We all have regrets — money regrets, that is. But, like all mistakes, we wouldn't be who — or where — we are today without them. In our "Money Fails" series, real people share how they bounced back from financial slip-ups, and what they learned along the way.
Here, a recent grad realizes saving too much can be a bad thing.
When I landed my first few freelance writing jobs after graduating from college, I felt like I had it made. Finally getting paid to do what I loved was rewarding. I put 80% of my first paycheck into a savings account, thrilled by the fact that it finally held more than $50.
Not even a week later, I withdrew some of my savings to grab lunch with a friend. The 20% of my pay I kept in my checking account was fine for covering my student loan bill, but it wasn’t actually enough for me to live on, even with my relatively low cost of living (I had moved in with my parents). So after a student loan payment and a run to the grocery store, my checking account was depleted.
A Pattern Emerges
This wasn’t a one-time occurrence. My pattern of dipping into savings became regular. But I figured I still had to be saving more than the average person.
The first time I realized my habits were a bit weird was while talking with my best friends from college. We were discussing our savings accounts, where they stood and where we wanted them to be, with a common goal of moving out of our parents’ homes. When I realized how much smaller of a percentage my friends were saving compared to me, I immediately looked up what was a “normal” amount to save — at least by the internet’s standards.
The quick search told me my friends were spot-on. A pretty common guideline is to save 20% of your take-home pay. I instantly felt like I had to be really well off compared to the average 20-something, given I was saving quadruple the average.
Later, I realized my mistake: I was saving so much of my pay, I couldn't cover my daily expenses. At least once a week, I treated my savings account as a backup checking account instead of the untouched reserve it should be. So while I was saving the biggest chunk of each paycheck to start, I had one of the lowest account balances among my friends.
How I Learned to Find Financial Balance
Today, I'm happy to report that I haven’t touched my savings account in a few months — and I’m hoping for the streak to last many more. Three major steps helped me adjust my habits:
1. I shifted my attitude. It’s important to act as if there’s a lock and key on your savings account — even if your bank doesn't penalize you for withdrawing. While the short-term consequences were small, dipping into savings to cover a $15 lunch or $10 movie ticket was taking away from my financial security for the long-term.
2. I was more patient. Seeing my savings account grow by smaller increments felt like torture. But after paying rent, my student loan bill and utilities, I soon realized why it’s important to leave money where I can access it — because I *will* need to use it. Saving less but saving consistently was one of the hardest steps for me.
3. I learned to budget for both my spending and my goals. Once I committed to saving that 20%, I also had to learn how to live on the rest. Even though I'm spending less day-to-day, I’ve been much happier when I've skipped a night out for Netflix at home, or when I canceled the subscription beauty box I didn't really use anymore.
I had good intentions when I started building my first real adult savings account. And while I was wildly wrong about how to approach it at first, I'm glad I had open conversations, did more research and gave myself a reality check to make a change that will pay off in the future. In the end, it’s a lesson I’m glad I was able to learn through trial and error.