At 7, your goal was to save enough money so you could buy that new toy all the kids were raving about.
At 18, you just wanted to scrape up enough to stock up on ramen for the week.
At 23, your cohorts started talking about emergency funds, and you thought, “OK, I probably need a little nest egg of my own, too.”
At 27, you started counting down to retirement — only about 40 years away… Better start saving now.
And you’re still saving.
You’ve basically been saving money your entire life. Is there ever a time you’ll be able to stop saving money? Perhaps even — gasp — spend it?
Short answer: Yes!
6 Times It’s OK to Stop Saving Your Money
We’ll forever encourage people to save their pennies, but, depending on your financial situation, sometimes it’s OK to stop saving, even just for a little while. Come on; you’ve earned it, right?
Breathe a sigh of relief. It’s OK to stop saving money if you’re…
1. Investing in Causes You Care About
Once you have a nice rainy day fund saved, investing can be a great way to grow your money. In a way, you’re still saving money — but know risk is always associated with investing.
You’ll want to make sure you’re using your hard-saved money to support companies you actually believe in — their morals and values. You probably wouldn’t want to invest in a company that’s destroying our oceans or cheating the system.
Impact investing is a simple fix. It adds a new layer of transparency to investing. Take Swell Investing, an SEC-registered investment adviser committed to supporting sustainable companies.
Its Impact 400 portfolio features companies whose products and services align with the United Nations Sustainable Development Goals. It considers everything from gender equality to ending poverty to clean energy.
You can start with just $50 and invest in this or other portfolios committed to clean water, zero waste, renewable energy or disease eradication, to name a few. Plus, you’ll get a $50 bonus with the code PENNY after making your initial investment.
Swell doesn’t have any trading fees, price tiers or expense ratios. It charges a 0.75% annual fee — that’s about the cost of one coffee ($3.75) per year if you invest $500.
Disclosure: We have a financial relationship with Swell Investing LLC and will be compensated if consumers apply for an account and/or fund an account with Swell through links in our content. However, the analysis and opinions expressed here are our own.
2. Signing up for Life Insurance
If you have a dependent or two, you’ll want to think about life insurance. Sure, it’ll cost you a monthly fee, but it’ll help ensure your family will be financially sound if (goodness forbid) anything happens to you.
Plus, finding life insurance doesn’t have to be the complicated, research-intensive experience you might expect. Some newcomers in the industry are updating the old model.
Ethos can get you term life insurance in less than 10 minutes — with no medical exam — for coverage up to $1 million. Ethos offers a digital application, and customer service is available if you have questions.
It partners with a major life insurance carrier to quickly offer policies as low as $6 a month. It’s helped thousands of folks access term life insurance, including independent contractors who use Uber, Postmates, TaskRabbit and other gig apps.
So even if you have to take $6 out of your savings each month, life insurance could be worth it — for that peace of mind.
3. Paying off Your Credit Card Debt
A lot of us are being crushed by credit card interest rates north of 20%. That can make paying off your debt feel like this never-ending cycle — and can even cost you thousands of extra dollars over time.
If you have a nice savings cushion, it could be beneficial to pause your savings for a couple of months and pay off your debt more quickly to alleviate the pain of tacked-on interest.
See if you can make your debt a little more manageable first by consolidating or refinancing with a personal loan.
A good resource is online lending platform Upstart, which can help you find a loan without relying on only your conventional credit score.
Unlike traditional underwriting models that use only the common FICO scoring model, Upstart’s technology looks at factors like your education and employment history to determine your creditworthiness (though it does require a 620 credit score).
It can help you borrow up to $50,000, potentially with better terms (e.g. lower interest or lower monthly payments) than traditional lenders. If managing many different bills and credit lines is a hassle, you can also use an Upstart loan to streamline all of your loans into one.
4. Preparing for a Happy Retirement
Because you’re already into saving, you probably have a 401(k). Kudos for that, but is it doing what you need it to?
Chances are, your 401(k) could be doing a lot better. Take control with help from Blooom, an SEC-registered investment advisory firm that can optimize and monitor your 401(k) for you and keep it speeding toward retirement.
It just takes a few minutes to get a free 401(k) analysis that will show you whether your investments are allocated properly and whether you’re losing money paying hidden investment fees. It’ll even tell you just how much more money your account could earn by the time you want to retire.
After that, if you sign up, it’s just $10 per month to have Blooom monitor and maximize your 401(k). Bonus: Penny Hoarders get the first month free with the code PNNYHRD.
Think of Blooom like a mechanic constantly fine-tuning your car’s engine so it gives you the best possible performance and gas mileage. Except it’s your 401(k) — and your future.
5. Treating Yourself With a Reward
You know how most healthy people talk about the importance of cheat days? To let yourself indulge — just a little. The same goes for personal finance. You can be as budget abiding as you want, but you have to leave a little bit of wiggle room to treat yourself.
If you haven’t gotten a pedicure in at least a decade, escaped city limits for a weekend away from the kids or splurged on a new gadget, then maybe it’s time. But please do so responsibly.
Make sure you’re getting the most bang for your buck with these tools:
- Ibotta: With Ibotta, you can bank cash back when you make an Amazon purchase, sign up for Hulu, book your next vacation or even order groceries through Shipt. Plus, if you sign up now, you’ll snag a $10 bonus when you claim your first cash-back offer.
- Paribus: This tool gets you money back for your online purchases. If it discovers you’ve purchased something from one of its monitored retailers, it will track the item’s price and help you get a refund when there’s a price drop.
- When you’re spending money, always, always be sure to keep tabs on your budget to make sure you’re not overspending. If you don’t yet have one, the Empower app is a powerful budgeting tool that can help you figure out how you’re spending your money and develop a budgeting plan to keep you on track.
6. Buying a Home
Perhaps for the past few years, you’ve been saving for a down payment. That’s great! Now, you’re ready to buy your first home.
In those first couple of months of homeownership, though, don’t feel bad if you have to pause your savings. Expect a lot of expenses to pop up: closing costs, real estate agent commission, property taxes, homeowners insurance, last-minute repairs — just to name a few.
Get all of that taken care of as you settle into your new abode. After a few months, once you’re getting back into the swing of things and are coasting along with your monthly mortgage payments, you can start saving again.
Time to Resume…
Sure, depending on your financial health, there are certain life events, investments and money moves you can justify pausing your savings for. But the break can’t last forever — you’ll need to resume your savings at some point.
After all, you never know when you’ll need the savings. That newest and hottest toy of the season could hit the shelves any minute.
Carson Kohler ([email protected]) is a staff writer at The Penny Hoarder. She’ll forever be saving money.
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