Based on current normal monthly expenses save ~75k a year. Thinking of reducing that to 50k & blowing 25k on luxury goods (watch / jacket / nice vacations etc.). Is that a stupid decision? I’m 25 & wanna start balling, but know it’s financial irresponsible

likefunny
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You’re gonna feel real stupid when you’re surrounded by depreciating assets in the middle of a recession. Sock away cash for your future (house, retirement, marriage, etc.), buy a few choice luxury pieces over time, and spend money on experiences you’ll cherish forever.

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Yes, it's ok to live life a bit.

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I’ll say what iv said in loads of other threads. If you look at everything in life through a $$ ROI lens - you’ll hit the later portion of your life very wealthy and full of regret you didn’t actually enjoy your 20s and 30s

likesmart

Honestly depends.
With 75k saving at age 25, you are likely in the top 95%-99% in the US. Putting 50k aside at that age is already an incredible achievement, of which you can be proud.

I believe what you’re experiencing is life style creep, which again at 25 is totally understandable. If this is a one off, it’s probably not a problem. However, there is a mental element to this (building habits), which shouldn’t be underestimated.
So the question becomes, is this a one time thing or are you going to splurge every year, “because you can”?

That extra 25k can be estimated at +/-400k at retirement age. If you do that every year that’s a serious amount you’re spending upfront.
I’m a fan of using your 20s to work hard, get ahead, and save as much as you can. The earlier you get your money to work for you, the bigger the snowball effect.

Finally, the economic outlook doesn’t seem super positive. Two elements to it imo:
1. is it really the time to splurge on luxury items? how certain are you that next year you’ll have that 75k again?
2. people with cash will likely have excellent long term investment opportunities. The less cash you have, the less opportunity.

I’d assess all these points and make a decision accordingly. Maybe reduce the splurging amount in any case? I.e. take only one baller vacation and choose between the jacket and the watch?

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I’m married with kids, cars, house, student loans, and my own collection of watches. I never took that much money home in one year. Splurge on some things you want to enjoy and live a little. You’re doing fine! Just set your own limits and stay within them.

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Yes. That 25k annually, at an 8% return, would be $2M by the time you're 50.

I'd rather have the two mil. And I'd rather retire in my 50s

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Yeah bro but that Hamilton isn’t gonna get you laid.

funny

25k in the market at 25 years old will pay for your future kids entire college in 25 years

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It’s all about having a budget. I save 25% of my total income between before and after tax. If I am able to do that I could care if I buy a boat or a ham sandwich because following the 25% rule I can buy a house retire and do whatever I want in the future. Make sure you have an emergency fund for the recession first and then aim to save a specific amount of income

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Walk it up so you feel like you’re getting more every year and still saving a great amount. 5k 1st year, 10k next, 15-20k next, or something similar.

It’s technically a bad decision financially, but saving “only” 50k a year from the age of 25 will leave you plenty comfortable by retirement. Enjoy life now knowing that you’re still being responsible.

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You save $75k/yr at 25? Do you just not spend money at all?

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You’ve already acknowledged it’s financially irresponsible. All you need to do know is decide whether or not being financially irresponsible is stupid and you’ll have your answer.

Average 25 is upside down with student loans and other personal debts along with lower paying job, so I think you deserve some fun for your hard work as long as it’s sustainable

Life is for living, get the watch. IMO you’re saving plenty, just don’t get into the rhythm of spending a higher amount of your savings each year.

Can you tell us about your earning/spending/saving situation for context? Curious to see how I can do that too

It’s pretty easy to do if you’re making a low six figure income while living at home with a paid-off car. Just taxes, insurance, and other living expenses at that point.

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