Permission to Spend

By Paul Ruedi

Over a decade ago I was approached by a reporter to comment on how I, as financial advisor, convince people to spend less money. I candidly responded I wasn’t a great fit for the article, because more often than not I have to convince people to spend more! The reporter was surprised enough by this response to turn it into an entirely separate article.

Over a decade later, it appears not much has changed. Last week on our radio show we received an interesting text. It was from a couple who I would deem “super-savers.” The husband maxes out his retirement account. The wife saves 40% of her salary, which I almost thought was a typo. The text mentioned they know they are on track to retire so they must have done some preliminary retirement planning, or simply have such a high account balance relative to their needs they know they are going to be ok. 

But they had a question. Could they perhaps save a little less this year so they could have some extra cash to go to a Formula 1 race in Las Vegas? Formula 1 is an expensive sport to attend, and Las Vegas is extra expensive on race weekend. I could see how the sticker shock could give someone hesitation.

This couple had a plan or at least had the confidence they were on track to retire comfortably. They knew they had been saving a ton. They knew they would be saving plenty even if they reduced their savings to fund this trip – enough for him to max out his retirement account and for her to get her full employer match. But they still hesitated to bite the bullet and spend some of their hard-earned money on this once-in-a-lifetime experience. Though I think they knew they could do it financially, emotionally they needed someone else to give them “permission” to spend.

As an advisor I often have to push people to spend more and enjoy their money. Some people simply aren’t hard-wired to do it after a lifetime of frugal saving. I can do so by showing them if they do not spend more they will just end up the richest people in the graveyard. Or I can make blunt statements like “if you don’t fly first class, your kids will.” If you feel like you have the financial means to spend more, but are simply hard-wired not to do so, you may want to have a financial advisor give you “permission” to spend more.

Paul Ruedi is the CEO of Ruedi Wealth Management in Champaign, Illinois.