“Your homework is to spend more money on the things that make you happy.”
When you think of meeting with a financial advisor, I’m willing to bet you wouldn’t expect to hear them say this. One thing our industry is good at is helping people stockpile money to weather all contingencies. As an advisor, it feels good to be able to say something like this to a client, “Your plan is in great shape! Your portfolio could handle a stock market event like the Great Depression while simultaneously hiring help to support your aging parents, AND pay for your own long-term care when you need it. And, you can do all of this while living a long life at your current standard of living. And look, you still have margin after all that!” While that feels good, it isn’t always in the best interest of our clients if their “bulletproof” financial plan has also become “joy-proof”.
Our job as advisors is to help clients build a plan that works for them and has the margin they need for the “what-if” scenarios of life. It is also to encourage them to live a meaningful life along the way. Meaningful living can look like fulfilling lifelong dreams, giving more money to charity, or investing in their kids during their lives instead of only through their estate. These are just a few examples, but they have a common thread: They’re ways that clients can use and enjoy their money now, rather than clinging to it for fear of future unknowns.
“What role does money play in my life?”
I encourage you to think about this question and answer it honestly. It can be easy to value money (pun intended) as something almost larger than life, itself. Money protects us and keeps us safe, so it deserves our protection in return. In this view, money is something we hold onto tightly, unless we have to spend it. We’re closed-fisted and spend money grudgingly, and we count the cents as they walk out the door. We’re focused on the numbers and making them bigger, without a full understanding of what the bigger numbers really mean for us.
I’d like to frame it differently. To me, a healthier view of money is as a tool. Money helps us accomplish the things that are important to us. That’s it. In this view, it’s easier to be open-handed. We can use our money to make our lives richer, rather than living to make our portfolios bigger. It’s a subtle shift, but it’s powerful.
I recently met with a client who’s on a very strict budget. She has margin in her plan, but not much. Over the past couple of years as she has implemented her budget, I’ve watched her posture toward money shift, such that spending money seems a bit painful and something she’s reluctant to do. She has started to view spending money as shrinking her portfolio.
As I was preparing for our last meeting, I wanted to help her shift her mentality. She and her late husband worked hard for their money, and I don’t want it to be a source of stress for the rest of her life. I asked her, “What makes you happy to spend money on?” and watched her face light up as she rattled off all the things she loves to do. Then, I gave her the homework to spend a certain amount more each month on those things. She was floored! It isn’t a lot of money in the context of her financial plan, but it’s a meaningful amount that will help make her daily life richer. Her plan can handle it. The “what if’s” are still accounted for, just like they were. She just needed permission to actually spend it. And I’ll hold her accountable to that spending in the future, which is equally as important.
This isn’t just for retired people, by the way.In my own finances, I can get so focused on wanting to accumulate and be prepared for the future that I forget to live today. My wife and I recently added daycare to our budget. If you’ve ever done that, I don’t need to tell you that it changed our financial picture quite a bit. As we redid our budget, we decided to set aside money on a monthly basis dedicated to bigger expenses that make life richer. For us, that’s a combination of travel and fun improvements to our home. (Furnace replacements don’t count). As this specific account grows, we’ll talk about what we want to spend it on. Whatever it is, it has to be travel or a fun home improvement. Not only are we building a pot of money for these bigger expenses, but we also built in accountability to spend our money on those things, which is equally as important.
We also realized that we were starting to pull back on how much we give charitably, in the name of getting that perfect next house, paying down debt, and saving more for the future. We decided that doesn’t align with our values. Giving matters to us and brings meaning to our lives and other’s lives today, so that’s now a line item that can’t go down. Money is a tool that helps us impact our community in positive ways, and it’s important to us that we use it in that way.
Through both of these conversations, we’re getting used to viewing money as a tool. I’m here to tell you that it has been incredibly freeing!
If you find yourself holding onto your money tightly, try loosening your grip a bit. Set aside a portion of your budget, and invest in yourself. Make your life richer. Maybe it’s $100/month to routinely try new restaurants, or $10,000/year to take a big trip. Maybe it’s $50/week to buy groceries for the person behind you in line, or $5/week for ice cream. Whatever you decide, the only two rules are to use it in a way that makes life richer and to actually spend the money. No stockpiling the $5 dollar bills.
Most importantly, enjoy the process!
Have fun dreaming a bit and finding a way to make those dreams a reality. You’ve worked hard for your money, so make sure it’s working hard for you as well. What does it mean to be truly cared for? It means understanding your passions and using proven methods to help you reach your goals—because true financial well-being isn’t just about building wealth; it’s about using it to live a fulfilling life. If you’d like a second opinion on your financial plan, reach out today—we’d love to help.
