Just Keep Buying Summary

How much should you save, spend, or invest? It depends on your income, goals, and what makes life meaningful for you.

1. Adapting Savings to Income Levels

Saving rates are often seen as fixed percentages of income, but Nick Maggiulli argues they can't be one-size-fits-all. Different earning levels give people varying capacities to save. High-income earners save a larger portion of their money, while those with lower incomes save far less. This disparity isn’t about morals or discipline but about what’s possible given their financial means.

Maggiulli points out that life’s phases significantly impact saving potential. For instance, younger people typically have lower incomes but room to grow financially. In contrast, established professionals might have more income but higher expenses tied to family or lifestyle. Instead of using rigid savings rules, he suggests treating savings like Alaska’s Dolly Varden charr fish: save more during times of abundance and less during leaner periods.

By adopting this flexible approach, people free themselves from the guilt of not reaching arbitrary savings benchmarks. This strategy acknowledges the realities of fluctuating income and expenses rather than pushing unattainable ideals.

Examples

• Low-income earners in the U.S. save only about 1% of what they earn, while top earners save upwards of 25%.
• A young graduate focuses on paying down loans before worrying about significant savings due to a modest entry-level salary.
• People who experience windfalls, such as bonuses, can amplify their saving efforts during these beneficial periods.

2. Calculating Realistic Savings Goals

Maggiulli emphasizes the importance of understanding your financial picture before setting saving targets. Saving is a mathematical question, not a moral one. You can't save what you don’t have, and most people need a clear view of their income and spending habits to decide their goals.

Start by assessing your income against fixed and variable expenses. Fixed costs like rent and bills are predictable, whereas groceries, entertainment, and hobbies need estimation. Once you've subtracted spending from your income, the remainder reveals how much you can realistically save.

For retirement planning, he suggests thinking long-term. People accustomed to high living standards may need 25 times their annual expenses saved. Others with simpler lifestyles can make do with less. It’s not about extremes but tailoring plans based on what you realistically spend and want for the future.

Examples

• A $4,000 monthly income with $3,000 spent leaves $1,000 for savings.
• An individual spending $50,000 annually may aim for $1.25 million in retirement savings using the 25x rule.
• A detailed personal budget helps someone see they overspend $300 a month on dining out and adjust to allocate more for savings.

3. Growing Your Wealth Requires Investments

Maggiulli argues that saving alone rarely leads to significant wealth because there’s a ceiling to cutting back expenses. To truly grow your wealth, you must focus on increasing income, and investing is one of the most effective methods.

Citing the historical performance of stock markets, he shows that most major markets rise over time. While they occasionally dip, the long-term trajectory tends to be upward. Consistently investing, even during sluggish market periods, brings cumulative returns that far outweigh inflation’s effect. This “just keep buying” principle applies across varied investments, including stock indexes that diversify risk.

Even in lackluster markets like Japan’s, systematic investment strategies have shown better long-term results than avoiding investments. Steady inputs compound into meaningful growth, especially with reinvested earnings.

Examples

• Jeff Seder's discovery about horse racing success mirrors this idea: understanding core factors, like market trends, leads to informed bets.
• A $1,000 annual investment in the Japanese market from the late 1980s to 2022 would have grown from $33,000 to $59,000.
• Warren Buffett underscores that enduring short-term swings pays off because most markets rise over decades.

4. Reconsidering Debt’s Role

Debt often comes with a stigma, but Maggiulli challenges the idea that all debt is bad. He uses examples from nature, such as desert plants delaying reproduction to ensure survival, to show how leveraging debt strategically can strengthen financial resilience.

For someone with limited savings, prioritizing cash flow over immediate debt repayment can be smart. Keeping extra funds for emergencies provides a safety net, even if it means carrying more debt in the short term. This strategy, known as bet-hedging, helps mitigate risk in unpredictable financial environments.

The key is to ask whether the debt supports future growth, helps achieve goals, or merely increases liability. Thanks to its flexibility, debt becomes less about morality and more about serving practical needs.

Examples

• A person keeps cash for potential medical emergencies instead of paying off $1,000 in credit card debt immediately.
• A small business owner borrows to buy equipment that increases productivity and profitability.
• Homebuyers often use mortgages because paying upfront isn’t feasible, yet the debt leads to long-term asset ownership.

5. The Myth of Guilt-Free Saving

Many people today experience intense guilt tied to spending instead of saving. Cultural messaging often celebrates extreme frugality, turning everyday purchases into stress points. Maggiulli argues you can't save every penny, so it’s better to focus on meaningful, intentional spending.

Research shows that financial stress can outweigh the benefits of saving when taken to extremes. Instead, align spending with long-term happiness by focusing on purchases that boost autonomy, mastery, or purpose—key motivators that drive fulfillment.

For example, instead of cutting morning coffee from your routine after hearing it’s a frivolous expense, evaluate its role. If it genuinely keeps you productive and energized at work, it’s actually supporting your career goals.

Examples

• A survey cited half of Americans as severely anxious about their savings, showing the emotional toll of financial uncertainty.
• A $4 latte that improves work performance could have long-term returns by helping someone excel at their job.
• Brookings Institute research found stress from unmet savings goals often cancels out the benefits of saving.

6. Context Determines Good and Bad Financial Choices

Maggiulli stresses the importance of context when making any financial decision. Blanket statements like “all debt is bad” don’t consider variables like income, goals, and individual circumstances. In reality, there is no universal rulebook that applies to everyone.

For instance, debt that increases income potential—like a student loan—can be good. On the flip side, putting luxury items on credit without a repayment plan can be harmful. Similarly, frugality isn’t always wise if it comes at the cost of professional or personal progress.

This nuanced approach encourages smarter use of financial tools tailored to personal situations instead of following generalized advice blindly.

Examples

• Credit card use helps a low-income earner cover essential repairs they couldn’t otherwise afford.
• A young professional decides against a high-end apartment lease in order to prioritize funding further education.
• Context-dependent decisions help people understand savings rates fluctuate with life events like marriage or job changes.

7. Focus Investment on What Matters

Maggiulli advises spreading risk by investing in global indexes rather than relying on a single country or sector. This reduces exposure to downturns in isolated markets, helping portfolios weather adversity. Over decades, these diversified investments almost always pay off.

By focusing on broad indexes rather than chasing individual stocks, you minimize the chances of significant losses. You don’t need to be an expert stock picker if you commit to the simplest, most reliable investment strategies historically proven to deliver results.

Examples

• A global index fund includes companies like Apple, Toyota, and Nestle, balancing risks across industries and geographies.
• Historical data reveals diversified funds outperform most targeted stock selections over time.
• Even during massive downturns, index funds recover faster due to their broad market alignment.

8. Understand the Trade-Offs of Spending vs. Saving

Every dollar spent could be saved, but what’s the cost of hoarding money at the expense of experiences or needs? Maggiulli emphasizes striking a balance—financial security matters, but so does living well and enjoying life.

He encourages evaluating whether spending serves personal, emotional, or professional goals. When aligned with values, spending can be empowering instead of spending every cent with guilt.

Examples

• A person splashes out on a course for a passion project, finding it boosts personal growth and mental satisfaction.
• A retiree moves into a dream home, despite concerns it might delay financial milestones, because it enhances quality of life.
• Investing in travel creates memories that far surpass the value of a temporary boost in savings.

9. The Real Purpose of Money

Maggiulli reminds readers that money is a tool. Its ultimate purpose is to help you create a life aligned with your goals and values, not merely accumulate wealth for its own sake. The challenge lies in deciding what sort of life you desire and balancing saving, spending, and investing to achieve it.

He advises reflecting on what brings fulfillment—be it family, career progress, hobbies, or social causes—and using money accordingly. This alignment reduces stress and increases satisfaction in financial decision-making.

Examples

• Someone spends on philanthropic efforts, finding purpose in giving back to their community.
• A family invests in a home near a good school district to prioritize children’s education.
• A professional funds their small business because it aligns with their passions and values.

Takeaways

1. Save more in times of financial abundance and feel free to scale back during lean times. Flexibility is key.
2. Simplify financial planning by naming your goals, creating an honest budget, and sticking to steady investment habits.
3. Spend on what truly aligns with your long-term happiness, purpose, or growth, and let go of guilt around well-thought-out purchases.