One of the very real fears people have is that of spending money.
This is especially true after you have been in a frugal mindset for a long period of time.
When you are so used to pinching every penny, it’s common to become scared to start spending more money.
While this isn’t always a bad thing, it can contribute to a scarcity mindset and prevent you from taking full advantage of your financial resources.
Retirees Aren’t Spending What They Could
A study published in the Journal of Financial Planning found that many retirees who get to their golden years aren’t actually spending money in a way that draws down their assets.
While this might seem like a good thing on the surface, there are some questions the behavior brings up. For example, I know someone who has plenty of assets and available money, but he refuses to spend money on house cleaning. This is fine in and of itself, but he can’t keep up with the housework due to failing health.
This man doesn’t want to spend money on yardwork, home maintenance, or housework. Instead, he wants to try to do it all himself in the name of frugality.
His age and health isn’t allowing him to do a good job though. The result is that his home is falling apart around him, causing issues for not just himself but his neighbors as well.
That’s an extreme case.
But part of the point of saving up until retirement is so that you can enjoy the fruits of your labor. You should be comfortable and in a place where you can spend a little extra to do the things you planned to do.
This Can Happen Before Retirement
Being stuck in this mindset can also impact you today. This is something I see sometimes with people who have paid off debt. They have scrimped and saved so long and frugality is such a part of their lives now that they have a hard time spending once they are in a better financial situation.
While you certainly don’t want to end up in debt, you don’t need to keep being frugal to the point of extremity. It’s ok to let loose a little and spend on things that will truly enrich your life and bring you new experiences.
The idea is to have a plan for your money. That plan can involve saving for retirement, charitable giving, extracurricular activities for your kids, and travel. Now that you’ve paid off your debt, figure out what you want your money to do for you.
Just hoarding it won’t provide you with long-term benefits. After all, what’s the point of having money if you can’t use any of it…