How Can I Tell if I'm Saving Enough?

I’ve always been a rule follower.

In school, I was the anxiety-ridden “lookout” when peers would do things teachers or parents told us not to. And if I myself participated in any anti-rule behavior, I was usually too consumed with “what ifs” to enjoy the rebellion.

Instead of breaking rules, I gravitated towards structure. I preferred assignments with outlined steps and a clearly stated desired outcome. I wanted rigidity, formulas, and the ability to pinpoint the “right” and “wrong” way of doing something.

I’d like to think age and life experience has tamed this personality trait - and in many ways they have. But there’s one key area where I am still always tempted to look for rules to rely on: managing my finances.

I want to know exactly how much I need to invest monthly to retire at the age of 60. I want to know where my savings should be by the time I reach my 30th birthday. I want to know exactly how much I should be spending considering my income and money goals.

I’m not a big fan of “shoulds,” but I don’t like guesswork either. I just want something or someone to tell me I’m doing enough.

Unfortunately - or fortunately - money is personal. There is no one-size-fits-all approach to finances. Every situation is built from blocks of varying shapes and sizes. So instead of looking “out there” for validation, we have to pair basic financial information with the intricacies of our own lives.

It’s not an exact science. Considering the fluidity of life itself, savings plans should be flexible. But there are a few ways to give yourself the reassurance you’re doing “enough” when the outside world just isn’t suited to make that judgment call.

How You Can Tell if You're Saving "Enough"

You’ve covered the basics and determined a starting place.

Saving isn’t the first step to creating financial stability. There are other boxes that need to be checked off before diving into big savings goals, like:

• Establishing an emergency fund

Yes, you have to save in order to have an emergency fund. But an emergency fund doesn’t create forward momentum. An emergency fund simply prevents you from going backward. So for all intents and purposes, this is considered a box to check before moving on to savings goals.

• Creating and sticking to a debt-payoff plan

If you’re saddled with high-interest debt, paying that off - or at least having a plan to pay it down - should be at the top of your list of financial priorities.

• Ensuring all necessary expenses are being covered in full every month

If you aren’t covering necessities, you’re placing your finances in a precarious position. Make sure you are easily covering these things first, or prepare a plan for paring them down.

Checking these boxes will offer a solid financial foundation to start from. Then you can move on to establishing goals with a clear picture of what you have available to save.

You’ve pinpointed your priorities.

Priorities don’t directly translate to goals. But priorities should help inform the types of goals you set.

Freedom is one of my cornerstone priorities. Freedom to do the work I want to do, freedom to establish my own schedule, freedom to take time off when I deem it to be appropriate. Self-employment lends itself to this priority. Saving to establish a cushion larger than a traditional emergency fund is a financial goal in line with this priority.

Buying a new car, on the other hand, undermines this priority. Strapping myself with an extra monthly bill could equate to greater stress instead of greater freedom. One isn’t better than the other, one is simply more in line with what I want for my life.

What is the picture you have for your life? It might not be what you’re experiencing right now - that’s what goals are for. But the goals you set should go hand in hand with the priorities you can pull from this picture.

Bonus: Establishing priorities and setting goals in line with them can create a greater motivation to stick to the savings process.

You know your goals and what it takes to reach them.

I’ve spent a significant portion of my adult life worrying about whether the actions I’ve taken will create a financially stable life. Worry is a physically and emotionally exhausting state to constantly be in, so I made a decision.

If I’m going to give my mind over to worry, the worry needs to be clear. If it’s money-related, there needs to be a dollar amount attached. Vague worries aren’t allowed brain space because they are rarely worthy of the energy.

This means the financial goals I would normally worry about reaching need to be fleshed out with exact dollar amounts and timelines. I’m not allowed to say, “What if I can never ?” before knowing how much I will need and when I’ll need it by.

• Map them out

Create a list of your financial goals both large and small, making sure they are in line with your priorities. Determine the cost, timeline, and options for each.

• Work backward

Now you know what the timeline and dollar amount are, determine what you would need to save each month. Do your goals need to be adjusted? Or should your spending be adjusted? Decide what’s possible and what you’ll be committed to sticking to.

• Decide what to tackle now

I’ve dreamed up 5+ trips I would love to take in the next two years. But I can’t save for all of them right now. I have to save for one or two and table the rest. In the meantime, I’m continuing to save for the goals I’ll always be working towards (my cornerstone goals), like retirement. Decide what your cornerstone savings goals are, as well as your smaller, interchangeable goals.

You’re continuously checking in and making adjustments when necessary.

Putting your savings on autopilot is a great way to skirt around common mental hurdles that tell you to throw your money elsewhere. But incomes change, goals shift, and savings rates and methods shouldn’t stay stagnant.

When my income increased drastically from my first to second job, I needed to account for a larger amount of disposable income. The small drip, drip, drip, and slow progress towards my goals needed to be turned up a notch. It took me a few months of monitoring my spending and landing on the sweet spot of what I could keep in checking without dipping into savings each month. But once I landed on a number, I was able to allocate it according to my various savings timelines, priorities, and cornerstone savings goals.

Then, when I switched to full-time self-employment, I needed to account for more variable income, different pay periods, and taxes I would need to cover myself. My savings numbers and habits needed to change once again.

Through these periods of readjustment, I’ve realized something: “Enough” is a relative term. I was saving “enough” for my “freedom fund” when I was happy with my employer and freedom just meant occasional trips. When the term “freedom” switched to mean covering everything necessary to ensure that self-employment still allows me to be financially stable, well, that’s an entirely different picture of “enough.”

We change and so should our savings. Chances are, if you’re checking in and regularly making adjustments, you’ll always be saving “enough.” Or, you will be working towards a plan to reach “enough.”

You’re thinking big picture but still enjoying the day to day.

I used to never want to spend money. At all. Ever. I didn’t have a balance between saving and spending because I felt so tied to seeing my savings grow.

The problem was, when I did finally pinpoint goals I wanted to save for, I still never felt comfortable parting with the money. So I would turn down experiences I was previously excited for and delay life changes I could actually afford. All for the sake of keeping money in my account.

And it still never quite felt like enough.

Saving enough means living enough as well. It’s about learning to move between "someday" thinking and "today" thinking. Otherwise, you’ll always be setting your sights at some point in the future and never fully enjoying the fruits of your labor.

I had this stark realization halfway through a two-week trip to Europe, one I berated myself for taking. This trip, one I had saved for, was plagued by guilt. I felt guilty when I ordered anything above the cheapest thing on the menu. I felt guilty for purchasing museum tickets that were on the high end.

Not spending the money I allocated for this experience defeated the purpose of the entire savings process.

How I'm Changing the Way I View My Own Savings Mindset

I may have always been the rule follower, but now I work to spend intentionally, just as I would save intentionally. These two things paired together can ensure I’m saving enough and living enough at the same time.

It turns out that hard rules don’t really work with the personal nature of different financial situations. But in the process of determining our own idea of “enough,” we can learn a significant amount about our priorities and financial habits. And that can never be a bad thing.