Spend 10-15% of your income … it’s recommended!

Not exactly the headline typically found on a Financial Planner’s blog, is it? It’s not a fake headline to grab attention like those found across the “news media” either. The statement is 100% factual and I actually recommend my clients “spend” as much as possible!

Hold the phone Batman … that’s absurd … ridiculous … scandalous even!

A big part of financial planning revolves around goal planning and ultimately determining the “number” needed to achieve a goal. Typically, the process includes understanding how much a person is spending today, which involves the ever dreaded “B” word … Budget. “Ugh, budgets”.

“I’m a terrible saver, but I love spending.” “I’m a great shopper, I can spend with the best of them”. A common thought is most people are somehow bad at saving money, but great at spending it. For the moment, I’ll skip the notion that a great spender already has a detailed budget in place. Instead, I’ll focus on the strengths of the inner power shopper in us all.

As great spenders we all love to buy things on sale, right? You wouldn’t pass up a 15% coupon on your purchase now would you? How about 10%, or 20%? Unless you like paying full retail for everything, you’d take the discount in a heartbeat.

Why, do we like discounts? Say it with me now … “because it keeps more money in my pocket for spending later … Duh!”. In other words “you spent money, while saving some for later”. Agreed? Fair statement? This should make more sense to you now.

Savings is just another form of spending. If you have no issues with spending, savings is a walk in the park. You’re buying the most important and highly sought after item possible, financial stability! It’s the first thing you should purchase with every paycheck. Spend 10% or 15% of your income, and “save” it for your financial goals.

But wait, there’s more! Discounts!

“Spending” your money into any number of available tax advantaged plans (401k, IRA, HSA’s etc) may lower your adjusted gross income (AGI). AGI is the basis for how much income tax you have to pay, so lowering it means paying less taxes! That’s a discount we all understand and wouldn’t pass up, right?

Start spending 15% of your income on your financial stability today!

As always, be sure to consult with your financial planning professional to determine the best options available for your unique needs.

Steve