There is a point where comfort begins to corrode ambition, so you’re to find the equilibrium between the two.
Spending money on the joys of life decreases future earning power, but having a taste of the finer things of life can make one work harder. When you’re on the line, out of fear you work harder, but you tend to get too comfortable with a higher bank balance.
So where can we draw the line where both ambition and future earning power increases are maximized?
For an income around 100K for a single young person, a 50% savings rate seems satisfactory, as (0.5)(6000) = 3000, which is a liveable amount with discipline, where 6K is the approximate net income. It gives very little leeway for luxuries, so 33% is more flexible. For myself, 3K/month savings is near the bare minimum for my goals, so I’m required to stick to around 50%.
A even lower rate of 20% saving would provide even more leeway, but would slow progress far too much if you want to break the employment cycle within 10-15 years. Even at 100K and single status, over 10 years this is only 240K more in assets- neglecting principal residence, compounding and associated investment income increases. So, 50% would provide more appropriate progression- making this figure 420K- for which compounding and investment power is amplified.
I would like a nicer car and place, which may consequently increase my expenditure monthly by around 3000. This would then require about a 6000 increase in net income per month, so a little north of about 100K in gross income over the year. With a 33% saving rate, perhaps around 4500; some north of 80K gross income extra. I don’t see these figures coming anytime soon. Regardless, I’ll keep looking at the nice things to motivate me every morning and work harder for the light at the tunnel.