Abbey Graf has a bare-bones budget and a spending aversion. But an expert says she can spend more and still meet her goals
Abbey Graf Has a Bare-Bones Budget—but Could Spend More
Healfromzero.com – Abbey Graf has a bare-bones budget, a strong savings habit and a question many disciplined savers face: how much is enough? At 28, she earns $74,000 a year, saves about one-quarter of her income and is nearing the end of payments on her remaining $2,000 in student loans.
Her only debt is that student loan balance. She owns her 21-year-old car outright and keeps recurring costs, including rent, as low as possible. Graf’s goals are to potentially buy a home in the next few years and retire comfortably, possibly before the traditional retirement age.
Despite her progress, she is unsure what financial target would make her feel secure. She wants a clearer understanding of the savings, investments and future income needed to support retirement while leaving room for other goals.
“I’d like a plan of what I would need for retirement. I’m not sure what the goal post is,” Abbey said.
A savings strategy shaped by frugality
Graf enjoys cooking at home, which helps reduce food costs, and she has been hesitant to pursue hobbies that could create ongoing expenses. Her spending aversion is rooted in a desire for long-term flexibility, but it can also make ordinary purchases feel risky without a clear financial plan.
Certified financial planner Stacy Francis reviewed her finances and found that Abbey Graf has a bare-bones budget that stands out even among highly careful savers.
“Her budget is one of the most bare-bones budgets I’ve ever seen,” Stacy said.
Francis plans to build projections for several possible outcomes, including a future home purchase and an earlier retirement. The analysis will use cautious assumptions for inflation, health-related expenses and average investment returns.
When spending more can support a balanced life
A financial plan can help distinguish between spending that jeopardizes a goal and spending that fits within a sustainable budget. Rather than requiring one fixed answer, it can show how changes in income, investing, housing and retirement timing may affect Graf’s options.
Francis also wants to test a scenario in which Graf spends more on experiences, such as travel, while continuing to save for the future. Abbey Graf has a bare-bones approach today, but the projections may show that she can enjoy more of her twenties without sacrificing her major goals.
“I’d also like a scenario where she spends more money. I’d love for her to do some travel and enjoy her 20s,” Stacy said.
Francis said it is unusual for her to advise a client to increase spending. Over 25 years and more than 270 clients, she said she has had that conversation with only a small number of people.
“I’ve had this conversation of ‘You really need to spend more money’ with maybe three people.”
FAQ: Building a Budget That Supports Savings and Enjoyment
How can someone know whether they are saving enough for retirement?
A retirement plan can estimate future spending needs, expected income, investment growth, inflation and health costs. Reviewing the plan periodically can help a saver adjust contributions or spending as circumstances change.
Should a saver cut all discretionary spending?
Not necessarily. After essential expenses, debt obligations and savings goals are covered, discretionary spending can be part of a healthy financial plan. The key is understanding what level of spending fits the person’s goals.
Can a person save for a home and retirement at the same time?
It can be possible when a budget accounts for both goals separately. A plan can clarify how much to set aside for a down payment while maintaining retirement contributions and an emergency cushion.