Since I’ve been writing this blog, my friends have begun to think I’m judging their spending habits. One friend, who came over for dinner with a lovely pie purchased from a bakery, exclaimed that she knew it would be OK since I had written about how making your own pies isn’t necessarily cheaper than buying one. Another friend bowed her head when telling me about the specialty carpet she was installing. She said “Julie, I know, I’m never going to be able to retire”. Of course they are joking. The ones who aren’t have stopped spending time with me (just kidding). I suppose it’s a natural consequence of sharing expertise. My friend Barbara Wilson is an image consultant, and I’m not alone in worrying what she thinks of the clothes I’m wearing when we’re together. If you know anyone who is a psychiatrist or psychologist, you may think they are evaluating your mental health with every conversation.

Even I don’t pinch every penny. Jeff and I happen to spend what some would consider an extravagant amount on wine. How you spend your money is up to you. There really is no good or bad way to spend your money. There are only consequences. For every dollar spent, some alternative use for the money is eliminated. If the alternative use that falls by the wayside is the building of an emergency fund or saving for the day when you will have less income than you do today, you may not like the consequences, particularly if you aren’t aware of them ahead of time. My goal is to help you understand where your current path leads. Knowledge is power, and with that power you can make choices that make you the most happy.

Not sure where your path is leading? You may find my post “Do You Know Your Number” helpful. In this post, I describe a way to determine approximately how much you need to save for your financial future with only a few steps, starting with how much you are currently spending. You can also find a tool for estimating your savings need at choosetosave.org.

Another thought provoking exercise is to figure out how much of your income your current savings will replace. For every $1,000 dollars in savings you have, you can reasonably withdraw about $3.33 per month and have your savings last for the twenty five or more years you are likely to live beyond the traditional retirement age. For example, if you have $300,000 saved, you could reasonably spend $999 of it per month. If these numbers are sobering, you may want to be stashing away a few extra dollars.

Saving money works in two ways. Of course it helps you accumulate the money you will need to live on later in life, but it also reduces the amount of spending you have to accommodate. Jeff and I were able to give up our corporate careers so early because we were saving a big chunk of our income, which meant we had less spending to maintain (including the wine).

The earlier you begin to save, the more your savings work for you, and the less spending you have to give up today. Even if you are late to the saving party, you can make progress. One of my friends, who hasn’t accumulated very much in savings, is socking away all the money he can now that his kids are out of college and no long need his support. Given his circumstances, he plans to work another nine years, until he is 70, when his social security benefit will be maximized. That, combined with his savings will allow him to maintain his current lifestyle.

If you know what you need to save, and you are on track, buy that latte, try that new restaurant, take that trip, do whatever makes you happy. How you spend your money is no one’s business but yours. If this isn’t you, there are probably choices you can make today that will allow you more choices in the future.