Why do we find it so difficult to spend money?
A client of mine is retiring soon, a few months before he’s 55. He wants to enjoy as much time together with his wife while he can.
In the next few months they’ll travel to Las Vegas and then St. Lucia. Upper class of course, Virgin Atlantic don’t do business. In September, he’s heading to France for the Rugby World Cup. Why not?
But his friends and colleagues can’t quite get their heads around it. How can someone who wants to retire early afford such exploits? Shouldn’t he and his wife be hunkering down and living frugal lives until he finally escapes the workforce?
Contrary to popular belief, it’s possible to retire early and make the most of the present. My client is a man of numbers and modelling. He understands the maths. He knows how it works. And together, we’ve created a financial plan that screams: ‘you can do this!’
He’s something of an anomaly however. Successful and financially sensible people often struggle to spend. They put their future selves first while neglecting the present. But why? Why do we find it so hard to make the most of our time, health and money while we still can?
Ageing parents and reality bites
There’s something about watching your dad’s hair turn grey and your mum order a stairlift that can come as a shock.
My mum is showing early signs of Alzheimer’s. A friend of mine is experiencing the same thing with his mum. These types of challenges can help to put things in perspective.
When our parents are healthy, we might see retirement as a time for freedom and exploration. But when our parents start getting confused or forget what’s just been said despite being able to remember clear as day events form fifty years ago, or we get the first phone call to say there’s been ‘a fall’, the realisation that good health is not finite becomes hard to ignore. Age happens to us all. Retirement isn’t one long holiday.
This is a good time to start thinking about how we should really be spending our time – and money – so that we have the chance to enjoy it before the time comes for stairlifts and care homes. And yet, it’s still difficult to focus on the now.
The fear of boredom in retirement
For those who choose early retirement, there’s one question in particular they’re likely to hear again and again: “Aren’t you going to be bored?”
I wonder if people who ask this question are trying to put their own minds at ease. Perhaps they lack confidence in their ability to retire early. Working into your 70s or 80s doesn’t sound as daunting if you convince yourself you’d be bored in retirement.
But even if you genuinely love your job, there’s so much more to life than work. Retirement can be an opportunity to explore new hobbies, spend time with loved ones, and travel — as long as your joints are still up to the job, of course.
Pottery classes. Gardening. Playing an instrument. Reading. Swimming in the sea. Eating at new restaurants. Volunteering. Baking. Homebrewing. Writing. Creating a TikTok account and sharing your wisdom with the world, even. The possibilities are endless.
It’s not just about watching Murder She Wrote reruns and doing jigsaw puzzles — though those are worthy retirement hobbies too!
Turning money into happiness
Another client of mine was recently widowed. After years of thriftiness through his illness, she has found it hard to start spending money. It was a challenging transition, especially when it comes to spending that she considers to be from her husband’s savings, the joint future they never had.
They always dreamed of buying a property by the sea but now that she has, she’s yet to move there. The plan has changed. This was their dream afterall. When he became ill, their priorities had to change. They bought a home with her daughter who’d just had a baby, and all moved in together. That way, she could help with the baby and her daughter could help with dad’s care. Spending valuable time together.
It’s only now, after some encouragement, that she’s feeling comfortable with looking for ways to turn her money into happiness. She gets a lot of joy from giving it away. She’s thinking of getting a gardener, returning to the theatre and lunches with friends, and of course, spoiling her grandchild.
Figuring out what you love… and doing it
If you know what you love doing, you can afford to do it, your body is healthy enough to do it, do it! It takes courage, of course. Courage to stray from the status quo and ignore that little voice in your head that constantly reminds you of all the things that could go wrong.
It’s impossible to watch TV, read a newspaper or glance at social media without being bombarded with inflation and cost of living horror stories. It’s only natural, then, that we might spend a lot of time worrying about how inflation will impact the value of our savings in future.
Such concerns are valid, of course. But once you’ve got a plan in place and you’ve achieved a certain level of financial comfort and security, there comes a time when you need to spend!
If you’re unconvinced or you lack the motivation, here’s a scary exercise: Have a think about how different Christmas Day can be from one year to the next. The number of people around the table is constantly fluctuating. And as the pandemic showed, how we spend our time isn’t always within our control. We’ve got to grab life by the horns while we can.YOLO! This is not a dress rehearsal.
A final anecdote
A friend of mine recently turned 60. He’s been skiing three times this year and is making the most of every second. He felt, on reflection it might have been a tad excessive. A dearly held wish to ski in Japan might have to go on hold. I did some quick sums and said: “How long will you be able to ski for?”
I suggested that in 10, maybe 15 years, he might not be as strong and agile as he is now. If he goes skiing for just one week each year, that’s just 3 months’ of skiing in total. Imagine if he was to cram the next 15 years’ worth of ski trips into one, he’d be finished by August.
It’s scary when you think of it that way.
Nigel reassured me that he’ll still be skiing at 80, telling me about a friend who is 20 years older than he is and has ‘aluminium’ legs.
While I admire his friend’s ability to keep going, we should be cautious about using our friends’ health and longevity as proof that we’ll be equally capable in future. We only get one life. It’d be a shame to let opportunities pass us by only for our situation to change and leave us with regrets.
As I always say, run your own race, or perhaps ski your own piste, not someone else’s. If there’s one final point to take away it would be this: look after your present self as much as your future self. That way, everyone wins.