Wealthy individuals who’ve spent years or decades working hard, saving diligently and dutifully following a carefully constructed financial plan often confront a unique challenge: getting comfortable actually spending their money. Thoughts involving legacy concerns, retirement expenses and possible future healthcare needs are deeply ingrained and always top of mind.
But even factoring in those issues and expenses, what if you still have ample money available to afford things you merely “want” – things that you may even deem as extravagant? We understand you might experience ambivalence (or guilt) about spending on yourself. We also know you’re not alone. We’ve heard from a range of clients that varias life events can shift how they think about their wealth. Life generally speaking may feel more uncertain and fragile for some people while others have hunkered down and saved significant sums of money. As such, both individuals and families seem more apt to revisit their goals and retirement plans, as they explore ways to act now on certain pricey pursuits or big-ticket purchases.
So, what do you do if you now want to start spending money on yourself after many years of conscientious saving and delayed gratification?
First, recognize that encountering this “challenge” is a product of your success. You may feel conflicted, but you should also allow yourself to enjoy a sense of pride. Having room in your discretionary budget for an “extravagant” purchase is indeed a good thing – and it’s OK to give yourself permission to mull it over.
We are equipped to help you gain clarity during your decision-making process, so please reach out to your Planning Alternatives advisor. Our objective is to always help you “live your best life” as defined by you. Are you considering buying a vacation home or brand new luxury vehicle? Finally renovating the kitchen? Weighing the idea of spending two of the colder months in a posh island resort? We can help you think about major purchases from both a head and heart perspective.
How we can help you approach a lofty expense:
- We will help you to define your true goal and all related costs of the purchase.
- We can identify your spend margin and how it will likely affect your overall financial plan.
- We’ll also talk through unknown scenarios (unforeseen medical expenses, for instance) to make sure you understand the big picture and that you’re comfortable with all the numbers before the buy.
- We will explain any liquidity risks associated with making the purchase.
- We will help you evaluate the tax implications.
The bottom line is that money should be seen as a means to an end, not an end itself. Feeling ambivalence about a significant purchase, particularly if you’re a highly disciplined saver, can leave you immobilized and stuck in a decidedly unfun should-I-or-should-I-not loop. Don’t let fears or guilt automatically keep you from enjoying the fruits of all your labor.
We can arm you with the financial insights and projections you need to make the most informed decision possible. We can offer perspective about how the purchase fits into your big picture. And we can be an impartial sound board. What you deem “extravagant” might not be extravagant at all, particularly if it ultimately brings you more peace, fulfillment, happiness or better physical or emotional health.
As always, we are here for you every step of the way.