How predictable is your income? Are you going to earn $1M or more next year as well? That'll be a key indicator of how much you should increase your spend, and how.

Girl

You make a million a year lol; live a little.

I don't make nearly as much as you maybe half. But this year I had an epiphany.

I had two uncles that were getting close to 70, and they both died within a year of each other. One was not super healthy, probably average. The other one was super healthy.

I started thinking, and thought to myself, what if I only live to 65 or even 70? Do I really need to die with 3 or 4 or 5 million in the bank?

I put my pencil on the paper and saw that I could retire at 55 or 60, which is what I'm looking for, even if I start spending a little more.

So I went and bought an Audi RS6. I've had it for about 6 months now and I enjoy it so much.

Life is about being responsible, but also enjoying the fruits of your labors. Be smart, have goals, but also indulge and what makes you happy. You deserve it.

I’d say saving half your income is more than sufficient.

How were you able to increase your income some much in so little time? My income seems to be plateauing, and I’m struggling to navigate that.

Congrats, but this just feels like a flex tbh. If you earn that much, in finance, then I’m sure you are more than capable of managing a simple personal budget

Fire mindset is wild on redit

My opinion: save 1/3 tax 1/3 spend 1/3

If your income is variable make Sure that 1/3 spend can be adjusted if needed

If you don’t want to spend 1/3 one year increase savings. Living on $100k a year making $1m you’re not taking advantage of a lot of awesome advantages to being rich.

Hire a cleaner 2x a week, join a very nice gym, spend $500 a week on the best meal plan or groceries, take nice trips, fly first class, etc.

This is rage bait post

lol wtf 😂

This is a highly subjective question. The answer very much depends on other factors beyond your 1 year income -

• Do you have any non mortgage debt? If yes then you should pay off your debt before increasing spending.
• Do you plan to retire early ? if yes then every $1 you save and invest at your age will be worth at least $2 by the time you are 40. The most realistic path to sustained wealth is to save and invest money in your 20s and 30s.
• How stable is your income? If this is driven by transient factors like RSU appreciation and capital gains then it's more a windfall than income. You should save and invest nearly all of it instead of using it on lifestyle upgrades. The last thing you want is to be stuck with a more expensive lifestyle if the income drops in the future.
• If it is real income that should be at least 80% of that number going forward for the foreseeable future then you can rationally spend more. I'd still want to be smart about what I spend it on and take care of the important stuff like a reasonable house first.

I think as long as it's consistently way less than the rate of income growth, you're golden. Plus being intentional about it - I will spend more on housing so I buy a forever house and never have to move again for example.

Your income has increased by nearly 500%, and your spending has only increased by 233% so I think you're good. Also anything you save earlier in your career, the more it compounds so lifestyle creep later on in life will matter less.

I would not spend just to spend. Be thoughtful on your purchases and consider what will add value to your life or make you happier.

I don't increase my expenses at all (five years stacking now). My hobbies remain the same. Working out, hitting a cheap bar a few times a month, getting sunshine, cooking at home.

I like my clean non-branded wardrobe, a few pieces of silver jewelery, a stock Supra that's paid in cash that I love, and a fairly nice roomy apartment I've been in for years. So yeah.. I could save 90% of my income per month (usually 80%)

I think if you don't need to, then don't? If you want to treat yourself when you're feeling tired, go for it. But you don't have to increase your expenses if you're happy and healthy. :)

Building wealth involves deferred gratification. The way I got to my number being a w2/salary man was by not increasing expenses as i earned more, and investing everything i made. With your high salary, no dependents, you should be able to exceed my number. Wealth may mean better stuff to you now. As you get older the real benefit is how you spend your time.

Take a nice vacation - once you increase lifestyle spend there is no going back. Invest the rest and end up in a MCOL where your money goes much further.

Brother that savings rate is crazy. Live your life a little bit. If I was in your position I’d be comfortable spending 250k easily

It is truly a question of balance. The factors you want to balance are what things will you get more utility from when younger, therefore you should prioritize consuming/doing them now. I.E. if you weee a car person, you will enjoy it more and have the reflexes to enjoy it more younger. Is it something durable, that once purchased your utility begins immediately and the longer the time period the more utility, the sooner you should purchase. The other factor is not to spend too much emotional energy around The edges. When in doubt, buy it., it won’t matter. That said you have to balance with becoming so accustomed to every whim being fulfilled that the simple pleasures stop bringing joy.

You should talk to a wealth advisor, specifically a fee only registered investment advisor. They only work for you and can answer most finance questions and help you plan for your future.

I've had the same income increase in those years, but I am married + 2 kids, mortgage, etc

I would make sure it's a thoughtful increase, like up to $150k. That is still a reasonable sound if your income goes down. But if I'm starting to spend more, I'm making sure my emergency fund is 12 months, as I am extremely conservative with spending. Research the things that interest you the most, whether it be elaborate trips with all the expeditions offered, buying that dream car, buying a house and furnishing it with stuff that you actually enjoy/ your style.

If you plan to get married and have kids, do the wild trips now. Do the month long trip, the concert on another continent, etc. Because once you have kids, that extra energy is gone, the money may be there but everything else becomes more important than the material stuff.

We are just now getting to where the kids can travel more, so plane tickets add up quickly! Then you have all the stuff that come with kids, sports equipment, the endless toys, etc.

Good luck!

First of all congrats on absolutely crushing it income wise especially at such a young age. Others have already asked about how steady / reliable that income is.

Have you considered why you feel the need to spend more? Is it simply because you can? Are there things you want to spend money on but don’t because of savings?

For us one of the big epiphanies was we can use money to fix problems on the home front (we used to fight about cleaning the house so we just spent the money to hire cleaners). Point is within reason enjoy the fruits of your labor but don’t spend money simply because it’s sitting there.

It really depends on the exact details of both spending and comp. E.g. just before I bought a house my savings rate was in the 90s, but it's lower now and will be lower still when I'm paying for two private school tuitions.

So like I "oversaved" if you just use these nonsense rules, but it was actually a reasonable savings rate for my situation.

tl;dr I feel like $100k is already pretty healthy spending.

We try to keep savings to around 50% and spend the rest.

When asking ourselves what to spend it on, we think about spending it on the life we've always wanted to have (i.e. a nice house), doing things that we have always wanted to do (i.e. tennis lessons, seeing the great barrier reef), and reducing time spent on things we don't like (i.e. cleaning or laundry).

What's your current net worth and breakdown? That's important info to know.

Since you're younger, I generally recommend saving more than you "need to" and building that cushion while you're young. That cushion will give you invaluable options later if you want to take any type of break or pursue a different path. Life is long, with many unexpected twists and turns.

With your income and spending, you can become fully FI in just a few short years. That's insane. If there are no glaring lifestyle adjustments, don't do it. In my experience, the value of knowing I have options is far, far greater than any additional lifestyle adjustments I can make. I'm so grateful that I saved and invested a lot more than I "needed to".

I think you need to look at net worth and not income.

If my net worth was say $2M and I was making $1M a year. I’d not spend anything beyond bare basics it’s not enough.

What I notice is most regular things in life are negligible in cost. Unless you go insane.

The only meaningful spend is mortgage and big luxuries like cars and watches.

But if you only have $2M net and $1M income (good), then you stand the risk of getting a mortgage too big that has risk down the line or too small of a mortgage where you’ll outgrow it in 1-2 years.

I’d recommend you do nothing, stabilise for 1-2 years before making big moves.

What specifically do you do in Finance?

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You only get one life, as long as you aren’t living in debt, and you have a comfortable nest egg for anything extreme that could happen, live your life. Money comes, and money goes; it’s a man-made concept to begin with, obviously you want to avoid becoming homeless due to bad financial decisions, etc., but as long as you are being smart, you should enjoy your life. Also, at that salary, I would strongly suggest looking into ways you can give back if you feel comfortable financially otherwise!

I don’t think about it relative to income growth, I think of it relative to investments:

1) Get financially independent at your current expenses (have investments 25x your annual spending). That gives you the freedom to maintain your lifestyle and never get income again.

2) Increase your spending proportional to your net worth increasing to keep yourself financially independent.

At 110k and a 600k income after taxes, you should be able to hit #1 in like 3-4 years staring from zero (which I assume you aren’t), then have a pretty quick path to doubling or tripping spending along with net worth.

(And TBH, more spending on top of 110k for a single person even in a HCOL area will likely not increase tour happiness much or make your life much better m. Knowing you’ll be totally fine regardless of what happens with your job in the future and with the option to do something lower paid and lower stress will make life better)

Congrats!

How likely are you to lose your job?

How easily can you cut back on your spend if you lose your job?

How long do you think you can keep working?

If you do lose your job, how comfortable would you be with finding a new one, and how long could you handle being unemployed?

That said, there's a point at which spending more won't affect your long term goals in a meaningful way. I'd crunch those numbers and see what you personally are comfortable with.

I’ve had somewhat similar income growth, though MCOL with a bit less than 1M. My philosophy is to maintain spending at a level where if something happened to my job that pays in the top =<5% of IC tech jobs, I could pick up a more typically paid job in my field and still not worry about money all that much and just reduce savings rate. If it turns out that I was worried for nothing, I’ll end up in a position where I can quit, start a business, or do something else for work.

I don’t find that saving most of my income has been a drag on lifestyle. My wife and I can vacation and eat out how we want, have hobbies, and have a decent house and a nice car we bought a couple years used. The rest feels like pointless lifestyle creep that I’m not particularly interested in.

I may be weird but when I talked to my partner in our 20s we made a goal to restrict significant lifestyle creep until we could hit coastfire. That way if anything happened we would always not regret looking back that we couldn’t make the numbers.

That’s not to say we thought less saying yes to a fun experience or meal. We def were ok paying for more PT when injured and invested more in our health

I’m ~29 and have the same comp as you, also in finance. My spend was ~80k this year and I have ~ 2.2mm NW. I might spend a little more next year, but my main goal really is to fat fire by 40.

My advice changes depending on marital status, parenthood status, and job security….

If your job is insecure (i.e. you could lose your job and struggle to find comparable salary replacement) then only increase your spend commensurate with the increase in dividends generated by your taxable brokerage portfolio. This has been my rule of thumb to stay disciplined.

Since you’re single no kids, that means you can and should live more frugally at this stage in life, even if your income has spiked. You never know what lies ahead for you….

If lifestyle creep sets in now…. just wait until you have a wedding / nanny / daycare / morgage / 529s / private school tuition / college expenses / vacations for a family of 5. These are all big ticket items. You don’t want to feel like your lifestyle is backsliding when you get married and have kids!

Spend an extra $100K, and aim for spending on experiences over buying goods

Don’t base spending on income as it can always be temporary. Base it on your net worth. I find the 0.01% rule as described by Nick Magiulli to be most helpful as it is a good starting point of how much you can expect to spend without running into trouble. The name of the game is to not commit too much mental bandwidth to spending which allows you to do other, more productive or fun things with that mental capital.

I increase my spend, but not to the limit of the 0.01% rule. I’m having a bit of fun with it kind of like a flexing of my mental saving muscle. My goal right now is to spend in total, less than 10% of income. An adult marshmallow test. The things I want to buy in the future are far more expensive (architectural home) than what I can afford now and I will need compound interest working in my favor to get to level 5 of Nick Magiulli’s wealth ladder, which is the $10 - $100M net worth range.

I somewhat trick myself to be satisfied with simple things. Like the Joker says in the dark night, "You see, I'm a guy of simple taste. I enjoy dynamite, and gunpowder, and gasoline! And you know the thing they have in common? They're cheap!", before he burns a mountain of cash. You have to define what consumption makes you happy and develop conscious spending habits as described by Ramiro Sethi. Spend extravagantly in what you love while mercilously cut costs on everything else. If what makes you happy is collecting Lamborghinis, you’re going to have to make a lot more money lol. Fortunate for me, it’s good food, exercise, health and travel while I cut mercilously on cars.

Other rule of thumb to follow with splurges and bonuses is to be able to afford the splurge, twice. One half of the money goes into savings/investments which allows me freedom to spend on whatever it is I desire. Another rule of thumb that alleviates the mental bandwidth/anxiety of lifestyle creep.

Hope this helps and Merry Capitalist Christmas!