Is saving money difficult for you? The average American family doesn’t save much. The US personal saving rate was 6.2% in September 2018. That’s not too bad by historical standards, but at this saving rate, FIRE (financial independence/retire early) is way out of reach. You need to save
30-50% of your income to achieve financial independence in a reasonable timeframe. Saving that much consistently isn’t easy. However, we haven’t had much trouble with it. Why not? Is saving money easier for some people?
Saving money is not that hard
I’ve been lucky most of my life. For me, saving money is the easy part of wealth building. The formula is simple. For the most part, we made good income and lived a moderate lifestyle. This combination enabled us to save 30-50% of our income for 20+ years. Both of these factors are important, but being frugal is the first step. Luckily, Mrs. RB40 and I are both naturally frugal. We don’t like spending money. Now that we have a son, I wonder if our frugal trait will pass down to RB40Jr. Let’s take a look at our saving history and then see how our son is turning out.
Joe’s saving habit
Was I frugal as a kid? I don’t really remember. I lived in Chiang Mai, Thailand until I was 12. In Thailand, I didn’t feel the need to spend my own money because my parents provided for us. I had an allowance, but there wasn’t much to spend on. I remember buying some lemon preserves, Coke, and other snacks. That was it. Kids just ran around outside and invented games to play.
After we moved to the US, my parent started over and struggled financially for many years. Money was tight. During my teenage years, I rarely purchased anything and became very frugal. This habit stuck even after my parents’ finances improved. My parent remained frugal as well. After all, they had to save for college educations for their three sons.
After I graduated from college, I became a computer hardware engineer. I had a stable job and generated good income in my 20s and 30s. Over the years, I relaxed a bit and lived a more moderate lifestyle. I didn’t watch every little purchase anymore, but I knew I had to save for the rainy days. Saving a large portion of my income was never that hard for me. I knew the savings would come in handy someday.
Mrs. RB40’s saving habit
What about my wife, Mrs. RB40? She was a very frugal kid. As her grandmother used to say, “She’s the tightest kid I know.” Her family struggled financially when she was young too. Her dad has a degree in agriculture, but he struggled to find a good job in that field that provided some kind of work-life balance. Eventually, he found work with the county and their finances stabilized. Her mom was a stay-at-home mom, but she went back to school and became a teacher. (The law degree she earned overseas was essentially useless here.) That helped their household finance as well, though there always seemed to be one more major expense (car broke down, heater needed fixing, roof leaked, etc). Her parents were also DIY-ers and that helped a lot as well.
So, her financial history is similar to mine. She was cheap when she was a kid and the habit stuck. After college, her income started low as she found her way in the world. In 2006, she earned a Master’s degree. This opened doors and her income has been good since. While she has loosened up in recent years, she is still relatively frugal. This is probably due to my FIRE journey.
In 2010, I discovered the FIRE concept and got us onboard pretty quickly. My engineering career was starting to implode and I needed to get out. I retired from engineering in 2012 and became a stay-at-home dad/blogger. In theory, we were financially independent, but Mrs. RB40 doesn’t trust theory. She needs more security than that. It’s understandable because our AGI dropped 75% from 2012 to 2013. That’s not very reassuring. We made enough to support our moderate lifestyle. That was mainly due to Mrs. RB40’s job. We could withdraw 3% of our investment portfolio and it would cover our cost of living. However, Mrs. RB40 doesn’t like drawing down. She’d rather work a bit longer and put off withdrawal for a while.
It took a few years, but our finance improved tremendously since I retired from engineering. I made more money online and worked to increase our passive income. Now, Mrs. RB40 doesn’t have to work anymore. She could retire tomorrow and we’d be fine financially. Our passive income + my online income are enough to cover our living expenses as long as we continue living a moderate lifestyle. If we live it up and increase our spending, the numbers wouldn’t work out. Currently, we spend about $60,000 per year. That’s a comfortable level for us.
Anyway, saving money hasn’t been too difficult. We are used to this moderate lifestyle now and I don’t really need to spend more. Mrs. RB40 has relaxed a bit recently. She told me she’ll keep working longer so she can buy nicer clothes and eat out at nice restaurants. I think that’s fine. She’ll need to cut back once she retires, though. Maybe she can figure out a way to make some spending money after her retirement. We’ll see how it goes.
RB40Jr’s saving habit
Now, let’s look at RB40Jr’s saving habit. Our son is 7 years old and he is already frugal. He loves counting his stash of money. His grandparents send him cash for his birthday and various special occasions. Now, he has $392 and he doesn’t want to touch it. The only thing he thinks about spending money on is Lego. Occasionally, I’d bribe him with a 50% match to buy a small Lego set. Other than that, he doesn’t want to part with his savings. He is like his mom was when she was young.
He’s also picking up my frugal shopping habit. If he sees something on sale, he’d tell me to get it. Conversely, if he sees something expensive, he’d say – “What a ripoff!” That’s great. He’s starting to become a frugal guy. I’m so proud, hahaha.
Halloween candy saving experiment
Check out RB40Jr’s Halloween candy stash.
This year, I told RB40Jr he can do whatever he wants with it. Surprisingly, he wants to make it last until next Halloween. Wow, that’s ambitious! I don’t know if he can do it, though. He got a nice haul, but I don’t see how it will last a whole year. However, I forgot that he’ll get more candy. Christmas, Valentine’s, and Easter are all opportunities to add to his treasure hoard. Last week, he picked up some candy at his friend’s birthday party when the kids broke open a piñata. He also gets chocolate from Trader Joe’s occasionally when I need to bribe him.
Here is his stash after a week. That’s still a whole lot of candy.
His stash at Thanksgiving, about 3 weeks after Halloween.
Wow, he’s doing better than I thought. The candy stash is dwindling, but there’s still plenty left. It looks like he’s saving the full-size packs for later. That’s smart. I don’t think it will last until next Halloween, but who knows? Good luck buddy.
Is saving money easier for some people?
Yes, I’m pretty sure it’s easier for some. Saving money has never been a big issue for me. The pain of making money eclipses the pleasure of spending. I’d rather save than spend if I have a choice. I have a lot more problem with overeating than overspending. Most of this is probably genetic, but the environment plays a big part too. If we grew up in a typical middle-class family that bought whatever they wanted, Mrs. RB40 and I probably wouldn’t be as frugal.
Hopefully, we can pass on our frugal mindset to our son. Life is a lot easier if you can save some money for the rainy days.
How about you? Do you have a difficult time saving money? Do you think frugality depends on genetics and/or childhood environment? How are your kids doing with their Halloween candy stash?