Affluent families accumulate wealth because they earn a nice living and they spend less than they earn. It’s not easy to earn a nice living; it’s even harder to spend less than you earn. It requires you to often settle for “good enough” when you decide what to purchase and the ability to consistently defer gratification. To be blunt, it requires you to say “no” to others and yourself.
Chances are that over time, it becomes a habit. You always purchase the preowned car. You wait to buy clothes on sale. You stay in your comfortable home with a small mortgage, even though you would love a nice master suite and bigger kitchen. You rarely, if ever, treat yourself to that big splurge. Now, you’ve reached the stage where you live comfortably, and you have enough to afford that luxury cruise, purchase a new Tesla, or move to a home with more room to entertain friends and family.
Still, you’re nervous about spending too much. You don’t know how much you can reasonably afford to spend without putting yourself at risk. It’s scary to depart from your long-time habit of being careful and cautious with your money. It feels uncomfortable to loosen the purse strings.
So, you are in a bind. You don’t want to be filled with a pile of regrets at the end of life wishing you had more fun, more joy, and more “wow” experiences. You also don’t want to end up without enough money to provide for yourself and those you love. The answer to getting out of this bind requires a combination of solid number crunching and emotional wisdom. Here are some steps you can take to help you enjoy more of life’s pleasures with confidence:
Work with Your Financial Advisor
Create a cash flow model that shows how much money you need to support your current lifestyle and how much more you can spend without putting you or your family in harm’s way. Your financial planner, like the ones at Wealth Enhancement Group, should create a model that will be tax- and inflation-sensitive and will vigorously test your ability to maintain your lifestyle under a wide range of market conditions, both good and bad. No projection is perfect because the world is constantly changing, but with your advisor at your side, you can have more confidence.
Work with a Behavioral Wealth Specialist
Although you might rationally understand you can spend more money, you may still be nervous. We often have unexamined messages from our childhood that can hold us back. Your parents might have preached messages such as “money is security,” or “don’t take chances—better to be safe than sorry.” The Behavioral Wealth Specialists at Wealth Enhancement Group can help you explore your money messages around security, success and freedom and encourage you to consider reframing them to better align with your current financial situation, values, and life priorities. Give yourself the freedom to indulge yourself—if only a little.
Give Yourself Permission to Dream
Many financially conservative people don’t allow themselves to dream about what they might want. After all, if you’re not going to buy it, why spend time thinking about it and ending up disappointed? Now that you know you can afford to spend some more, give yourself permission to think big. Brainstorm about how you might spend some money to enjoy life more. You might consider owning a second home where you can create shared memories with family and friends. Maybe you purchase the car you have been dreaming about for years. Maybe you travel more. Where (and with whom) would you like to travel? Think about your legacy and how you want to leave your mark on the world.
We only live once. A dream delayed is often a dream denied. Of course, we never want to put ourselves at risk of not having enough money to provide for ourselves and our loved ones. We also don’t want to die wishing we had enjoyed life more. Working with your financial advising team, you can find the right balance for you and your family.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
CFP® David joined Wealth Enhancement Group through the partnership with JOYN Advisors, where he acted as CEO and Co-Founder. He is the creator of the Behavioral Wealth Management™ model. A model that focuses on aligning wealth management with the integration of human emotions while taking into consideration an individual’s talents, wisdom, network and relationships. David has been featured in a number of prominent outlets including The New York Times, The Wall Street Journal and The...Read More