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Smart Investors are Smart Spenders

All investors have different Amounts of Money to Spend & Save!

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Indexperts Smart Spenders

How much should I save to meet my goals?

Many investors ask themselves "how much should I save to meet my goals?" The truth is that it varies depending on goals, time horizon, risk tolerance, income, spending, and more. Perhaps a better question to ask is "am I saving consistently?" Regardless of how much saving is needed, committing to consistent savings is the first step towards building long-term wealth and financial independence.

One rule of thumb is the 70/20/10 approach. Earmarking 70% of income towards spending and 20% towards savings will usually bring a Smart Investor within range of their goals while leaving an additional 10% for tithe or charity. Of course, this is not always possible. If spending is above 70%, the investor should consider reviewing their expenses to see which items can be limited or removed. If 20% in savings still can't be achieved, the investor should review their debts, income, and expenses to see what changes are necessary to meet their goals. It may take years to adjust income, expenses, and goals so that the investor's financial future is sound, but the most important thing is to begin saving consistently.

Spend 70%Save 20%Give 10%

Paying off high interest debt.

Once the emergency safety net is built, the investor should consider aggressively paying off high interest debt. Albert Einstein once said "compound interest is the most powerful force in the universe. He who understands it, earns it; he who doesn't, pays it". It is unreasonable for someone to begin investing if they have excessive high-interest debt. Credit cards often have interest rates exceeding 20%, and the Smart Investor knows that they won't reliably be able to earn that sort of return in the market. It can be disheartening to be paying off debt rather than building wealth, but it can be helpful to think of paying an additional $300 towards a credit card at 20% interest as a "guaranteed" 20% return. That 20% won't accrue in your asset accounts, but it has a similar effect on net worth.

Build your budget.

Building and reviewing a monthly budget is an exercise that can benefit investors regardless of their amount of wealth. Putting this information to paper allows the Smart Investor to track spending, monitor the changes in prices and/or spending habits, and investigate opportunities to reduce spending and/or increase savings. Identifying where money is spent makes the Smart Investor more deliberate with their funds and ensures they are on the right track.

Paying off high interest debt.

Once the emergency safety net is built, the investor should consider aggressively paying off high interest debt. Albert Einstein once said "compound interest is the most powerful force in the universe. He who understands it, earns it; he who doesn't, pays it". It is unreasonable for someone to begin investing if they have excessive high-interest debt. Credit cards often have interest rates exceeding 20%, and the Smart Investor knows that they won't reliably be able to earn that sort of return in the market. It can be disheartening to be paying off debt rather than building wealth, but it can be helpful to think of paying an additional $300 towards a credit card at 20% interest as a "guaranteed" 20% return. That 20% won't accrue in your asset accounts, but it has a similar effect on net worth.

Build your budget.

Building and reviewing a monthly budget is an exercise that can benefit investors regardless of their amount of wealth. Putting this information to paper allows the Smart Investor to track spending, monitor the changes in prices and/or spending habits, and investigate opportunities to reduce spending and/or increase savings. Identifying where money is spent makes the Smart Investor more deliberate with their funds and ensures they are on the right track.


If you're looking for education on budgeting, spending, or building a methodical approach to saving, look no further than Linden Thomas & Company's Investor institute. There you'll find a repository of more than 30 years of research and insights. By providing these tools, we aim to make every client a Smart Investor.

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