How to be a super saver

Yeah, come on in. What about your life makes you the most happy? We just get to do the things that we enjoy. What was it that made you supercharge saving for retirement? Why wouldn't we save more to then give us more flexibility in the future? How can I live like a super saver? Be intentional with your spending and your saving, and then invest in the longer term. Make our money work harder for us. We're building financial freedom and then using that financial freedom to design the life that we want. [MUSIC PLAYING] Live like a super saver. How to save and invest for the life you want now and in retirement. Hi, I'm Ally Donnelly, and this is Money Unscripted, a podcast from Fidelity. Financial freedom means different things to different people. What does it mean to you? Could you travel more, remodel your home, leave a legacy? To help bring these dreams into focus, we're going to map out five strategies of a super saver. But first, we're going on a road trip with Jess and Corey. This couple made saving a strict habit, paving the way to live a life they love. [BIRDS CHIRPING] Come on, man. Let's go. We've put 40,000 miles on the van in the last two years. Come on, let's get in. And loving every minute of it. We love being able to explore new places. We've been on the coast where we see the beach. Colorado, North and South Dakota. Park next to lakes. Do stand up paddle boarding. We basically go anywhere and everywhere in this van. So how do they afford to live this life they want? Let's hit reverse and head back to the beginning. We started out freshly out of college, making 30 grand a year, combined. It was not enough. And we've always had this commitment that we weren't going to go into debt. And so when we increased our income, we had built some of these habits of staying within our means. We started to then say, OK, can we actually contribute to a Roth IRA or actually contribute more to my 403(b) at the time. And why? What was the driver? I think it was more of financial security. It was certainly some fear motivation, of I want to make sure that we're OK in our older years. And so it was like, well, why wouldn't we save more to then give us more flexibility in the future? [MUSIC PLAYING] While on this path to building their wealth, an unexpected turn. I had a mental health crisis, which really shifted everything for me, and I started to redefine what does success mean? It was being intentional, figuring out what I wanted, what I valued, and living my life according to that. So you started living more intentionally with your spending and saving and goals. It was an intentional choice to work less and have a better life, and a byproduct of that was spending less without even realizing it. During that time, we realized all of this money that we had been saving, that we can actually use it to improve our lives right now. Meaning that if we didn't save another-- save or invest another dollar for retirement, we'd still be able to fund our traditional retirement age from 60-ish on. So you could coast off? We could coast. And so we didn't fully commit to that. Like, we still wanted to save some because that's kind of like what was ingrained in us from those early days after graduating college. To live this life by design, as Jess calls it, meant big changes. Awesome. So let's come on in and I'll show you around. Jess transitioned first to part-time work, then started her own business helping other people with their financial goals, a venture Corey has now joined as well. We work remotely on our own business, which allows us to be location-independent and live and work wherever we want. So I think we no longer consider ourselves frugal. It's more of like spending along with our values. Do you love your life? I do. Life is just more peaceful and calm and feel really content. I think we just have shared goals, right? And we're really intentional now. It's not like following a certain script. It's kind of creating our own path. [MUSIC PLAYING] Safe travels to Jess and Corey wherever they wind up next. I want to bring Gina Gillespie into the conversation. She's a VP, Financial Consultant here at Fidelity. Gina, welcome. Thank you so much for having me today, Ally. You hear Jess and Corey's story. And who doesn't want to have enough money to live the life they want? But I can't imagine that looks the same for everybody. Oh, absolutely not. I have different clients come into my office every day. And their goals and their dreams are different. Not everybody wants the same things. You see someone like Jess and Corey, these savers who are aggressively saving for their specific goals, and that's something that they want to do, right? But someone else may come in and have very different hopes and dreams. And I think that's the thought between Jess and Corey, is that they're reaching their goals. Well, what are other people want to do, and how do we reach those goals right for them? Very different, could be very different. So Corey and Jess clearly developed a strong habit of saving early on. But there are super-saving strategies any of us can use it at any age. So we're going to talk through five of them-- Automate, budget, goals, benefits, and lifestyle. Let's start with automating. Perfect. Automation I see as one of the most important things to be very intentional. Intentional of how we're saving and simplifying something for yourself. I automate so many things in my life, Ally. I don't know if you do. But I have all the household goods that I need delivered directly to my door. I don't even think about it. So why wouldn't we prioritize things like savings and making that simple for ourselves. Every time we get a paycheck, part of it goes towards our savings. Every time that we think on a monthly basis, did I hit that goal for the year? Did I maybe get my emergency account where I need it to be? Instead of having to think about it, I think we are much more successful if we just set it and forget it. For both saving and investing, I imagine. Definitely. And what about baking in automatic increases? Definitely. So in a 401(k) plan, just to give you an example, or a workplace plan, sometimes they'll have options just to say each year increase the amount of savings I do automatically. Don't even tell me I'm doing it. And that makes it much easier because then you don't even have to think twice. Yeah, I love that. OK, number 2, make a detailed budget. I am really a stickler for the details when it comes to a budget, and sometimes people don't like the term budget. So I'll say cash flow analysis because it can seem constraining. But when I think of a budget, it allows us to then say, where are we spending money? Sometimes there's things on that list that are the essentials or the I have to pay for these things, I have to-dos. And then there's other discretionary items. Like maybe, I went out to dinner how many times last month? So when we start to really look at where we're spending and we get into the details, we're able to really then see, is that really intentional? Is that what I meant to spend? When we're trying to figure out ways to save better, sometimes looking at where we're spending first, we have a lot of control over that. So when we're being really intentional, I think it's a lot easier to look at your expenses and figure out if there's places we want to cut when we look at line item by line item. Rather than saying, I spend x amount on a credit card every month and that's just what I spend. Right. Well, are you talking to me? I wanted-- Talk to myself, too. No, you're super organized. Your dog food's coming every week. I want to dig in on budget. So Jess and Corey, obviously, they're very focused on living, spending, saving intentionally. But what if we are not Jess and Corey? What if we are not Gina? Give me some motivation to create that budget and stick to it. Definitely. I think we can control our expenses, but we can't always control our income, right? Maybe you work for a company and the bonuses fluctuate every year. So-- Or there is no bonus. Or there is no bonus. So you think about expenses. And when you put pen to paper, how much does my essential expenses, like running my household, paying for health care, paying for food, things I have to do. And then what are the discretionary items? Maybe you give yourself a budget each month for discretionary things, and then you can pick and choose. Is it, I want to go to that concert. I really want to go out to dinner with friends. I want to do a lot of things. But if you can set limitations to what you will spend, I think it gives you a lot easier way to control the spend better, to know what you're spending, and then to control it on things that may be important to you or may not be important to you. So when we see savers, in general, probably the hardest thing is just knowing what you spent. And really trying to look at those expenses very closely, it'll help you a lot better to understand where you can pivot a little bit. It's interesting because sometimes I talk with friends and they feel like budgeting is like rudimentary for their younger self, but then they have kids and they have sports and they have families. And they're like, it is what it is. It's so important to budget any time. And I think we become busy, and then we don't even know where we're spending. Yeah. It's actually puts more stress, I think, on people when they don't know. If you can really put pen to paper and understand where we're spending, I think that it can help you to be more intentional. I think it can help you to be better at saving. I think it also can help you to reach your goals or know where you stand. Yeah. I think sometimes people come in and I'll say, how much do you spend? And they don't know. And that's stressful. That can be stressful. They just know that they bring in enough income, but they don't know what they spend. They're covering it. But is that the best? Let's get to number 3 on the list. Set goals. I mean, obviously, we all have different goals. For a lot of us, it's we want to travel more. It might be buying your first home or a second one or retirement. Talk me through how I should be thinking about that. I think when we set goals, we can be much more intentional and motivated to save. Not just saving to save. We are saving to hit a specific goal. Yeah. I think setting goals are the best way to then understand what are the things I want to accomplish, and then how can I achieve them? I like a couple little tricks to do. So let's say we have one account that's just our emergency account. We want to make sure that we have enough money there for just the things, just in case something happens. That three to six months. Three to six months. Yeah. Essentials. Lose my job. Other things that may happen. What if your next goal is something shorter term though? In the next couple of years, I'd love to go on a big bucket list trip. I'd love to have enough for a down payment on a summer home. Something really, really-- as I think about it, something you really love to do, but it's shorter term. Maybe we open an account, a different account, we put it in a money market, CDs, something fixed that can't really fluctuate in value. And we see every month, hey, look at that account grow. After a couple of years, I can now do that thing that I'd like to do. And it's not co-mingled with all the other accounts, and we kind of know where we stand. Yeah. And then let's say there's other money that we have saved for longer term. So I always say saving and investing is different. Saving is there for us for the things that shorter term. And then invest in the longer term. Make our money work harder for us. Make it grow for us over time. The longer term accounts. Number 4, taking advantage of available workplace benefits. Tell me what I should be looking out for here? Have you ever heard of company match? So companies may match a 401(k) plan. It's just like free money. So make sure that you see what your company contributes. And do at least that as a minimum. One company might do 3%, another might do 7%. Right. OK. What about other benefits that companies may have? Maybe you have a gym membership and there's gym reimbursements. Maybe you're newly out of college and there's college-- they pay back student loans. Student loan debt. Yeah. Ask your company, when you're interviewing at even companies, ask them some of their benefits that you may not know, or when you have open enrollment. It could be other benefits that can help you save money or things that you're already spending money on that can help reimburse. So I think company benefits are a really great way to save in places that you didn't even know that you could be saving. Number 5, avoid lifestyle creep. As we earn more, it gets easier to spend more. So talk to me about sticking to your budget and sticking to your goals, even if you're making more. So you brought it up earlier, and I loved. When you make more money, sometimes that's when we stop budgeting. Yeah. So you may make more. That doesn't mean you have to spend more. You could save more, right? And you could reach some of those goals that you want to do. But lifestyle creep can be easy because we just don't have time. All of a sudden, we get busier, and the next thing we're spending money in places we didn't even know. Define lifestyle creep. So what I think of lifestyle creep is that you make more money. And then you spend more money just because you made more money. Right. There's more there. Yeah, there's more there. So you're like, oh, I'll do all the things I've ever wanted to do. How do I avoid it? Let's go back to the fundamentals. Which was let's make a budget. Let's figure out what we're spending. Let's figure out what we need to spend. So rule of thumb, 50% of what you make should go towards your essential expenses. OK. So 50% towards essentials. But you make more money. You may not have that much of essential expenses. That's when you can be intentional. Let's go back, budget. Let's go back to goals. Oh, you know what, Ally? I've always wanted to maybe retire earlier or go on that trip. Or my children are going to go to college soon. I should probably stuff more money away for that. Yeah. So when you think about lifestyle creep, that means, hey, I could just all of a sudden spend more and not even realize it. Yeah. So let's take a step back and say, let's still make that budget or cash flow as need and then make sure we're automating the savings. And if you don't have it in your normal bank account, sometimes you don't spend it. To that end, you talked about benefits earlier. So super savers might be in a position to max out their 401(k), right? Max out their 401(k). If I'm someone who has done that, what could I consider next as a goal or as some place to put that money? That's a great question. Get this all the time. So one of the things to think about is a health savings account. So if you have a high deductible plan, health care plan through your employer, health savings accounts are another place where you can save. You get a tax deduction on the way in. Sometimes your company matches. So we talk about benefits. And then you can use that money now for health care or later. You could use it later in retirement. So it's such a flexible account to use, a great account to use when you take the money out. If it's used for those health care expenses, it may be tax-free too. So so many different benefits. OK. What other accounts? Roth IRAs are a great place. Now, there are income limitations. And there's lots of rules around them. So you may not be able to contribute to a traditional-- just a Roth IRA. There's also a backdoor Roth IRA. So there's lots of different rules and ways you can save. But that could be another place, a Roth, you put in after-tax money and it grows and comes out tax-- it's possible it'll come out tax-free later. Yeah. So just a different type of account to save and different taxation which is always nice if you have that diversification later. Those are both investing vehicles. But what if I'm focused on say, brokerage. Yeah. So brokerage could be a non-retirement account. And I say retirement. Retirement accounts oftentimes have age restrictions or rules around them. A brokerage account you could save as much as you want in a non-retirement account. Usually they could be just titled in your own name. And those accounts give you a lot of flexibility. You can use them now. You could use them for any goal that you may have. You can keep short term and cash inside of those accounts. You can keep investments in those accounts and allow them to grow. And think about a super saver like Jess and Corey. They could use some of that money now if they ever needed to if something came up, or they can leave it for later. So it's just a very flexible account that doesn't always have to be for the long term, but it can be. All right. So let's just recap those fundamental things. If I'm watching this, I'm going to take some very clear takeaways. What do you hope those to be? Automate what you're doing. Come up with a budget. Sit down and in all the right places. I think the most important thing is being intentional and knowing what you spend and knowing what you save. And have goals, right? Talk about them. I think it's OK. Sometimes we think about talking about money, isn't it? It's taboo. Yeah, right. Obviously, this is what we do for a living. So talk about it. I think whatever your goals may be, as different as they can, you do these fundamental things. It's very surprising how much you can achieve if you just put your mind to it. Put your mind to it. I love it. Gina Gillespie, thank you so much. Thanks, Ally. If you want to live, save, invest like a super saver, we've got some great resources for you on our website. It's Fidelity.com/MoneyUnscripted. Be sure to like, follow, subscribe to the podcast. And we'll see you next time on Money Unscripted. It's your life. Get your money's worth. [MUSIC PLAYING] [Disclosures] Investing involves risk, including risk of loss.     The information provided herein is general in nature. It is not intended, nor should it be construed, as legal or tax advice. Because the administration of an HSA is a taxpayer responsibility, you are strongly encouraged to consult your tax advisor before opening an HSA. You are also encouraged to review information available from the Internal Revenue Service (IRS) for taxpayers, which can be found on the IRS website at IRS.gov. You can find IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans, and IRS Publication 502, Medical and Dental Expenses, online, or you can call the IRS to request a copy of each at 800-829-3676. With respect to federal taxation only. Contributions, investment earnings, and distributions may or may not be subject to state taxation For 2025, eligibility for a full Roth IRA contribution is available to joint filers whose 2025 MAGI is $236,000 or less ($236,000-$246,000 partial contribution). For single filers, full eligibility is available to those whose 2025 MAGI is $150,000 or less ($150,000-$165,000 partial contribution). For a distribution to be considered qualified, the 5-year aging requirement has to be satisfied, and you must be age 59½ or older or meet one of several exemptions (disability, qualified first-time home purchase, or death among them). Information presented herein is for discussion and illustrative purposes only and is not a recommendation or an offer or solicitation to buy or sell any securities. The views and opinions expressed by the Fidelity speaker are his or her own as of the date of the recording and do not necessarily represent the views of Fidelity Investments or its affiliates. Any such views are subject to change at any time based on market or other conditions, and Fidelity disclaims any responsibility to update such views. These views should not be relied on as investment advice and, because investment decisions are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity product. Neither Fidelity nor the Fidelity speaker can be held responsible for any direct or incidental loss incurred by applying any of the information offered. Please consult your tax or financial advisor for additional information concerning your specific situation.   This podcast is intended for U.S. persons only and is not a solicitation for any Fidelity product or service.     This podcast is provided for your personal noncommercial use and is the copyrighted work of FMR LLC. You may not reproduce this podcast, in whole or in part, in any form without the permission of FMR LLC.    Fidelity does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation. The third-party contributors are not employed by Fidelity and did not receive compensation for their services.    Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917    © 2025 FMR LLC. All rights reserved.    1188983.1.2