By Dr. Jim Dahle, WCI Founder
This post is going to be a little odd. Most personal finance writers write all kinds of articles motivating you and teaching you how to spend less money so you can save more and actually reach your financial goals. However, many people who read personal finance books, blogs, and magazines don’t have that problem. Personal finance is their hobby. They’re already highly motivated to save money. They generally start early, save a big chunk of their income, and do a great job investing. It’s a huge disconnect. The writers are writing for people who don’t read their stuff, and the readers are reading stuff not written for them.
To make matters worse, a certain percentage of personal finance hobbyists not only end up with gobs of money but they also have a certain amount of anxiety about money. This anxiety is readily identified in others, but it's difficult to see in ourselves and it's manifested in many ways. Perhaps it shows up in an ultra-low withdrawal rate, like 2%-2.5%. Or recommending others save 50%+ of their income. Maybe it shows up as a difficulty transitioning from saving to spending. Or maybe just an unwillingness to spend money on something that will obviously make your life easier and happier.
If you’re one of those who needs to loosen the purse strings a bit, this post is for you. And lest you think I’m criticizing you, bear in mind I write this sort of post for myself just as much as for you.
8 Ways to Spend More Money
#1 Support Your Favorite Charitable Cause
There are thousands of charities out there doing incredible work. The likelihood of you not finding one whose mission you agree with seems awfully low. WCI readers support hundreds of different charities. Giving to charity has two benefits—first, it helps the charity and those whom it helps, but second, it helps you. There is a psychological effect of giving away some of your hard-earned money voluntarily (sorry, taxes don’t count). It sends your subconscious a message—“You have enough, quit worrying about running out of money.”
More information here:
6 Tips for Those Who Have Enough
#2 Recognize Your Mortality
Some who struggle to spend do so out of fear, conscious or subconscious, of running out of money. Sometimes we need to step back for a moment and recognize the law of averages. While you may have a chance of living to 105, you’ll probably die at 85. It can be helpful to remember that. As you realize your time on this planet is likely to be shorter than most safe withdrawal rate studies might suggest, perhaps it will be easier for you to get out and start ticking off those bucket list items before it is too late. I’m only in my 40s, but I’ve already got a bucket list that is at least two lifetimes long.
#3 Give Yourself Permission to Spend
That fear of running out of money can be very powerful. The financial technique that is most likely to allow you to accumulate (and thus leave behind) the maximum amount of money is to keep the money invested in aggressive investments—like stocks and real estate—throughout your life. Although they do get a step up in basis at death, those risky assets can always go down in value, sometimes severely. That fear of loss (and, thus, running out of money) keeps a lot of people from spending as much as they could.
There are several financial products out there that give you “permission to spend.” The most useful of these is a Single Premium Immediate Annuity (SPIA), where you give an insurance company a lump sum of money in exchange for a monthly payment every month from now until your death. However, if you also want to ensure you leave a certain amount of money behind to your heirs or a charity, a permanent life insurance policy can be very useful, particularly inside an irrevocable life insurance trust (ILIT) if you have an estate tax problem. If you want to leave a guaranteed nominal amount of money, a guaranteed universal life (GUL) policy is best. If you want the amount left behind to slowly grow as the years go by, a whole life policy is probably better, although the premiums may be twice as high.
#4 Save for Someone Else
Love to save but already have enough to meet your financial goals? You can save for someone else, too. You can save for your kid’s college using a 529 account. If you’re married, you can contribute $180,000 per kid in one fell swoop by superfunding your 529. You can save for your kid’s future cars, down payments, marriage, European vacation, or anything else in a UGMA/UTMA account (think of a taxable account for kids). If your kids have earned income, you can put it in a Roth IRA. If they don’t want to save their money, let them spend an equal amount of yours (the parent match) and put theirs in the Roth IRA. This doesn’t even have to stop once they turn 18. You can let them spend your money while contributing their own earnings to a 401(k).
If your underage kids don’t have earned income, you can save for their retirement in a low-cost variable annuity. Over multiple decades, the tax-protected growth in the annuity will overcome the higher costs (and ordinary income tax rates at withdrawal) of the annuity. Are your kids set, too (or do you already have enough set aside for them that you’re afraid any more will ruin them)? You can start saving for others, too. Start a 529 for your nephew. Or your grandkids. Or the neighbor kid (if you can talk his parents into giving you his birthday and Social Security number).
#5 Buy Time
You may have far more money than you need, but you have another resource that will always be limited—your time. The larger your money-to-time ratio is, the more you should be willing to spend to buy more time. That may mean money spent on exercise, good food, and healthcare. But there are other ways to exchange money for time. Hire someone to clean your house or to mow your lawn or to manage your portfolio. Fly instead of drive. Cut back to half-time or retire early. Pay a partner to take your call. Refer away work you don’t want to do. The more you look, the more opportunities you will find to purchase time with money.
More information here:
What’s the Value of Our Time, Anyway?
#6 Take Up an Expensive Hobby
A great income, a little fortune, and some discipline are likely to result in many readers of this site being in a higher socioeconomic class than how they grew up. That means you can do some things you couldn’t afford to do as a kid. Maybe it is international travel. Maybe it is boating, snowmobiling, or 4-wheeling. Polo, anyone? There are a lot of fun things to do out there that aren’t particularly cheap. Why not find one or two that you think you might enjoy?
#7 Send Someone on a Dream Trip
Have enough money to do everything you want to do? I bet you know someone who doesn’t. Ask a less well-to-do family member sometime about what they would do if they had more money; you might be surprised how affordable it is to you to give them their dream trip. Happy Birthday!
More information here:
#8 Recognize Wise Spending Takes Effort
Good savers tend to automate their financial lives, but that works a lot better for saving than it does for spending. The wealthy often find that it takes just as much effort to spend or give away money in a wise manner as it does to earn and invest it. Don’t expect it to be easy. It takes work. You’ve got to really analyze yourself and figure out what will make you happier. Upgrading your 2022 Lexus (or Mastercraft) to a 2024 model probably isn’t going to increase your happiness much. The same probably goes for moving to a larger home when you already live in a “doctor house.” While those things would increase your spending, they wouldn’t increase your happiness, which is the real point. That’s going to take a little more work.
But remember this—either fly first class or your heirs will. As my mother told me after taking her 31-member extended family on a cruise, “I figured you guys would be spending this money eventually so I thought I’d just arrange to be there when you did!”
What do you think? Is it hard for you to spend? Do you think it will be eventually? What do you do to keep yourself from becoming miserly?
[This updated post was originally published in 2017.]
Great post!
You make a great point about those who are already dedicated to personal finance. We already save and invest like crazy, but one thing we don’t really do/study is how to actually SPEND that money! It’s still a fear of mine that when I eventually retire, I might not even want to spend my money! Thank you for all the insightful tips.
Here I am reading this 3 years later. But it’s a great post. I feel guilty sometimes when I spend money. I needed this.
Good reminder. I am now considering having the cleaner come weekly not biweekly, reminded I need to set up massage appointments, and am now definitely going out to lunch today! And maybe tomorrow.
I say this not to be snarky, but to be constructive: it is not appropriate to rerun an article and say so at the END of the article. To be fair and honest with your readers, this should be made clear at the TOP of the post.
It would be fun if Jim added what he’s started spending money on in the 7 years since the post was run, but might come across too much as too much bragging. I was interested in the wakeboat and am waiting for netjets post. 🙂
I can think of many cool things to spend money on — space travel, flying to the South Pole, African safari for the family, etc. Whether I would do it instead of charitable donations is still questionable, although at this time (and probably never) I can’t afford any of those activities. Jim is rich enough to consider any of those rich person’s activities except maybe personally owning a private jet or a mega yacht.
Many premeds think doctors will be at that level of wealth but most won’t. Most will be comfortable compared to the general population with a couple toys or a nicer house but not at the same level as the truly rich. And that is probably a fair level of wealth for working as a doctor and still a good outcome.
For any interesting book about the super rich check out We need to talk, a memoir about wealth by Jennifer Risher. Her husband struck it rich at Amazon, sounds like the 100 million range.
Katie and I both want to go to space and would spend considerably to do it. I’d like to orbit once though, not just 6 minutes of weightlessness. She went on safari last year and the family is going this year. Still have the wakeboat. No NetJets, but I think about it every now and then. Bought 1/48th of a “yacht” (Lake Powell houseboat). Happy? 🙂
We certainly worry MUCH less about spending money after FI than we did before FI 7 years ago. Spent the last 5 days backpacking, packrafting, and canyoneering. Ate $8 freeze dried dinners, spent $50 in gas, and now have about $25 worth of equipment to replace. Fun doesn’t have to be expensive.
Hi CancerDoc, I’ve worked in journalism and publishing for a long time. Everywhere I’ve worked, we’ve put most corrections or amendments or minor additional information at the end of the post. But it’s my decision to run the “[This updated post was originally published in 2017.]” note at the end. Why do you think it’s “not appropriate” to run it at the end of the post? How is that being less fair and less honest with the readers? I’m curious about your rationale.
I personally find it deceptive and a waste of my time to realize two thirds of the way in that it’s old content that I digested before. I would really appreciate it to see the classic posts branded as classic at the top.
I understand what you’re saying (though I very much disagree with the term “deceptive”), but if people don’t remember that they haven’t read it before, why is it a bad idea that they reread it again? It’s rarely a bad idea to review information that you already know but maybe haven’t brushed up on in a while. Do you remember reading this post from seven years ago? If not, how is it a waste of your time?
It’s not for you to rationalize why we should read something again…it’s our (the readers) decision. Sorry, it should be at the top.
I invest my time here to acquire high value information. I read in hopes of learning something new. When I realize after investing my time and energy that there is nothing new to be learned from this read because I read it all before, I feel deceived. Essentially it amounts to a bait and switch.
If rereading it had given me value, I would not have posted the displeasure in the first place.
Appreciate the feedback.
+1 about preferring you said it was a re-run right at the top. But I understand you are trying to get readers not deter them.
Wow! That’s the first complaint about this practice in the 5+ years we’ve been doing it. This one is 7 years old. Most of our audience wasn’t even here 7 years ago. And those who happen to have been here then probably don’t even remember it. Certainly if you don’t remember it from the first paragraph or two, you’ve forgotten enough about it that it is still probably useful to you, at least as useful as something totally new.
What exactly is the issue with noting it was republished on the blog at the end rather than the beginning? Did you feel like your time was wasted reading it or what?
Surprised it’s a new complaint, but also think that “Wow!” is an overreaction to at least how I feel about it, and to a handful of comments. Simply a minor suggestion to flag a re-run at the top. It’s just a minor irritation to realize there aren’t really 70 comments and lots of interest overnight and that actually it’s a cumulative discussion over years. As much as anything I’m annoyed at myself that it takes too long to realize I’ve read it before – no-one likes to be made aware of their age/forgetfulness !
I was just really surprised I guess. As near as we can tell, most people don’t notice nor care and we figure, hey, tons of new readers, great post, pretty much evergreen, we should run it again.
We’ll talk about it though and figure something out. We certainly don’t want to be annoying our longest term readers.
I’m thinking of fostering or adopting a child. A huge undertaking, but another worthwhile way to spend money if you can give an orphaned or unwanted child a good home.
I enjoy this article even as a re-read, and different parts of it resonate each time. A few thoughts that it triggers:
1) I *can’t* understand it when people don’t even want to spend! Most things I spend on really are great and almost addictive – 5 star travel, great food, latest devices, helpful home services, home decor, etc etc! I agree that some have diminishing returns and easily become the new norm, but plenty don’t!
2) I *can* understand the fear of running out. Perhaps not so much about running out of already accumulated money. But I definitely worry about running out of the ability to accumulate. It’s hard to spend freely in your 40s when you don’t know how long the earning will continue
3) Maybe an uncommon viewpoint but I consider taxes as part of giving. While it’s not as explicit and voluntary, I devote effort to trying to encourage higher taxation* for certain specific beliefs (education, healthcare)
* or at least better directed tax spending
RJ – thank you for believing that “you” should be the one to decide to how others should spend “their” hard earned money… (sarcasm intended)
And just in case you don’t understand this, when you decouple the “customer” from the person paying the bill, you get extreme inflation…. Witness the two topics you reference….
Brainerdoc – I offer no opinion on how others should spend their money – only sharing a personal reaction of surprise that other people don’t want to spend. It is truly interesting to me that people don’t feel the pull of many ways to burn through money all too easily.
In comparison I (again just me) find it easy to understand that different people have different views on whether taxation, single payer, etc can work well or not – hence my “maybe an uncommon view” wording to acknowledge that there’s a wide range of opinions on that.
@Jim – Yes absolutely a political viewpoint – almost the definition of one – to think that taxes can do good, and to have varying views on how progressively they should be applied. Charitable giving and higher taxation aren’t mutually exclusive of course.
Regarding # 3 I find that attitude is FAR more prevalent on one end of the political spectrum than the other. Of course, true charitable giving tends to be more prevalent at the other in my experience.
This post is one of the reasons I like this blog and keep returning to it. WCI provides a balanced look at financial life and I like hearing this. Some of the other forums only concentrate on accumulation.
Maybe #6 would make a good comment section. There may be no end to what you can spend money on, but I would be interested in what others see as an expensive hobby. For me building a better music/audio system has always been a lot of fun and worthwhile but not cheap.
Hey Jim,
Do you know of a financial coach in the Utah area that actually helps doctors to spend more money?
This is a great post by the way. There are so few of these out there
I do know of some good advisors in Utah. Email me if you want those or look at our list here:
https://www.whitecoatinvestor.com/financial-advisors/
But you might just need a friend. I have one that’s always encouraging me to spend more money to be happier. He’s usually, but not always, right.
Thanks for the response!
The issue I have with financial advisors is that they tell you HOW MUCH money you have to spend but not WHAT to spend it on. And that’s where I have the problem. Your blog post helps with great ideas but having someone to assess and then continue follow up for my financial situation would be even more awesome!
As for it being a friend, yes that’s basically what I’m doing now but I am finding that having a third party can be more helpful. Sometimes it’s nice not to mix your financial situation with someone too close to you.
Great list!
I realized one that could be added:
Investing in yourself as a doctor (beyond the bare minimum)
Examples include:
Extra “toys” that could be too expensive for the hospital to purchase (for surgeons this could be certain instruments, for clinic it could be a special imaging device or AI tool for dictating). Or investing in innovation or research for your respective field. In ophthalmology, there is always something to invent to make surgery safer and more effective and most of that has a start up cost.
These things have the benefit of 1) advancing technology and patient care in an area we care about 2) being fun and giving us a better sense of control in something we are experts in 3) continuing to improve ourselves in something that we are already constantly trying to improve in, which is why we chose that field in the first place
Great idea!