It’s your money and I don’t have any right to tell you what to do with it. On the other hand, you’re here because you’re looking for advice. So consider this advice: Don’t blow all of your savings on your lifestyle! If you’ve set up an automatic savings plan (about the only budget that most people can reasonably handle sticking with) already then consider this: It’s not pay yourself first unless you actually don’t spend the money you’ve payed into your savings plans on your lifestyle. You should have savings goals and retirement goals and the only way you’re likely to accomplish them is by following the principle of pay yourself first.
You’ll notice a recurring theme around here when it comes to saving, investing, etc…
Make It Automatic
If you’re not automating your finances then you’re wasting too much of your very valuable time every day/week/month managing your finances. Figure out your expenses you regularly make and then figure out how much you can reasonably save on a monthly basis and then make it automatic. You’ll be able to reach your money goals easily and with very little effort on your part by doing this. If you don’t then you’ll likely never have substantial savings, investments or a comfortable retirement. I’d love to sugar coat it for you, but the fact of the matter is you’re not likely the exception. You are the rule. Therefore you need to make it automatic if you really want to build wealth.
Don’t Spend Your Savings
If you’ve set up an automatic savings plan don’t touch what you are saving unless it’s for your very specific goal. If you are saving for a down payment on a house, good for you. Don’t touch that money until you actually go to buy that house. It’s not to be used for vacations or worse, day to day expenses (because you can’t get a handle on your shoe habit). Now if you have a shoe habit and you know it, that’s fine. Set up a bit of money every month to go into a shoes savings account. Problem solved. You’ve got that money now to buy your shoes. The point of an automatic savings plan is to build wealth. It’s not to give you cash that you can use whenever you want a new gadget, purse, whatever.
The point of my little rant is this: just because you have a decent chunk of money set aside in a savings account doesn’t mean that you have money available to spend on some indulgence that you otherwise would normally skip (or budget and save up for). I’ve been guilty of this myself in the past. Please, please, please do not allow yourself to live beyond your means by borrowing from your savings and investments that are meant to build lasting wealth. Pay yourself first does not mean you can live beyond your means. It’s not worth the tradeoff in the end.