Main Argument 2: Save What You Can (It’s Probably Less Than You Think)
In the world of personal finance, advice on saving is ubiquitous, and it almost always comes in the form of a rigid, prescriptive rule. Admonitions to “Save 20% of your income,” or to have “1x your salary saved by age 30,” are staples of financial literature. These rules are well-intentioned, offering a simple benchmark in a complex world. However, in “Just Keep Buying,” Nick Maggiulli argues that this one-size-fits-all approach is not only misguided but can be actively harmful. He posits that the single best piece of savings advice is far more flexible, personal, and psychologically sustainable: Save what you can. This philosophy is rooted in a deeper understanding of the realities of modern financial life and the biological principles of adaptation. It replaces a static, guilt-inducing target with a dynamic process that aligns with the natural ebbs and flows of one’s income and expenses, ultimately leading to less stress and more consistent long-term success.
To fully grasp the power of this argument, we must first dismantle the flawed assumptions underpinning conventional savings advice, then explore the elegant biological analogy that provides a new framework, understand the profound psychological benefits of this approach, learn the practical method for implementing it, and finally, consider the counterintuitive reality that many people may actually need to save less than they fear.
The Flawed Foundation of Traditional Savings Rules
The common rules of thumb for saving, like the 50/30/20 budget (50% for needs, 30% for wants, 20% for savings), are built on two fundamental assumptions that have been increasingly invalidated by economic data.
First, they assume that income is relatively stable over time. The idea of saving a fixed percentage of every paycheck presupposes a steady, predictable paycheck. However, research leveraging the Panel Study of Income Dynamics (PSID), one of the longest-running household surveys in the world, demonstrates that family income volatility has significantly increased over the past several decades. The author points to a 25% to 50% rise in this volatility from the late 1960s to the mid-2000s. This trend makes intuitive sense in the context of our evolving economy. The gradual shift from single-income to dual-income households, while boosting total income, also doubles the risk of a job loss affecting the family unit. Furthermore, the rise of the gig economy, freelance work, and more frequent career changes means that the steady, linear income progression of previous generations is no longer the norm for many. A rigid savings rule becomes untenable when income can fluctuate dramatically from one year to the next.
Second, and more critically, they assume that people at all income levels have a similar ability to save. This is empirically false. The ability to save is not primarily a function of discipline, but of income. Maggiulli cites research from economists at the Federal Reserve and the National Bureau of Economic Research that paints a clear picture: the rich save more. Not just in absolute dollars, but as a percentage of their income. Their estimates show that while the bottom 20% of earners save a mere 1% of their income, the top 20% save 24%. This gap widens at the extremes, with the top 1% of earners saving a staggering 51% of their income.
This isn’t a moral failing on the part of lower earners; it’s a mathematical reality. As we will explore in the next chapter’s argument, for lower-income households, essential expenses like housing, food, transportation, and healthcare can easily consume 100% or more of their take-home pay. For them, a 20% savings target is not just difficult; it is a mathematical impossibility without a significant increase in income. Conversely, for a high-earning software engineer, saving only 20% might be unambitious and could lead to a significant delay in achieving their financial goals. Therefore, a single, universal savings percentage is simultaneously too demanding for the poor and too lenient for the rich.
Phenotypic Plasticity: A Biological Model for Financial Health
Having deconstructed the old rules, Maggiulli introduces a new mental model borrowed from biology: phenotypic plasticity. This is the ability of an organism to change its physical traits in response to its environment. The book’s chosen exemplar is the Dolly Varden char, a species of fish found in the streams of southern Alaska.
For most of the year, these streams are spartan environments with very little food. The char survive, but just barely. However, starting in early summer, the annual salmon run begins. The streams are flooded with salmon, and more importantly, with their eggs. For the char, this is a period of incredible abundance. They enter what scientists describe as an “egg-crazed” feeding frenzy, gorging themselves until their bellies are visibly distended.
The truly remarkable part is what happens physiologically. Researchers discovered that during the lean months, the char actually shrink their digestive tracts to conserve energy. When the salmon arrive, their digestive organs rapidly grow to more than double their normal size to process the massive influx of calories. The char don’t try to consume the same number of calories every day of the year. Their consumption—and their very biology—is plastic, adapting dynamically to the availability of resources.
This is the core of the “Save what you can” philosophy. Our financial lives are not static; they are subject to periods of feast and famine. A promotion or a large bonus is a “salmon run.” A job loss, a medical emergency, or a major life change like moving to an expensive city is a “lean winter.” Instead of adhering to a rigid, unchanging savings rule, we should behave like the Dolly Varden char. When our financial resources are abundant—when income is high and expenses are low—we should expand our savings capacity and save aggressively. When times are tough—when income drops or unexpected expenses arise—we should allow our savings rate to shrink, without guilt, to weather the storm.
The author makes this concrete with his own experience. While living in Boston with roommates and a stable job, he was able to maintain a 40% savings rate. This was his personal salmon run. When he moved to New York City for a career change and began living alone, his savings rate plummeted to just 4%. This was his lean winter. Had he been shackled to a “save 20% no matter what” rule, his first year in New York would have been a period of immense stress, deprivation, and likely, failure. Instead, by adapting and saving what he could, he navigated the transition successfully and was able to ramp his savings back up as his new career progressed.
The Psychology of Saving: Freedom from Financial Stress
This adaptive approach does more than just align with economic reality; it has profound psychological benefits. The book cites compelling data from the American Psychological Association, which has consistently found that money is the top source of stress for Americans, year after year. A significant component of this stress is the anxiety around whether one is “saving enough.” A Northwestern Mutual study found that nearly half of all U.S. adults experience high or moderate anxiety about their savings level.
Rigid rules exacerbate this anxiety. They create a constant pass/fail test that many people are destined to fail, not through lack of effort, but due to circumstances beyond their control. This failure induces guilt, shame, and a sense of being perpetually behind. The “Save what you can” philosophy dismantles this toxic dynamic. It reframes saving not as an external mandate to be met, but as an internal capacity to be understood.
The goal is to determine how much you can save in a stress-free way. This is a critical point. The book highlights research from the Brookings Institute suggesting that “the negative effects of stress outweigh the positive effects of income or health in general.” This implies that the mental and physical toll of stressing to save an extra few hundred dollars a month could be more detrimental to your overall well-being than the financial benefit you gain. By saving what you can, you remove the guilt and anxiety from the equation. You are no longer failing to meet an arbitrary benchmark; you are succeeding at optimizing your savings based on your current reality. This psychological freedom makes the habit of saving sustainable over the long run, which is far more important than hitting a specific target in any given month or year.
Practical Implementation: The Equation for Your Savings
A philosophy, no matter how elegant, is useless without a practical method for application. The process for determining “what you can save” is a straightforward exercise in understanding your personal cash flow. It boils down to solving the simple equation:
Savings = Income – Spending
To solve this, you need to find two numbers on a monthly basis:
- Your Monthly After-Tax Income: For most people with salaried jobs, this is the easy part. It’s the amount that hits your bank account each month after taxes, healthcare premiums, and other deductions.
- Your Monthly Spending: This is the more challenging component. While a detailed, line-item budget is the gold standard, the author acknowledges that most people find this too tedious and will simply not do it. He advocates for a more practical, “good enough” approach:
- Calculate Fixed Spending: Sum up all your non-negotiable, recurring monthly costs. This includes rent or mortgage, car payments, insurance, internet/cable bills, and subscription services. These are predictable and easy to tally.
- Estimate Variable Spending: For costs that fluctuate, make a reasonable estimate. Look at your past few credit card and bank statements. If you typically spend around $100 per week at the grocery store, your monthly food estimate is $400. Do the same for categories like dining out, entertainment, and transportation. The author suggests a useful hack: put all variable expenses on a single credit card. Even if it’s not perfectly optimized for rewards points, it creates a single, easily trackable statement for your variable spending, making this estimation process much simpler.
Once you have your monthly income and a realistic total for your monthly spending (fixed + variable), the difference is what you can save. This number is your personalized, dynamic savings target. It’s not a number from a blog post or a finance guru; it’s a number derived from the reality of your own life. This is the amount you should aim to automate into your investment accounts each month. If your circumstances change—you get a raise or your rent increases—you simply rerun the calculation and adjust your savings accordingly.
The Surprising Conclusion: You May Need to Save Less Than You Think
The final layer of this argument is a powerful antidote to the pervasive fear of not having enough for the future. After establishing that you should save what you can, the book presents compelling evidence that this amount may be less than the alarmist headlines suggest. The primary fear driving people to adopt excessively high savings goals is the terror of running out of money in retirement. However, a large body of research indicates that the opposite is often the problem: retirees don’t spend enough.
Maggiulli cites multiple studies showing that, rather than drawing down their nest eggs, many retirees live off their Social Security, pensions, and investment income (like dividends and interest) alone. They never touch the principal. As a result, the financial assets of retirees often hold steady or even increase over time. According to the Investments & Wealth Institute, only about one in seven retirees actually draws down their principal in a given year. This behavior results in significant inheritances. A study by United Income found that the average retired adult leaves behind a net wealth of around $300,000, a figure that remains remarkably stable whether they pass away in their 60s, 70s, or 80s.
This data suggests that the fear of running out of money is a far greater threat to retirees’ quality of life than the actual risk of it happening. This fear is compounded by worries about the future solvency of programs like Social Security. Yet here, too, the reality is less dire than commonly perceived. Even if no changes are made, the Social Security trust fund is projected to be able to pay out approximately 80% of its scheduled benefits for the foreseeable future. While not ideal, this is a far cry from the 0% that 77% of workers believe they will receive.
By understanding that the risk of impoverishment in old age is lower than we are often led to believe, we can approach saving with more calm and less desperation. It reinforces the central thesis: calculate what you can comfortably save, do it consistently, and free yourself from the anxiety that you need to be doing more. The data suggests that for most people who follow this sustainable path, it will be more than enough.