Some of my favorite questions come from readers who are worried that they’re saving too much. This is a great problem to have. For example, Henry wrote recently with this dilemma:

I’ve been reading Get Rich Slowly since I was 15. At that time, it inspired me to save 20% of everything I earn for retirement. I’m almost 20 now, and I currently max my Roth IRA each year. (Well, I did in 2008 and 2009.) I also take the required percentage to get my employer’s 401(k) match. I also tithe. All of this means that I only take home about 50% of my net (after-tax) income.

I currently live at home, and I’ve wanted to move out, but I’ve realized that while I’m saving the money I can’t afford to be on my own. But if I stopped contributing to my retirement accounts, I could. I also want to open a business by the time I graduate from college, and I’d like replace my car (though I don’t really need to). With as much as I save for retirement, I find it hard to save more money for the things I want today. Am I being stupid to save so much money that I can’t touch until I’m 65?

First, I want to say that it’s awesome to see somebody so young saving so much money. That’s fantastic. In a society where young people tend to spend much more than they earn, here’s a guy who has made saving a priority. Henry, you’re all right.

But what about his dilemma? Is he saving too much? Would it make more sense for a young man to put saving on hold and fund the needs of today?

A part of me wants to tell Henry to keep doing what he’s doing: He’s already maxing out his Roth IRA every year and he’s getting the full 401(k) match from his employer. Combined, these two retirement plans will give him a ton of financial weight once the effects of compounding come to fruition in the coming decades.

So, one option for Henry is to keep contributing to his 401(k) and his Roth IRA, but to intentionally plan to use future increases in income for his other goals. That is, if he continues his super saving, he can use upcoming raises to get his own place, buy a new car, and start a business.

But another part of me wants to tell Henry to seek balance. Money is a tool. It’s there to help you build a life that makes you happy, both today and tomorrow. If he’s not happy today, that’s a problem.

The question, then, is how to find balance. Henry needs to be careful not to swing too far the other way. I think it would be a mistake, for example, to stop saving for retirement completely. It’d also be a mistake to begin using debt to finance the things he wants today.

How can Henry find balance? What would you do if you were in his shoes? I think I’d try to make small adjustments until I found the balance I needed. He might, for example, pick one of his three goals — moving out on his own, starting a business, buying a new car — and adjust his retirement savings downward in order to pursue it. Or, he could stop contributing to his Roth IRA and use the proceeds to meet one of his goals.

Whatever Henry chooses, it’s going to involve trade-offs. That’s one of the realities of personal finance. Though we can generally have anything we want, we can’t have everything we want. Henry is going to have to establish some priorities, and then use his money to meet them.

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