Some people spend every penny they earn, never putting any money aside for a rainy day.  Worse, they don’t put anything aside for their retirement.

There’s another side to that coin.  The person that saves everything.  Having some extra money in the bank is a good thing, but is it possible to save too much?

Are You Living Debt-Free?

Some level of debt is reasonable.  Most people can’t afford to buy a home upfront, so a mortgage is usually a given.  You probably also have student loans, an auto loan, and possible some credit card debt.  Don’t save so much that you neglect to pay off your debt.  Generally, you should pay off highest interest debt first which usually means credit card debt, then auto loan, followed by student loans, and mortgage.

What Are You Saving For?

Saving is good, but what’s the point of saving for the sake of saving?  When you’re putting money into your savings account each month, you should have a savings goal in mind.  Not only will that goal give you something to work toward, it will also let you know when it’s ok to stop saving.

Enjoy the Money You Make

What’s the point of going to work everyday if you never get to enjoy the fruits of your labor?  It’s okay to spend money on things you like, whether it’s going to see a movie, enjoying a new restaurant, or buying the latest electronic gadgets.  You just have to do it in moderation.

If you’re putting aside money each month for retirement, you’re making payments toward your debt, and you already have an emergency fund, doing a little frivilous spending is acceptable.