Most of us struggle to follow a budget. In fact, 83% of Americans say they find it hard to stick to one. But there’s a dedicated few who treat their budgets like a law — or even a religion.
Budgeting is smart. It allows you to live within your means, save for the future and avoid nasty financial surprises. But can you overdo it? (1)
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Meet Angie.
At 40, she’s on $300,000 across her 401(k) and other savings accounts — far more than most Americans her age (2). With an $80,000 salary, she’s already surpassed the common benchmark of having three times your income saved by 40 (3).
She’s proud of her being a good saver and the retirement it promises. Still, she wonders if she’s missing out on life. She skipped girls’ trips in her 20s and turned down so many nights out that some of her friends eventually stopped asking. Now she wonders if she sacrificed too much — and if she’ll even know how to have fun when she finally retires.
So how can Angie — and others like her — loosen their financial grip without losing control?
Angie’s financial situation
Angie lives in Texas and brings home about $5,500 a month after taxes (4). She pays $700 for health insurance and contributes $675 to her employer-matched 401(k). To keep costs low, she splits an apartment with a roommate, paying $800 a month.
On top of her retirement savings, she saves another 15% — about $825 — toward her emergency fund and other investments. That leaves around $2,500 for bills, groceries and discretionary spending.
She’s built an emergency fund could cover nearly a year of expenses. But because she grew up with parents who worked seasonal jobs, she’s always felt that money could disappear overnight. Saving, to her, feels like survival.
Lately, though, she’s realizing it might be time to breathe a little (6).
Read more: I’m almost 50 and have nothing saved for retirement — what now? Don’t panic. These 6 easy steps can help you turn things around
Finding balance in the budget
With her savings in great shape, Angie can afford to loosen up — maybe by redirecting some of that money toward experiences she’s been putting off. A big vacation. A summer rental with friends. Even just more dinners out.
She could start by reviewing how much she’s actually spending on fun. The popular 50/30/20 rule says 50% of income goes to needs, 30% to wants and 20% to savings (7). That means Angie could comfortably spend up to $1650 a month on fun without jeopardizing her future.
Here’s a sample breakdown she could follow:
- Rent: $800 (15% of income, well below the 30% guideline)
- Utilities: $275 (5%)
- Groceries: $800 (15%) — any leftover can roll into dining out
- Transportation: $200 (less than 5% with a transit pass)
- Insurance: $675 (12%)
- Giving: $550 (10%) — donating can actually make spending feel more rewarding, according to financial experts like Dave Ramsey.
- Saving: 5% — she can safely scale back here, given her strong nest egg
- Miscellaneous: 5% — for unexpected expenses or extra savings at month’s end
- Lifestyle and entertainment: $1,650 (30%) — guilt-free fun
For someone used to pinching every penny, this may feel indulgent. But trying it for a few months could be an eye-opener.
It might also help to meet with her financial advisor. Together, they can run retirement projections and see if Angie’s current pace of saving could overshoot her needs. If it does, that’s all the more reason to spend a little more now — and enjoy the wealth she’s worked so hard for.
How to evaluate your own budget
You don’t need to be as strict as Angie to benefit from rethinking your budget. The best budgets aren’t the tightest — they’re the ones you can actually stick to.
Here’s a common breakdown that works well for many people:
- Housing: 35%
- Food: 10%
- Transportation: 10%
- Utilities: 10%
- Savings: 10%
- Insurance: 10%
- Personal & Entertainment: 15%
Adjust it to fit your lifestyle. Love to travel? Stash some cash in a separate account each month so you can book that flight next summer without guilt.
More of a gym rat? Budget a set amount for classes and gear so you can chase the latest fitness trend — whether that’s rucking or reformer Pilates — without debt following you around (8).
At the end of the day, money is a tool. It’s there to serve your goals — both the ones you’re planning decades ahead and the ones that make today worth living.
So if your budget feels more like a straitjacket than a strategy, take a page from Angie’s book: loosen up a little. You’ve earned it.
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Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Nerd Wallet (1); Wisebread (2); CNBC (3); Salary After Tax (4); Nasdaq (6); Citizen’s Bank (7); Gym Desk (8).
This article originally appeared on Moneywise.com under the title: I’m 40 years old and I’ve saved hard for retirement but skipped the fun — can I do both without wrecking my future?
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.