Ready to Spend Your Hard-Earned Savings? Why It’s Harder Than You Think
Hello everyone, John here! It’s great to have you back on the blog. Today, we’re going to tackle a topic that might sound a little backward at first. We spend so much time talking about how to save money, how to invest wisely, and how to build up a healthy nest egg for the future. But what happens when the future is… well, now? What happens when it’s time to actually start spending that money?
You might think, “Spending money? That’s the easy part!” But for many people who have been diligent savers their entire lives, flipping the switch from “save mode” to “spend mode” is one of the most difficult challenges they’ll face. It can be stressful, scary, and feel completely unnatural.
So, let’s explore why this happens and walk through some simple, gentle ways to give yourself permission to enjoy the financial security you’ve worked so hard to create.
The Saver’s Mindset: A Habit That’s Hard to Break
Imagine you trained for a marathon for 30 or 40 years. Every day, you were disciplined. You watched what you ate, you ran for miles, and you focused on that one big goal. Then, after you cross the finish line, someone tells you, “Okay, you can stop running now. Just relax and enjoy yourself.” It would feel strange, right? Your body and mind are so used to the discipline of running that just stopping feels wrong.
Saving money works the same way. For decades, you told yourself “no” to certain purchases. You automatically moved money into savings, watched your accounts grow, and felt a sense of security from seeing that number go up. That behavior becomes a deeply ingrained part of your identity. When retirement comes, the idea of watching that number go down, even if it’s for things you want and need, can trigger anxiety.
Lila, my assistant, had a great question about this the other day.
“John,” she asked, “I hear people talk about their ‘nest egg’ all the time. What does that actually mean?”
That’s a perfect question, Lila! A nest egg is just a friendly term for the total savings and investments someone has accumulated for their future, especially for retirement. Think of a bird carefully building a nest twig by twig, making it safe and secure. Your nest egg is the financial nest you’ve built to keep you comfortable when you’re no longer working.
The Real Reason We’re Afraid to Spend
At the heart of this spending-phobia is one simple thing: fear. It’s not an irrational fear, either. Retirees and lifelong savers worry about very real possibilities:
- What if I live a really long time? Modern medicine is wonderful, but living to be 95 or 100 means your money needs to last a lot longer, too.
- What about unexpected costs? A major health issue or a necessary home repair can pop up at any time, and these can be expensive.
- What if the stock market crashes? Seeing your investment values drop right after you’ve stopped earning an income is a terrifying thought for anyone.
These worries can make people “underspend,” meaning they live a more frugal life than they need to, sometimes missing out on experiences and joys because they’re too scared to touch their savings. The key is to find a balance—to respect the risks but not let them paralyze you.
Lila piped up, “You mentioned a stock market crash. That sounds really scary. What exactly is it?”
It does sound scary, Lila, and it can be. Think of the stock market as a giant marketplace where people buy and sell tiny ownership shares of companies. Most days, prices go up and down a little. A “crash” is when a wave of panic hits the market, and everyone tries to sell at once, which causes prices to fall very quickly. It’s like a sudden, massive “everything must go” sale. The important thing to remember is that historically, the market has always recovered and gone on to reach new highs. The goal is to have a plan so you don’t have to sell your investments during one of those panic moments.
Four Practical Ways to Get Comfortable with Spending
Okay, so we know it’s hard and we know why. But how do we fix it? It’s not about becoming a reckless spender overnight. It’s about building a thoughtful, intentional plan that makes you feel in control and confident. Here are a few strategies that can help.
1. Create a “Permission to Spend” Budget
This might sound like the budgets you used to save money, but it’s framed differently. This budget’s job is to give you permission to spend. By clearly mapping out your expenses, you can see exactly how much you can afford to spend on fun and fulfilling things without jeopardizing your future.
Try dividing your money into different “buckets”:
- The Essentials Bucket: This is for your non-negotiable costs like housing, utilities, groceries, and healthcare.
- The Fun & Fulfillment Bucket: This is the money you set aside specifically for travel, hobbies, dining out, and spoiling the grandkids. This is your “guilt-free” spending money!
- The “Just in Case” Bucket: This is for unexpected emergencies and future big costs. Knowing this is set aside can dramatically lower your anxiety.
When you see it all laid out, spending from the “Fun” bucket feels much safer, because you know all your other important bases are covered.
2. Pay Yourself a Retirement “Salary”
For most of your life, you got a paycheck. You knew how much was coming in each month, and you spent accordingly. You can recreate this in retirement! Instead of looking at your savings as one giant pile of money, set up an automatic transfer from your retirement account to your checking account each month.
This simple trick reframes everything. You’re no longer “draining your savings”; you’re simply “living on your salary.” It makes spending feel routine and normal again, rather than like a major, scary decision every time you pull out your wallet.
“Hold on, John,” Lila interrupted. “What’s a retirement account? Is that just a normal bank account?”
Not quite, Lila! A retirement account (like a 401(k) or an IRA, which are common in the U.S.) is a special type of investment account. The government gives you tax breaks on the money you put into it to encourage you to save for the long term. You contribute while you’re working, that money grows over many years, and then you use it to live on when you retire. It’s the account where most people keep their “nest egg.”
3. Focus on Experiences Over Things
When you do start spending, think about where that money will bring the most lasting happiness. Study after study has shown that people get more sustained joy from spending on experiences than on material goods. A new TV is exciting for a few weeks, but the memories from a trip with your family can last a lifetime.
Make a list of things you’ve always wanted to do.
- Take that trip to Italy you’ve dreamed about.
- Sign up for a pottery class.
- Take your grandkids on a special outing once a month.
- Fund a scholarship at your old high school.
Spending on things that create memories and enrich your life feels less like depletion and more like an investment in your own happiness.
4. Keep a “Sleep-Well-at-Night” Fund in Cash
This strategy directly tackles the fear of a stock market downturn. The idea is to keep a buffer of one to three years’ worth of your essential living expenses in something extremely safe and stable, like a high-yield savings account. It’s completely separate from your long-term investments.
Think of it as your financial emergency generator. If the market (the main “power grid”) has a bad year or two, you don’t have to worry. You just flip the switch on your generator and live off your cash fund. This prevents you from having to sell your investments when their value is low, giving them time to recover. Just knowing that cash is there can do wonders for your peace of mind.
A Few Final Thoughts
John’s perspective: For me, this is a powerful reminder that money is simply a tool. It’s not the ultimate goal. We work, save, and invest to build a life of security and opportunity. Learning to use that tool to create joy and memories in retirement is the final, and perhaps most important, step in a successful financial plan.
Lila’s perspective: As someone at the beginning of my career, this is so eye-opening! It teaches me that financial planning isn’t just about saving, it’s about knowing what you’re saving for. It’s a good lesson to start thinking now about the kind of life I want to be able to enjoy later on.
This article is based on the following original source, summarized from the author’s perspective:
How to Spend More Money