How to spend more money - request for help regarding an article

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
Topic Author
Allan Roth
Posts: 466
Joined: Thu Sep 11, 2008 12:47 pm

How to spend more money - request for help regarding an article

Post by Allan Roth »

I'm doing some research for an article on how to s=spend more money and wanted to solicit some views from the Bogleheads forum.

We spend so much time and effort on developing "safe spend rates" from one's nest egg and live frugally but there is another problem that I personally have and suspect many on the forum do as well. For whatever reason, many of us were programed to live below our means and build up a nest egg. After decades of building up a nest egg, the thought of spending it down is scary and our fugal behavior continues even though we know we can't take this money with us when we pass.

Any thoughts on the subject, especially on how to get someone to spend more money, would be very much appreciated. Thank you!
Freeadvice
Posts: 261
Joined: Wed Nov 27, 2019 12:42 pm

Re: How to spend more money - request for help regarding an article

Post by Freeadvice »

Haha. You came to the wrong place. 🤣
User avatar
Svensk Anga
Posts: 1596
Joined: Sun Dec 23, 2012 4:16 pm

Re: How to spend more money - request for help regarding an article

Post by Svensk Anga »

There might be some inspiration at the early-retirement.org forum, specifically this thread: https://www.early-retirement.org/forums ... 16450.html There is one for 2022 as well and probably older versions.

I think that those who are savers by nature are very likely to die with a very large stash, especially if markets are at all cooperative. There is always the prospect of some awful scenario over the horizon, so those folks (me included) will not spend close to the edge. I think that a TIPS ladder helps by dodging sequence risk in both returns and inflation. You're still left with longevity "risk". Spending down fixed income early in retirement in order to delay SS helps there. Larger cash flows have been shown to spend easily. Those of substantial means are usually advised to self-fund long term care, so how much should be set aside for that?


ETA: It does not help that the financial advisory complex is full of stories about how maybe the 4% SWR isn't so safe anymore given stock valuations and meager bond yields, oh, and inflation risk too, so maybe it is 3.5% now, or 3%, or 2.5% or ......
Last edited by Svensk Anga on Thu Jan 26, 2023 4:35 pm, edited 1 time in total.
User avatar
ray.james
Posts: 1902
Joined: Tue Jul 19, 2011 4:08 am

Re: How to spend more money - request for help regarding an article

Post by ray.james »

After years of being frugal and careful, one can truly never become a bad spender with out a lot of effort. However, there is one thing that can help.

Like delayed gratification is practiced for generating wealth, if one has more than needed, an instant gratification in some areas can help. Help children buy a home. fund 529 for grandkids. Annual mega family vacation that is paid for. Charity contributions and activity planned for later. There can be justified and helps in pulling in spending earlier than expected.

Now in regards to materialistic things, for years they are delayed for better retirement success. One needs to fight that and loosen the purse strings. If not, not much is lost either. :sharebeer
When in doubt, http://www.bogleheads.org/forum/viewtopic.php?f=1&t=79939
KlangFool
Posts: 31426
Joined: Sat Oct 11, 2008 12:35 pm

Re: How to spend more money - request for help regarding an article

Post by KlangFool »

OP,

Keep a large pile in cash and keep the cash away from your portfolio. Psychologically, it earns so little that you considered it as "spent" money. You would not compare this as in "if I do not spend it, it would earn this much".

KlangFool
30% VWENX | 16% VFWAX/VTIAX | 14.5% VTSAX | 19.5% VBTLX | 10% VSIAX/VTMSX/VSMAX | 10% VSIGX| 30% Wellington 50% 3-funds 20% Mini-Larry
sailaway
Posts: 8184
Joined: Fri May 12, 2017 1:11 pm

Re: How to spend more money - request for help regarding an article

Post by sailaway »

No matter how rich you are, it doesn't make sense to spend for the sake of spending.

What could you spend money on that would bring you joy?

For some that is an ongoing expenses like a fancy house or a boat. For some it is periodic expenses, like taking the whole family on a vacation every year. For some, it is building a legacy either by giving the kids and grandkids a leg up or by making a big difference in the community.

Gratitude helps. Research shows that gratitude is highly correlated to both happiness and generosity.
makeitcount
Posts: 281
Joined: Wed Aug 01, 2018 8:07 pm

Re: How to spend more money - request for help regarding an article

Post by makeitcount »

I believe these was a recent thread that discussed how annuitizing a portion of one's savings led to reduced money anxiety and increased willingness to spend. Perhaps someone can dig up that thread.
"Yeah, well, you know, that's just like, uh, your opinion, man." - J. Lebowski
willyd123
Posts: 398
Joined: Mon Feb 19, 2018 6:23 am

Re: How to spend more money - request for help regarding an article

Post by willyd123 »

We are definitely too frugal. One thought I had was to annuitize (SPIA) all or as much of our assets as possible so that when we die so would our annuities and we'd have little if any left over. However, with our being cheap, we'd probably underspend the annuity and save the delta but at least the ongoing worry about do we have enough assets, etc. theoretically would be reduced as we'd have essentially a monthly allowance to live on and may be more inclined to spend it all. I know the issues with annuities so please don't bombard me with you should never buy an annuity, etc. It's just a thought.
User avatar
RickBoglehead
Posts: 7852
Joined: Wed Feb 14, 2018 8:10 am
Location: In a house

Re: How to spend more money - request for help regarding an article

Post by RickBoglehead »

Freeadvice wrote: Thu Jan 26, 2023 4:17 pm Haha. You came to the wrong place. 🤣
I recommend that the OP adopt me and my wife. We will work diligently on the problem.


I agree that spending for the sake of spending is absurd. Last month we went to a very nice restaurant that we hadn't been to in over a decade. We bought a $100 gift card for $80, and spent $110 with tip, so really $90. We both agreed that the meal, while nice, was not worth $90 or $110.

We have upped our spending in retirement, but we don't spend for the sake of spending.

I think keeping a pile of cash is an awful idea.
Avid user of forums on variety of interests-financial, home brewing, F-150, EV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.
Chuckles960
Posts: 917
Joined: Thu May 13, 2021 12:09 pm

Re: How to spend more money - request for help regarding an article

Post by Chuckles960 »

Allan Roth wrote: Thu Jan 26, 2023 4:08 pm we know we can't take this money with us when we pass.
However, technology continues to evolve, and we may need money many years longer than we think. We don't actually know how much money we can't take with us when we pass.

Those retirement estimates are just that, estimates based on typical past scenarios. They do not predict the future. Having more money than we want to spend is a good problem to have, it buys freedom from financial anxiety (and we don't have to pay to buy this---what a deal). Why would one mess that up? "Die with zero" sounds good, but what if we overshoot the target?

Perhaps you could ask your editor for a different assignment.
Mike Scott
Posts: 3574
Joined: Fri Jul 19, 2013 2:45 pm

Re: How to spend more money - request for help regarding an article

Post by Mike Scott »

hobbies, collectibles, art, gifts to family, gifts to charity
Doctor Rhythm
Posts: 3034
Joined: Mon Jan 22, 2018 2:55 am

Re: How to spend more money - request for help regarding an article

Post by Doctor Rhythm »

I somewhat subscribe to the $75,000 rule (or whatever the threshold number is now), where surveys find that on a population level, life-satisfaction doesn’t increase much above an income that could be described as American upper middle class. The science isn’t great, and there are studies that don’t find diminishing returns even at very high income levels.

Obviously YMMV on this, but if the goal is happiness, additional spending beyond a not especially high level doesn’t move the needle much.
Last edited by Doctor Rhythm on Thu Jan 26, 2023 5:20 pm, edited 1 time in total.
chitownguy
Posts: 58
Joined: Thu Jul 25, 2019 7:03 pm

Re: How to spend more money - request for help regarding an article

Post by chitownguy »

I would suggest you get more hobbies and interests - preferably expensive ones. Take wine for instance instead of buying the $9.99 bottle buy the $100 bottle - do some research, read the wine magazines and forums and maybe start a little cellar. Same could go for music; if you have any interest in music reproduction become an audiophile. Same thing with wine but stereo magazines and forums. Then you'll need music to play start buying ups again (you'll be surprised by how much those old Blue Note records cost today). No better what to go broke than the audiophile way. Same could be said for cigars, golf, fashion, accessories like Rolex's etc. Rinse repeat. and then do it all again. Of course it should be something you are organically attracted to - not something you force upon yourself.

One thing I have done and it's kind of a cheat because it could be considered an investment is I started to gain an interest in art. Depends on what category of art interests you you have to do research (it should be fun). Then attend auctions (they are virtual now) or galleries in person and then purchase something. You can easily spend any imaginable amount and you can rationalize if you want that it is an investment that your kids will get when your gone.
Dave55
Posts: 2016
Joined: Tue Sep 03, 2013 2:51 pm

Re: How to spend more money - request for help regarding an article

Post by Dave55 »

I had a friend who was making $1M a year in his 40's and 50's. He amassed over $10M by 50. He gave his wife grief for shopping at Walmart. He died in his early 60's and never enjoyed his money.

Dave
"Reality always wins, your only job is to get in touch with it." Wilfred Bion
ikowik
Posts: 392
Joined: Tue Dec 23, 2014 5:52 pm

Re: How to spend more money - request for help regarding an article

Post by ikowik »

makeitcount wrote: Thu Jan 26, 2023 4:51 pm I believe these was a recent thread that discussed how annuitizing a portion of one's savings led to reduced money anxiety and increased willingness to spend. Perhaps someone can dig up that thread.
I agree, but with a big if: IF there is (at least some degree of) protection against inflation. From personal experience, I have an with-COLA pension, a pension without COLA, a TIPS ladder and I-bonds. I have spent way more than what I spent during my working years in the last few years after retirement. The with-COLA pension, TIPS and I-bonds are what gave me the courage to spend on travel and other expenses. The non-COLA pension is just a temporary bonus. I know that if things really turn sour, I could live comfortably on the inflation-linked income streams alone.
HomeStretch
Posts: 11334
Joined: Thu Dec 27, 2018 2:06 pm

Re: How to spend more money - request for help regarding an article

Post by HomeStretch »

Spending below one’s means in retirement is probably rooted, in part, (at least for spouse and me) in a life-long ingrained habit of doing so.

For us, the other part is rooted in:
(1) only having guaranteed COLA’d income that covers 40-50% of our total retirement spending,
(2) not knowing how long our portfolio needs to last, and (3) keeping a large cushion (no LTCi) for potential high care costs later in life. We both have parents with severe dementia and, as their POAs, we have watched their life savings be rapidly depleted by in-facility memory care/skilled nursing. This resulted in a Medicaid LTC application for one parent (with the community spouse being left with very little to live on).
User avatar
retiredjg
Posts: 53989
Joined: Thu Jan 10, 2008 11:56 am

Re: How to spend more money - request for help regarding an article

Post by retiredjg »

I think there are at least 2 different reasons for people to have trouble spending money in retirement.

1. They just don't know if they will have enough. Or they may know it in their heads and not know it in their gut/emotions.

Whether not having enough is a realistic concern or not, something like a SPIA can help someone in this category to spend at least as much as their income. If they cover their expenses with known and dependable income streams (including a SPIA) they can see the rest of the portfolio as "extra". For fun. For emergencies. For long term care. Whatever it is they need to see it as. It is freeing.

I have often wondered if this "freeing" thing is why our friend Taylor has been so vocal about his satisfaction with SPIAs.


2. There are other folks who know they have enough, even more than enough, but they just cannot make the mental switch. Even though they can afford to do it, they refuse to pay $6.99 for a dozen eggs this week because they used to cost $1.99.

This is a behavioral issue. I would guess it would take a significant emotional event to change this behavior.
dcabler
Posts: 4482
Joined: Wed Feb 19, 2014 10:30 am

Re: How to spend more money - request for help regarding an article

Post by dcabler »

Svensk Anga wrote: Thu Jan 26, 2023 4:28 pm There might be some inspiration at the early-retirement.org forum, specifically this thread: https://www.early-retirement.org/forums ... 16450.html There is one for 2022 as well and probably older versions.
Just remember - these are the guys who think Bogleheads are a cult: https://www.early-retirement.org/forums ... 14809.html

:D :D :D
JDave
Posts: 591
Joined: Tue Oct 29, 2019 9:23 am

Re: How to spend more money - request for help regarding an article

Post by JDave »

With some - not all - of your retirement funds buy an annuity. It's a proven fact that people spend more if they have an annuity than if they don't, because of the reassurance that no matter how long they live, or whatever the heck the market does, their funds won't run out.
mhalley
Posts: 10424
Joined: Tue Nov 20, 2007 5:02 am

Re: How to spend more money - request for help regarding an article

Post by mhalley »

From reading and listening to a lot of financial blogs/podcasts, one consistant way of opening the purestrings is having a check come in. Either from SS, or an annuity, getting the check in the mail/consistant online deposit gives a psychological boost that makes it feel
that you have more money than just looking at a bunch of :moneybag in your brokerages/bank accounts.
I don't know if it would work similarly if you just had an autodraft from your brokerage, but it might be worth a try.
dcabler
Posts: 4482
Joined: Wed Feb 19, 2014 10:30 am

Re: How to spend more money - request for help regarding an article

Post by dcabler »

Allan Roth wrote: Thu Jan 26, 2023 4:08 pm I'm doing some research for an article on how to s=spend more money and wanted to solicit some views from the Bogleheads forum.

We spend so much time and effort on developing "safe spend rates" from one's nest egg and live frugally but there is another problem that I personally have and suspect many on the forum do as well. For whatever reason, many of us were programed to live below our means and build up a nest egg. After decades of building up a nest egg, the thought of spending it down is scary and our fugal behavior continues even though we know we can't take this money with us when we pass.

Any thoughts on the subject, especially on how to get someone to spend more money, would be very much appreciated. Thank you!
For me, it's going to be a combination of mechanical and flexible
Mechanical (aka fixed, inflation adjusted income floor)
- Social Security
- Duration Matched TIPs + Ibonds, all to be reassessed in our 80's with an option to move all of this to a SPIA.

Discretionary (aka flexible depending on a lot of factors)
- What I withdraw from stocks.

I arrived at this approach after taking in so many good posts from the likes of
1. BobK and Vineviz for duration matched TIPS via duration matching
2. The original VPW thread and lots of offline discussions with siamond as well as the ABW thread from Ben Mathew

Essentially, I started with my gross paycheck and removed everything that won't apply in retirement (no SS with holdings, no 401K with holdings, no regular savings into the taxable account, etc) and replaced my employer sponsored health insurance premiums with likely ACA premiums. Requires some tax software or spreadsheet to do this correctly as some of the items were pre-tax and some were post-tax. Whatever was left is what we actually spend. I found this easier than creating a bottoms-up spending budget. Finally, I took the spend and reverse calculated a pre-tax withdrawal that would support it. Then performed an ABW-like calculation of what a withdrawal would be and, wouldn't you know it, it's larger than the spend previously calculated. And by quite a bit.

Bottom line - in retirement we can support a higher spending rate than we had pre-retirement, so that nailed it and I sail off into retirement this April. We've always pretty much spent what we want. But we're neither extravagant in our tastes nor or we frugal with our spending. I expect we'll be on the higher side of spending for the first decade or two and less so later on.

And, yes, there is an "easy button plan B for my wife should I pre-decease"

Cheers!
User avatar
JazzTime
Posts: 724
Joined: Mon Oct 25, 2021 8:43 am
Location: MA

Re: How to spend more money - request for help regarding an article

Post by JazzTime »

I suggest taking "baby steps." Start by NOT using coupons, then work your way up to buying something at full price. :oops:
The difficulty with jazz is there are too many notes. (Borrowed from Emperor's critique in Amadeus)
User avatar
Watty
Posts: 28813
Joined: Wed Oct 10, 2007 3:55 pm

Re: How to spend more money - request for help regarding an article

Post by Watty »

Allan Roth wrote: Thu Jan 26, 2023 4:08 pm Any thoughts on the subject, especially on how to get someone to spend more money, would be very much appreciated. Thank you!

A couple of ideas for brainstorming.

1) Retirement calculators are often misleading since they often give results in percent chances of "success" or "failure". The problem with that is that "failure" sounds like a dire situation where you end up broke and homeless. For people that are not planning a bare bones retirement "failure" might just mean that you need to cut your spending by 10 percent when you are 75 if your portfolio is declining faster than planned.

2) Another problem with retirement calculators is that they rarely take your mortality into account. For example there might be 10% failure rate for a 30 year retirement with a higher withdrawal rate but there is also a high probably that you will not actually live long enough to run out of money. In made up numbers if there only a 10% chance that you would live long enough to run out of money then combined that would equate to only a 1% actual failure rate where someone lived long enough to run out of money. I can't vouch for the math behind it but the "Rich, Broke, or Dead" retirement calculator is one of the few retirement calculators that I have seen that tries to take this into account.

https://engaging-data.com/will-money-last-retire-early/

3) The joint life expectancy for a couple is not intuitive and in many ways more important than the individual life expectancy, I use this simple joint life expectancy calculator.

https://www.kitces.com/joint-life-expec ... alculator/

For example for a 65 year old couple there is about a 1 in 3 chance that one of them will be dead within 10 years according to that calculator. I would assume that there is about an equal chance that one of the couple would have significant health issues within 10 years. The odds of them both being alive and in good health in 10 years when they are 75 are not all that great.

The flip side of the joint life expectancy is that there is also a higher probability of one of them living to an older age like 95.

This is not just for older couples either. For a 30 year old couple according to that calculator there is about a 28% chance that one of them will not alive in 35 years when they would turn 65.

Personally I had one year when I was in my 50's when I went to three funerals of people that more or less my age. I was not real close to any of them but when you see neighbors and coworkers dying that does get you thinking that you might not have as much time left an you might be assuming. Along with some health scares that seem to be OK now I shifted the "now vs later" balance more towards the "now" side and even before I retired I started spending more on things like travel. I then retired in my late 50s as soon as reasonably could.

After I retired we went to my wife's 50th reunion for her high school class when she was 68. There was a memorial wall for the people that had already died with way too many photos on it. There was also a large list of people that they were still looking for contact information for since they could not find them and it is likely that many of them had also already died.
Last edited by Watty on Thu Jan 26, 2023 6:09 pm, edited 1 time in total.
User avatar
Leif
Posts: 3698
Joined: Wed Sep 19, 2007 4:15 pm

Re: How to spend more money - request for help regarding an article

Post by Leif »

I retired 2 years before the pandemic. We did some traveling, but that mostly stopped at the pandemic. So we will resume, carefully, our travels.

I don't know if you consider an annuity as spending or just a different type of investment. I think for some this can be freeing if you feel you're covered by that. The rest will be play money.

That is not for me, however, since I plan to leave the remaining amount to charity and my beneficiaries. In the meantime i'll help with a house downpayment to give the next generation a chance in this highly priced housing market.
Last edited by Leif on Thu Jan 26, 2023 6:53 pm, edited 1 time in total.
Topic Author
Allan Roth
Posts: 466
Joined: Thu Sep 11, 2008 12:47 pm

Re: How to spend more money - request for help regarding an article

Post by Allan Roth »

Freeadvice wrote: Thu Jan 26, 2023 4:17 pm Haha. You came to the wrong place. 🤣
I came to the Bogleheads because we tend to be so frugal. That was one of the many traits I loved about Jack Bogle as well. I'm certainly not arguing to spend for the sake of spending but if we work hard and deny ourselves something that would bring us greater happiness, then that's not a good thing. I understand this from a theoretical standpoint - it's the actual practice I fall short on.

Thanks everyone for the great comments so far!
livesoft
Posts: 85971
Joined: Thu Mar 01, 2007 7:00 pm

Re: How to spend more money - request for help regarding an article

Post by livesoft »

All those neglected home repairs (roof, painting, damaged driveway, ...) are a good way to spend more money. Lots more money. In a short time.

So just pretend you have to sell your home and have to get things fixed beforehand. Hiss. Bang. Gone!
Wiki This signature message sponsored by sscritic: Learn to fish.
LuckyGuy
Posts: 158
Joined: Fri May 15, 2020 6:41 am

Re: How to spend more money - request for help regarding an article

Post by LuckyGuy »

DW and I bought 3 Super Bowl packages with hotel, transportation, and tickets to the game. That’s how you spend money.

We did this about 10 minutes ago. DW is shaking right now :sharebeer

(We’ve never done anything like this before)
User avatar
GerryL
Posts: 3902
Joined: Fri Sep 20, 2013 11:40 pm

Re: How to spend more money - request for help regarding an article

Post by GerryL »

For most of my life, I have subscribed to the idea of being happy to have Enough. My frugal habits made it possible for me to retire with More Than Enough. So now I am focusing on More.

The key for me has been knowing how much I can safely spend. I have given myself a generous annual allowance that a CFP tested against my portfolio, so I am comfortable spending up to that amount - even though I haven't yet. (And I keep a running tab of how far below that target I am coming in, so I have a pool of extra $$$ beyond the annual allowance.)

Knowledge about how much I can safely spend has freed me to be more generous to myself and to others. Charitable giving (yea QCDs). Symphony subscription so I can invite friends to come with me. Even more travel than I thought and considering comfort at least as much as price. I have gotten less frugal when eating out ... and I have become a better tipper. Paying others to do tasks I used to do myself. I still use coupons and look for bargains, and I will never stop considering value of a purchase, but the instinct to squirrel all my nuts away for the future has eased. The future is now.

It has definitely been a gradual move from pinching pennies to spending. From "can I afford this" to "you CAN afford this," but if this "frugal miser"* can do it, there is hope for others.

* Frugal miser is what my free-spending brother used to call me.
8301
Posts: 942
Joined: Thu Dec 22, 2022 1:52 pm

Re: How to spend more money - request for help regarding an article

Post by 8301 »

retiredjg wrote: Thu Jan 26, 2023 5:34 pm 2. There are other folks who know they have enough, even more than enough, but they just cannot make the mental switch. Even though they can afford to do it, they refuse to pay $6.99 for a dozen eggs this week because they used to cost $1.99.
Would you feel happy if you pay $1.99 for eggs and toss $5.00 away into a waste basket? If no, move on. Maybe next time.
heyyou
Posts: 4452
Joined: Tue Feb 20, 2007 3:58 pm

Re: How to spend more money - request for help regarding an article

Post by heyyou »

This addresses how to safely spend more, but is less helpful for convincing the unsure retirees to do so.
My greatest criticism of 4% SWR is the size of the unspent assets if the worst case does not occur. Some like that feature as it boosts the legacy amount for their children.

Consider using a rising % spending rate on your portfolio as a somewhat more thorough choice of spending plan. You are safely adapting each annual spending amount to your portfolio's recent value, as you are annually spending a slowly rising percentage of the portfolio. The RMD spending method applies your rising RMD % annually to the entire recent portfolio value, plus spending annual dividends and interest. Yes, it is a supposedly dreaded variable spending plan, but the variation is welcome due to its annual adjustments that contribute to portfolio longevity. As your portfolio value varies this year, you can see what your withdrawal amount might be next year, so there is not a December 31st surprise unless the stock market crashes that day.

The plan was developed by Sun and Webb at Boston College's Center for Retirement Research.
https://crr.bc.edu/wp-content/uploads/2 ... 19-508.pdf
Page 7 in the Appendix shows an outdated RMD table. Some retirees will reject this method since the base rate does not ascend to 4% until age 73, but do remember the additional spending of your annual dividends and interest.

When the authors stated that their method compared well to the standard, that begs the question of "why not use that method?" The standard is if the fresh retiree knew all of his future portfolio returns on retirement day!
theplayer11
Posts: 2279
Joined: Tue Jul 22, 2014 8:55 pm

Re: How to spend more money - request for help regarding an article

Post by theplayer11 »

makes one wonder that maybe living so frugally while younger to build a substantial nest egg isn't actually the best way to live. How many regret not traveling more while younger only to find that they can't travel to the places they wanted to go because of age or can't experience those vacations like that could have if they were younger. There must be balance and you have to live life as you go.
Sho
Posts: 432
Joined: Wed Nov 24, 2021 8:38 am

Re: How to spend more money - request for help regarding an article

Post by Sho »

theplayer11 wrote: Thu Jan 26, 2023 9:16 pm makes one wonder that maybe living so frugally while younger to build a substantial nest egg isn't actually the best way to live. How many regret not traveling more while younger only to find that they can't travel to the places they wanted to go because of age or can't experience those vacations like that could have if they were younger. There must be balance and you have to live life as you go.
Everything is so clear in hindsight . Right now, I want to save
to be FI. But when I am 65 and if I even save 2/3 of what I save now , I would have plenty to spend . But I can’t predict how the job market would be in next 20 years or how the market would be . So trying to save what I can .

I agree though life is all about balance , but when you grow up with less money , you develop a lot of respect for money , whether it’s healthy or not , it’s something to debate about .
User avatar
GerryL
Posts: 3902
Joined: Fri Sep 20, 2013 11:40 pm

Re: How to spend more money - request for help regarding an article

Post by GerryL »

theplayer11 wrote: Thu Jan 26, 2023 9:16 pm makes one wonder that maybe living so frugally while younger to build a substantial nest egg isn't actually the best way to live. How many regret not traveling more while younger only to find that they can't travel to the places they wanted to go because of age or can't experience those vacations like that could have if they were younger. There must be balance and you have to live life as you go.
Maybe I got to have the best of both worlds. From 21 to mid-30s, I didn't think about the future and enjoyed traveling and living in different places, including different countries. I finally got serious and settled down. House. Career-like job. 401k. Continued "living like a student" and saved whatever I could because, well, you never know. (I'd gone through several extended periods of unemployment.)

Now I am retired (read: gainfully unemployed) with enough money to do many things I never thought I would be able to afford. And still enough health and energy -- for now -- to do those things.
Grt2bOutdoors
Posts: 25617
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: How to spend more money - request for help regarding an article

Post by Grt2bOutdoors »

I realize the question is how to "spend more money" but what if you could sway the frugal person that it is a form of investment instead of frivolous or needless use of resources? Here is one example, my local library would willingly accept donations of money and books or just books. The donation is an investment in paying it forward through knowledge that benefits others and so on. Similarly, donations made to this forum and The Bogle Center for Financial Literacy are an investment.

Invest in an educational course or cooking or photography class to learn or try something different if it brings you joy. Take up gardening or some other hobby. Fund a child's 529 plan.

Spending resources doesn't need to happen in large quantities to improve ones happiness or living standards though. An extra 0.5% or 1% more per year will likely have a measurable impact, just imagine having 10-25% more in spending capacity what it could do. (assuming they are adhering to the 4% rule).

Good Luck trying to convince retirees or your target market to spend more, I can't get my own folks to do it.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
User avatar
JoMoney
Posts: 16260
Joined: Tue Jul 23, 2013 5:31 am

Re: How to spend more money - request for help regarding an article

Post by JoMoney »

If you're not depriving yourself or family of something you otherwise really wanted, I think living below your means is a good habit to keep.

If you really want to blow through your money, get a hobby with expensive accessories, or an addiction - gambling could certainly take care of that too much money 'problem'.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
McQ
Posts: 1414
Joined: Fri Jun 18, 2021 12:21 am
Location: California

Re: How to spend more money - request for help regarding an article

Post by McQ »

I visit my 9x year old mother, living independently, once or twice a year on the other coast. In the spirit of this thread, I now fly first class. I stay in a $2xx per night hotel nearby instead of sleeping for free on the 20-year-old twin mattress in her apartment den.

Proud of myself! But baby steps, I'm only 6x...

And as others have mentioned, there are always 529 contributions for grandchildren...should I be blessed with any. The great virtue of contributing to a grandchild's 529: that's not spending! That's asset relocation allowing a higher allocation to risk assets. So much easier than moving up from $25 bottles of wine to $50 bottles, or to flying business class on international travel.
You can take the academic out of the classroom by retirement, but you can't ever take the classroom out of his tone, style, and manner of approach.
WAROB
Posts: 154
Joined: Fri Jan 22, 2021 11:13 am

Re: How to spend more money - request for help regarding an article

Post by WAROB »

Drugs are a good place to start, or donate to charity if you are boring.

Kidding aside, just because it’s there doesn’t mean you have to spend it. The reality is most on here got to the place in life they are at due to a comfort in living below their means. Postpone gratification long enough and how are you supposed to find it or know what it means later in life.
User avatar
unclescrooge
Posts: 6264
Joined: Thu Jun 07, 2012 7:00 pm

Re: How to spend more money - request for help regarding an article

Post by unclescrooge »

Dave55 wrote: Thu Jan 26, 2023 5:21 pm I had a friend who was making $1M a year in his 40's and 50's. He amassed over $10M by 50. He gave his wife grief for shopping at Walmart. He died in his early 60's and never enjoyed his money.

Dave
My new years resolution for 2022 was to spend more money.

I wanted to buy a $1k watch for my birthday. Couldn't decide whether I wanted a black disk or a white dial, so I decided to buy both. Of course, then I realized I can get a 50% discount if I buy used, so I ended up spending the same $1k.

I also upped my wine game, spending between $25 and $90 a bottle instead of $10-20. Frankly I can barely tell the difference between many $50 and $90 bottles.
CaptainT
Posts: 635
Joined: Tue Feb 15, 2022 7:20 am

Re: How to spend more money - request for help regarding an article

Post by CaptainT »

Perhaps use a budget. For example let's say you want to spend 12k on random acts of kindness a year. Well budget that 1k a month and make sure you spend it all..
Figure out and plan how you want to spend your money and then it is just implementing the plan
kd2008
Posts: 1267
Joined: Sun Feb 15, 2009 5:19 pm

Re: How to spend more money - request for help regarding an article

Post by kd2008 »

Allan, my take take on this different from the usual advice. It is to recommend reflection on what your values are and if the current spending pattern complements that. Value- aligned spending is guilt-free spending in my book. May be test waters to see if marginal increase in spending gives you satisfaction.

Restaurants for example - took DH to my city's one of the most expensive steakhouses that is very close to us. My overall impression was it was a nice experience but not a great value. But we tried an expensive seafood place that also very close to where we live. It was undoubtedly better experience and better food and an amazing value even though it was just as expensive as the steakhouse. It is our go to place now for special occasions.
It is through such small consistent experiments that we discover value-aligned spending.

DH pointed out I was way more willing to jump on and sign up for a shore Excursion on our planned vacation than I was to buy a new mattress. I said excursion was something I was looking forward to and a limited opportunity while the mattress is a commitment and I need to be sure it is the right one for me like him 😀
Parkinglotracer
Posts: 3915
Joined: Fri Dec 20, 2019 2:49 am
Location: Upstate NY

Re: How to spend more money - request for help regarding an article

Post by Parkinglotracer »

Allan,

Being married helps. Darling spouse wanted to update 1970’s kitchen. Me, Well we better do the floor first. The tray ceiling in kitchen is outdated too.

- tile floor 13K
- diy kitchen ceiling redo 3K
- kitchen cabinets 13K
- countertop 3K
- backsplash ?
- misc plumbing $700
- misc electric $1200
- DIY paint $400

Notice how I kept that gender neutral. At age 62, i Had to get a crow bar out to spend that from retirement nest egg.

On a more serious note trying to see life holistically “Cradle to grave” helps me try to spend some. Lost my mom at age 9 to alcohol / sleeping pill overdose. Life can be short. Note to self. I grew up as the youngest of 6; cut grass and saved a few bucks - was the only 12 yr old I knew with $30 in my pocket. It felt good. Gave me a lot of freedom. Note to self. When I turned 15, dad and step mom, me moved to an active retirement community in Florida. I was the only teenager there. I saw the end of life a lot - the flag at our condo complex was at half mast as parent’s friends passed frequently. Life is short - note to self. I also saw a lot of upper middle class folks having a great retirement in our waterfront boating community. Hmmmn. They must have saved money along the way to retire early. Note to self. Many residents were government military retirees and small business owners. Hmmmn note to self.

I went in military in a high risk occupation and lost friends along the way. Life is short. Note to self. I Read you money or your life by Vicki robbins. I don’t have to work forever? Note to self. Was my parents financial caregiver as they went to assisted living. In 2008 their care was 10K a month at sunrise asst living in reston Virginia area. Life can be hard and expensive in the end. Hmmmn note to self. Was my oldest sister’s executor when she died of lung cancer at age 65. She went back to work in retirement and lived in a falling apart co-op in green belt md as she was afraid she would outlive her money. We had to redo the co-op just to sell it. She Left her son a high 6 figure nest egg. Note to self.

So what I have learned is 1) life is short; cherish it. 2) save money and live beneath your means in order to have the freedom to have the life you want. 3) money goes quick at the end of life - like 10K a month in 2008 dollars. 4) while it may be good to leave some money for your heirs, life is short and it makes sense to treat yourself to some of what you earned.

So the money we spent on the kitchen was less than 4 months in asst living. And at age 62 it was done by withdrawing less than 4% of our savings this year. Looking at the big picture; life is short and you can’t take it with you. And we are lucky to be here and now.
Last edited by Parkinglotracer on Fri Jan 27, 2023 6:24 am, edited 1 time in total.
rustwood
Posts: 201
Joined: Mon Jan 17, 2022 2:05 pm

Re: How to spend more money - request for help regarding an article

Post by rustwood »

retiredjg wrote: Thu Jan 26, 2023 5:34 pm I think there are at least 2 different reasons for people to have trouble spending money in retirement.

1. They just don't know if they will have enough. Or they may know it in their heads and not know it in their gut/emotions.

2. There are other folks who know they have enough, even more than enough, but they just cannot make the mental switch. Even though they can afford to do it, they refuse to pay $6.99 for a dozen eggs this week because they used to cost $1.99.
+1, this is exactly what I was thinking. I am not ready to make that move yet, but I am inclined to secure a comfortable level of income via one or more SPIAs because I believe it will be freeing. I think that will take away one part of the 'problem', although LTC is a great unknown for me so I am also inclined to try to lock down funding for that one way or another (LTC insurance, reserve funds, whatever). I think that could be the last piece of the retirement spending puzzle for me.

I also totally believe in the difficulty of making the mental switch in point 2. As others have said, baby steps are a good idea. I still rather enjoy doing my research to ensure I will like whatever I am buying and trying to find a deal, but below a steadily rising cost threshold, I increasingly limit how much time/effort I am willing to put into a purchase. At a certain point, I just buy it and find out. I do think there is a sustainability angle though - we only put out a fraction of the garbage that our neighbors do, perhaps because we are more careful with our purchases and tend to buy things with long useful lifetimes.

Also in the psychological vein is concern about fair value and/or being cheated. There are many possible examples, but another poster mentioned a meal not being worth $100. If you are in a position where you aren't sacrificing anything else by spending $100 on a meal, then I think the correct question shouldn't be whether it was worth $100, it should be did you enjoy it. Maybe there is another restaurant you would enjoy more next time and that is fine, but within a reasonable range, value for the dollar probably shouldn't be a major consideration. It is an easy trap to fall into though and I have thought that exact same thing about a meal many times. Baby steps apply for me in this vein as well - within a reasonable range, I recognize that perhaps I am being taken advantage of/overcharged/ripped off a bit, but I'm OK with that as long as I am enjoying myself since the extra cost isn't going to make any difference to me in the grand scheme of things.

Oddly, I find I struggle more with smaller discretionary expenses than with large, unexpected expenses. For example, our water supply line had to be repaired and it cost us almost 5 figures. While it was a bit of a bummer, I was mostly glad that we had the money to make the problem go away. That is what it is for - we had a huge problem, some digits changed in our bank balance, and the huge problem went away. I haven't given a second thought to the expense since then.
stoptothink
Posts: 15368
Joined: Fri Dec 31, 2010 8:53 am

Re: How to spend more money - request for help regarding an article

Post by stoptothink »

sailaway wrote: Thu Jan 26, 2023 4:37 pm No matter how rich you are, it doesn't make sense to spend for the sake of spending.

What could you spend money on that would bring you joy?

For some that is an ongoing expenses like a fancy house or a boat. For some it is periodic expenses, like taking the whole family on a vacation every year. For some, it is building a legacy either by giving the kids and grandkids a leg up or by making a big difference in the community.

Gratitude helps. Research shows that gratitude is highly correlated to both happiness and generosity.
All of this. In our case, we are simple people who grew up very poor, I guess you can say in some respects we are blissfully ignorant regarding things that cost a lot more money. We have tried international vacations, I have driven plenty of high-end sports cars (and will occasionally do an exotic car track day experience), we have no real want for a (much) bigger home...The biggest spending drivers for most people simply are not of much interest to us, even after experiencing them. Maybe that will change someday, but it hasn't yet.

Only you can figure out what brings you joy and improves your quality of life. We are no longer budgeting at all, but our overall spending hasn't changed much and we still spend what is considered "poverty level" by many. We've figured, through a lot of trial and error, what level of consumption makes us happy. I am not going to start spending just for the sake of spending, but at some point we may retire (very early) because our jobs no longer are a net positive in our lives.
ThankYouJack
Posts: 5704
Joined: Wed Oct 08, 2014 7:27 pm

Re: How to spend more money - request for help regarding an article

Post by ThankYouJack »

I think a lot of us feel there's a scarcity of money where we should feel more of an abundance. Switching from the scarcity mindset to abundance would help people spend more $. But changing mindset is easier said than done
Carson
Posts: 854
Joined: Fri May 09, 2014 3:26 pm

Re: How to spend more money - request for help regarding an article

Post by Carson »

sailaway wrote: Thu Jan 26, 2023 4:37 pm No matter how rich you are, it doesn't make sense to spend for the sake of spending.

What could you spend money on that would bring you joy?
I was thinking about this as I planned this year, making sure ourselves and our savings needs were met. I was trying to think of intentional ways of spending money that would make me happy. And I really can't come up with any. I've spent a little bit more on food we enjoy, and I've spent a little more saving time on not over-researching/running around for minor purchases. But I don't want to do that too much as I feel like it's a bit wasteful.

I think part of what gives me pause is the collision of DH retirement and kiddo's college heading our way in <5 years and I think we should be saving every single dollar at this point. :moneybag And then I read this thread and see others who have 10, 20, 30 years on us saying they have some unknown expense headed towards them, and wonder if it will always be something??? And probably a commonality among many of us here.
User avatar
Taylor Larimore
Posts: 32839
Joined: Tue Feb 27, 2007 7:09 pm
Location: Miami FL

Re: How to spend more money - request for help regarding an article

Post by Taylor Larimore »

Allan Roth wrote: Thu Jan 26, 2023 4:08 pm I'm doing some research for an article on how to s=spend more money and wanted to solicit some views from the Bogleheads forum.

We spend so much time and effort on developing "safe spend rates" from one's nest egg and live frugally but there is another problem that I personally have and suspect many on the forum do as well. For whatever reason, many of us were programed to live below our means and build up a nest egg. After decades of building up a nest egg, the thought of spending it down is scary and our fugal behavior continues even though we know we can't take this money with us when we pass.

Any thoughts on the subject, especially on how to get someone to spend more money, would be very much appreciated. Thank you!
Allan:

When Pat and I reached our 80s, we purchased a Single Premium Immediate Annuity (SPIA). The application was easy, the contract was one page that we could understand, so we bought another a year later which added to our Social Security and my government pension, gave us a comfortable guaranteed lifetime income.

I hope this post helps your article. It is sent with utmost respect for all you do to help investors.

Taylor
Jack Bogle's Words of Wisdom: “Success in short can be measured, not in what we attain for ourselves, but in what we contribute to society.”


"Simplicity is the master key to financial success." -- Jack Bogle
User avatar
Svensk Anga
Posts: 1596
Joined: Sun Dec 23, 2012 4:16 pm

Re: How to spend more money - request for help regarding an article

Post by Svensk Anga »

I saw somewhere advice to exercise the spending muscle by setting an annual spend target in accord with some estimate of what is sustainable, then either spend it, or at year end donate what you did not spend. Either way, you know it will be gone. Whether you spend it on your own selfish desires, on your family's needs or wants, or on charity is up to you. The yearly deadline helps to motivate action one way or another and forestalls hanging on to it for "someday...."'
MikeG62
Posts: 5054
Joined: Tue Nov 15, 2016 2:20 pm
Location: New Jersey

Re: How to spend more money - request for help regarding an article

Post by MikeG62 »

Allan Roth wrote: Thu Jan 26, 2023 4:08 pm I'm doing some research for an article on how to s=spend more money and wanted to solicit some views from the Bogleheads forum.

We spend so much time and effort on developing "safe spend rates" from one's nest egg and live frugally but there is another problem that I personally have and suspect many on the forum do as well. For whatever reason, many of us were programed to live below our means and build up a nest egg. After decades of building up a nest egg, the thought of spending it down is scary and our fugal behavior continues even though we know we can't take this money with us when we pass.

Any thoughts on the subject, especially on how to get someone to spend more money, would be very much appreciated. Thank you!
We spend more money in retirement than we spent pre-retirement. Reasons being that while working we lived well below our means and we now live "up to" the level of our means. Primary drivers of the increase is spending on travel and entertainment (which is many, many multiples of what it was when we worked and by far the largest single line item of spending for us) and health care (we pay for our own healthcare, whereas we had employer subsidized healthcare while I worked).

Here is the annual budget setting process we follow. Our WD rate naturally sets our budget for the year. Then the individual line items fill in as much of that as necessary and the excess becomes our travel and entertainment budget or other unplanned one-off spend budget. I typically have a list of travel and entertainment I am working on for the upcoming year a good 6-9 months before the year begins. We then make airfare and hotel reservations. I know in a ballpark sense how big the T&E bucket is so I don't necessarily need to wait until the end of the current year to make those decisions.

My philosophy has been that I don't want to leave experiences on the table. So budgeting in this way helps me to actively plan our T&E calendar to try and live all the way up to the level of our means.
Real Knowledge Comes Only From Experience
MnD
Posts: 5184
Joined: Mon Jan 14, 2008 11:41 am

Re: How to spend more money - request for help regarding an article

Post by MnD »

The day I retired (mid-50's) we set our withdrawal from portfolio at 5% of annual balance (less risky than inflation-adjusted) and after taxes have it deposited monthly into checking along with my pension. That's our paychecks to spend freely as we desire. Our needs are about 1/3 of that - so 2/3rd's discretionary on a 5-figure monthly income. It's very much like when working but lower taxes and not having to save for retirement and college. Despite a healthy income from portfolio, 4+ years in we have more wealth than when we retired.

Serious amounts of travel, home improvements, gifts to each other and adult kids, high quality foods and beverages, regular dining out, massages, exercise classes etc. If it something we want we generally buy it but we do make sure what we are buying is a good value. We have 77 travel days booked for 2023 and we have only planned out through June. We are not wasteful and do not purchase goods or experiences that don't bring us happiness.

Our whole lives we have paid ourselves first for things we needed to put money away for (home purchase, college, retirement etc.) and happily spent the remainder, so there was no "switching gears" at retirement other than we suddenly had vastly more time to do the things we enjoyed besides working. Including things that cost money.

I'm at a complete loss regarding people who spend decades "saving for retirement" and then struggle to use that wealth for retirement income. Or keep working because they can never convince themselves they have "enough". I know so many people that never got a happy retirement due to premature death, disabling illnesses or other misfortunes. I feel extremely privileged to be in our situation, but after 40 years of working for others (age 16-56) and 32 years of systematically building wealth it would seem like a huge blown opportunity not to live the financial lifestyle we are enjoying now.
70/30 AA for life, Global market cap equity. Rebalance if fixed income <25% or >35%. Weighted ER< .10%. 5% of annual portfolio balance SWR, Proportional (to AA) withdrawals.
Grt2bOutdoors
Posts: 25617
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: How to spend more money - request for help regarding an article

Post by Grt2bOutdoors »

unclescrooge wrote: Fri Jan 27, 2023 3:03 am
Dave55 wrote: Thu Jan 26, 2023 5:21 pm I had a friend who was making $1M a year in his 40's and 50's. He amassed over $10M by 50. He gave his wife grief for shopping at Walmart. He died in his early 60's and never enjoyed his money.

Dave
My new years resolution for 2022 was to spend more money.

I wanted to buy a $1k watch for my birthday. Couldn't decide whether I wanted a black disk or a white dial, so I decided to buy both. Of course, then I realized I can get a 50% discount if I buy used, so I ended up spending the same $1k.

I also upped my wine game, spending between $25 and $90 a bottle instead of $10-20. Frankly I can barely tell the difference between many $50 and $90 bottles.
The best tasting bottle of wine I've had, cost exactly $4 although that was nearly 15 years ago. I found it by dumb luck walking into a winery in Napa. They are out there and they are on the shelves of your local store. I've found more expensive or more doesn't mean better - taste is subjective, just like spending.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Post Reply