Play a Different Game
The Saver's Dilemma: Finding Joy in Spending Your Nest Egg
For 40 years beginning at age 25, I was a prodigious saver.
I invested in equities and watched my net worth grow. I took pride in my investing acumen and in my ability to provide for the people I love.
I am now in a different phase of life with different priorities. I have the opportunity to spend my money in all sorts of meaningful ways. Still it feels strange and uncomfortable to spend down my savings. Watching my net worth shrink feels like letting the other team score when I’m way ahead. I’m still going to win the game, but it won’t be a rout.
My wealth management clients often found it difficult to spend or give away money they would almost certainly never need. I experience the same challenges cropping up in my own life. How do I overcome this mindset? I remind myself that I am playing a different game. Money is not how I want to keep score any more.
My new game is spending my time wisely.
I win when I focus on what matters most to me. I win when I live a healthy life with the hope of extending my active years well in my 80s or even 90s. I win when I spend time with those I love the most and when I use my individual strengths to help people in my orbit. I win when I engage in thought-provoking discussions, spend time in nature, laugh with friends and enjoy the moment. I win when I make a positive difference in the world, whether it’s helping the poor, supporting my local community, or bridging our country’s deep divides.
I have found that it takes patience and practice to refocus my mindset. Why is it so hard to spend or give away money I will almost certainly never need? I have to remind myself that money is simply a tool. I can do incredible things with my money, particularly when my wife Heidi and I combine it with our time, talents, wisdom, network of relationships and personal values. I also remind myself that our money has an expiration date! When we die, so does the ability to enjoy our money.
My anxiety about the future also holds me back. I’m aware that the future is unknowable; life can change in an instant. I know it is possible than someone I love will suffer a terrible tragedy. That is true for all of us, all the time. Humans are just inherently vulnerable to misfortune. Knowing this, my anxious self says: “Play it safe and hold onto the money. Your first and only responsibility is to the people you love.”
They are my prime responsibility, but they are not the only people I care about. I believe that all humans are connected, and the suffering of one leads to the suffering of all. We are each and every one of us responsible for those who are struggling.
I have developed a three-prong approach to dealing with the concerns of my anxious self.
First, I realize my anxious mind imagines Heidi and me having spent or given away almost all our money, leaving us with very little. The truth is Heidi and I don’t plan to spend or give away all our money tomorrow. Our plan is to deploy our money over our lifetime, and to always have a meaningful reserve to help our family.
Second, I acknowledge that money can’t solve many problems, and sometimes it exacerbates a difficult situation. Money can’t cure an incurable disease. Money can’t heal a troubled marriage. Money can’t give a child confidence, persistence, or resilience. Whether or not Heidi and I have a financial reserve, our children and grandchildren will have to face and overcome their own struggles.
Third, I want to use my money to enhance the quality of my life. Watching it grow in my investment account is neither meaningful nor satisfying. Much better to use my money to have fun, and to show family and friends how much I love them.
(If you need more encouragement or ideas for how to do more of this, see my blog Enjoy Spending Your Money)
Heidi and I want to help repair our broken world. We have discovered the joy of giving money to charities and causes we support. These charitable gifts are more fulfilling when we combine the financial contributions with gifts of our time, talents, and wisdom.
Do you have captured capital, money you will likely never spend? Does it feel strange to you to embrace a spending strategy that reduces your net worth? Do you worry about having the resources to deal with a future disaster?
I hope my ideas will help you consider making a transition from feeling good about how much your money has grown to feeling good about using your money to create a more fulfilling life.
Until our next conversation,
David
“Money is like manure. It’s not worth a thing unless you spread it around, encouraging young things to grow.”
- Sir Frances Bacon (1561 - 1626)
Small Steps & Worthy Questions
If you are still working, do you know how much money you need to save to reach your financial goals? If not, have you considered hiring a wealth manager or finding a different manager who will help you think this through?
If you are retired, do you know how much money you need to live a comfortable life—now, and until the moment you pass?
Whether you are working or retired, do you have extra? How might you start to spend the extra to add joy and meaning to your life? Imagine doing some of those activities and how you would feel.
What is holding you back from spreading your money around?
How much is enough? From childhood and throughout our lives, our culture teaches us the answer, always, is "More." Could that be so we won't have to calculate our needs, examine our wants, and evaluate our wishes? Your post recommends focusing on what matters, which requires self-knowledge, and that's hard. But it's worth the effort, and reduces the pressure of always chasing "More."