Can I Save More Money and Still Have Some To Spend?

Our editor-in-chief helps a reader 'make cents' of financial priorities.

Illustration of a person with shopping bags

The Balance/Alice Morgan

Dear Kristin,

I have a fair amount in my Thrift Savings Plan (TSP). How can I save a little more money but still have some spending money?


Saving for Retirement Late

Dear Late,

You’re essentially wondering how you can balance saving for retirement while still keeping money for yourself to spend on things you need or things you want. This is honestly one of the trickiest tightropes to walk when it comes to finances. How do you spend money to enjoy your present while also saving some money to make sure you will be able to enjoy your future? 

The good news is that you can include “fun” and “spending money” in your budget, while also earmarking a portion of your income for retirement. The easiest way to do this is by following the 50/30/20 formula for budgeting, where you set aside 50% of your monthly income on your needs, 30% on your wants (like going out with friends) and 20% for your future, whether that’s to buy a house or for retirement.

You don’t have to stick to this formula, and depending on your life circumstances it might not be best for you. Maybe you don’t need to spend so much on your needs, or even your wants, allowing you to put more money toward the savings and retirement category in your budget. 

But you’ve given me some clues—like your sign-off name—that perhaps you haven’t saved as much as you need or want for your retirement, and that maybe, the funds you have in your TSP aren’t as much as you’d like. (For any readers that don’t know, a thrift savings plan is similar to a 401(k), but for government workers). 

If you feel that way, you aren’t alone. People regularly underestimate how much money they will need in retirement, and don’t save enough. And according to a survey by the Federal Reserve, only 36% of Americans felt their retirement savings were on track to meet their goals.

So here’s what you need to do now. You need to create financial goals and decide what is a priority. And you’ll have to accept this hard reality: while you might be able to increase your retirement savings while also going out to dinner every once in a while, you probably can’t spend as much as you want right now on entertainment while also saving as much as you need for retirement. Don’t feel bad about this. Most of us without the salary of a movie star or famous athlete also can’t do everything we want all at once. 

So sit down with your finances one weekend, and promise to be kind—but honest—with yourself. Take a look at your retirement accounts. Are you on track to have enough money for when you retire? Do you know how much money you’ll need or want? One school of thought says that you should save enough that you can spend 80% of your current income each year in your retirement. And if you need more help, take a look at one of these retirement calculators

If the answer is no, that you don’t have enough, then you’ll have to decide which is a priority: your future or your present. Once you decide that, you can make some swift changes to your budget to start funneling more money toward that goal. 

But remember: just because you make your retirement a financial priority doesn’t mean that you can’t put any money aside for spending money to go out with friends, or buy a new outfit. Complete austerity is, in my opinion, a recipe for failure, so do give yourself some opportunities to have fun. It just might mean you won’t be able to spend as much as you’d like today while you’re saving for your future. 


If you have questions about money, Kristin is here to help. Submit an anonymous question and she may answer it in a future column.

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  1. The Fed. "Economic Well-Being of U.S. Households in 2020 - May 2021."

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