For those on the supercharged path towards financial independence, it’s good to recognize reasons to stop saving. The endpoint is one of the best parts of early retirement, so it’s worth recognizing that transition and avoid oversaving. But there are other times when it isn’t wise to save. In this post I want to touch on those moments because the pressure to save, save, save can be exhausting.
It’s very frustrating when someone puts a wrench in your savings strategy. Life tends to get more complicated with more chefs in the kitchen – as in, when you leave the world of singledom behind and start a family. Your partner may not be on the same page as you – they want to spend money on a vacation or help out family financially while you’re focused on getting to a financially secure place.
In the US economy, money is created out of thin air – banks give you a loan and add the necessary zeros to create that money. But in our personal lives, all odds are stacked against you when it comes to accumulating money. All forces in the universe are trying to take money out of your pocket.
Saving money is a way out of poverty. And you can be poor and make $1M a year – it’s what you keep and not what you earn.
Whatever mode of savings you employ, it’s good to be aware of the times in your life when there are valid reasons to just stop saving. Take a break from it without destroying everything you’ve built up and then resume when the time is right.
Reasons to Stop Saving
A buddy of mine is taking his sabbatical and enjoying some travel time with his family. But he’s worried because the income he’s getting from his employer is half of what he normally earns and it’s all going towards his travels.
It’s fine, dude! This is the time stop saving. You’re experiencing new cultures and experiences and in this world that requires some money. It’s a sabbatical. If he doesn’t dip into his savings and resumes saving money when he gets back to the grind, he’ll be fine in the long-run.
Here are a few situations when it’s appropriate to stop saving money:
1. Taking a Break from Work
It’s good to get away from work for a while. You may not be burnt out but you need a little distance so that you can return with more energy. Think of it as a mini-retirement.
A good time to get away from work is when major drama unfolds; let that shit work itself out and you can return to something more predictable once that dust settles.
You can take a break from work by:
- taking a protected leave of absence
- a sabbatical
- a long vacation
- quit altogether and resume at a new job
When there is little to no income coming in, it’s normal to spend from your savings, especially if you can budget reasonably for the expenditures. Hopefully you’ll have an emergency fund from which you can spend.
Come up with a reasonable budget for the months/years you might take off of work. Take out a portion of that money every few months while allowing the rest to continue earning some interest or appreciate in value.
2. Burnout from Medicine
Burning out in medicine is an emergency situation. Fuck trying to save money. You’re trying to prevent far more serious consequences.
This is the time to get back to the basics. Go back to doing the things you used to love as a child. Surround yourself with people who are positive and supportive. Have fun and don’t be hard on yourself.
Spending to remedy a burnout is irrational and will only mask the symptoms. But spending your money on things which are genuinely important to you is sensible and can help you heal.
I’ve tried curing feelings of burnout by spending more money on myself, such as shopping for clothes and gadgets, but that never lasted long. A far more effective method was to get rid of the pressure of saving money and spend on socializing with friends and family. Instead of trying to stash every last dollar and pay down debt, cut back on your work, cut back on your spending, and do more meaningful things.
3. Spending on Yourself
By spending money on yourself I don’t mean getting botox injections. But you might take singing lessons, sculpting lessons, getting a psychotherapist, or enrolling in interesting online courses.
I feel like I’ve been spending most of my income on myself the past 2 years. I’ve bought books, taken online courses, paid to learn new skills, and spent on experiences which have helped me grow.
The same money you would save and invest, can be spent towards investing in yourself. Skills are very valuable and can give you the confidence you need to make healthy career moves.
4. Career Transition
Once you make the decision to get out of your current career, life can become hectic. Your friends and family will be shocked by your decision and need time to digest it.
You often don’t have a clue which direction to take next. And your mind is preoccupied with figuring out the logistics. Instead of budgeting and trying to set aside more dollars, spend your ATP’s on how to make the transition as stress-free as possible.
I am just now starting to save a little bit of my income but I took a long break from it. It was a good move for me so that I could focus on my career transition. I’m still figuring it out but it seems that I’m getting closer.
5. When You Have Enough
The concept of fiscal sufficiency is lost on many medical professionals, especially on those with very high incomes. Some can’t save enough for retirement, while others can’t stop spending on dopaminergic experiences.
If you have saved enough for a particular calendar year then stop saving. It’s good to have a plan so that you don’t fall into the excess-savings trap. If your goal was $20k and you hit it in the first quarter, stop. Saving too much or putting too much pressure on yourself can burn you out.
Maybe you’ve saved enough for retirement – as in my case. I’ve saved more than enough for retirement; I oversaved. Accumulating excess wealth might give you a false sense of security and might end up ignoring other important aspects of your life.
6. When You’re Retired
This might seem obvious. But when you’re retired, as in, when you have enough money to support your retirement lifestyle, you don’t need to continue saving.
When I retired in 2016 I stopped saving money until early 2018. I only resumed saving because some of my goals changed. Saving in retirement can make sense but it shouldn’t be at the expense of your lifestyle.
It is such an awesome feeling to not have to save more money. Knowing that you got your stash set aside, it lifts all that pressure off of your shoulders.
7. Paying off Debt
Paying off debt is a form of saving, isn’t it? You might get a 3% rate of return on your CD savings but you would get a 5% rate of return by paying off your mortgage.
It’s not always that simple of a math but there are times when it makes sense to pay off debt rather than save your money. I don’t regret paying off my students loans early which definitely slowed down my savings.
8. Starting a business
I have always been impressed by my friends who have started their own businesses. It’s a bold step with a strong touch of uncertainty. It requires energy and money.
When starting a business it’s necessary to spend money. I am sure that this mental shift has been one of my weaknesses which has prevented me from pursuing some of my business ideas. Saving money makes no sense when you could use that capital to grow your fledgling business.