A couple days ago, Ramit blogged about 10-year saving strategy to “leave your friends in the dust” after you’ve already handled the basics of saving and investing. In his post, Ramit talked about saving for the things that’re likely to happen 10 years down the road – weddings, babies, vacations, etc.
Here is what will happen to you as you get older:
- Yes, you WILL have a nice and very expensive wedding (even if you’re a hypocrite and think you’ll have a “small, beautiful” wedding)
- Yes, you WILL have kids and want to buy them nice stuff
- Yes, you will need things like family health insurance and life insurance and homeowners’ insurance and family vacations and other things that you can’t predict right now because you’re not in that life situation
- Yes, these expenses WILL come up. People like to believe they’re the exception. BUT YOU’RE NOT. YOU WILL HAVE KIDS. YOUR KIDS WILL BE WHINY AND REQUIRE LOTS OF DIAPERS. THEY WILL POOP ALL OVER THE PLACE AND REQUIRE 10X MORE PAPER TOWELS AND CLOTHES AND CRIBS. PLEASE BELIEVE THIS.
Sounds great, right? What personal finance blogger doesn’t like to plan ahead?
BUT – I don’t think Ramit’s 10-year Saving Strategy is for me. Not because the idea doesn’t sound great in theory, or because it wouldn’t work well for some people – it’s just not my cup of tea.
I might be a planner, but I have to draw the line somewhere. I refuse to save for a wedding when I’m not engaged. And what happens if I don’t get married? I can take that money and do something else, sure, but why not just name it a Future Fund as Little Miss Moneybags have done?
As for babies, well, I’m not sure I’ll have a child, but assuming I do, how do I know what to save for? Hey, my baby might be a genius who gets a full-ride to college (a PF-er can dream, can’t she? 😉 )
Another issue is Ramit’s litany of things we need to save for (for our Future Self) can be overwhelming. On his little napkin sketch, Ramit’s 10-year strategy calls for $6,000 in savings per month to pay for my $30,000 wedding, $33,060 down payment, and various other items 10 years down the road. That’s just, er, a bit outside my budget right now.
I’m going to enjoy being young and carefree for a while longer. That means I’m saving for retirement, and when I’m thinking seriously about buying a home I’ll start saving for a down payment. But there’s no way that I’m going to start saving for my unborn child’s DIAPERS or family vacations after my child is successfully toilet-trained (after, I presume, using a mountain of diapers that I failed to save for).
I understand Ramit’s point – that there will be things that come up in my 30s and 40s that I might not have thought about in my 20s. I’m not discounting the importance of saving for the fuzzy future – after all, what’s fuzzier than retirement 40 years in the horizon? So I suppose I’m doing something similar to what Ramit suggests, just in a different manner.
I’m saving as much as I can for retirement and mid-term cash needs now (i.e. MY vacation and graduate school costs), so that I have the flexiblity to save for other priorities as they come up later.
In the end, though I agree with many of the concepts Ramit touched upon, his method isn’t motivating for me. Fortunately, there are many paths to get to the same end goal (financial preparedness), so to each his or her own. 🙂
What do you think? Do you follow Ramit’s 10-year Saving Strategy?