There is no point making money if you don't spend it all. If you die with too much money, that means you wasted a lot of energy, time, and nerves. You could have just relaxed more and enjoyed life!
Imagine you're a financially successful 35 year old professional making $250,000 a year. You're still $400,000 short from being in the top 1%. But by any other metric, you're doing just dandy.
Yet, instead of living a comfortable life, you live like a pauper, renting the same dumpy one bedroom since you were 25. For wheels, you drive a 2002 Toyota Corolla and for vacation, you always stay domestic, never wanting to see the world. Everything you do, or don't do rather, is because you want to save money.
Some of you may think this is a great way to live, as certainly you'll be saving a boat load of cash for retirement. I say there's absolutely no point making that kind of money if you are going to live so frugally.
The Opportunities To Make Lots Of Money
Six figure jobs are a dime a dozen, but generally come with higher stress. As such, you might as well just make a fraction and lead a carefree life if you never plan to spend your earnings.
Watching the zeros grow in your bank account is a very empty feeling after a certain point. It might boost your self-esteem to tell your friends how much you have, but that's just shallow.
Cash is only a medium of exchange, and a means to provide a better life. If you aren't utilizing your cash, then you are wasting your time.
Hoarding Money Like A Disaster Is Always Around The Corner
There's a fine line between being smart with your finances and being overly frugal. Let's say you've always wanted to buy that second-hand $30,000 Porsche in your 30s and your gross income is 10X that amount.
Instead of buying what you want, you get a $8,000 Toyota Corolla to save money in your 30s. Well after 10 years, guess what? You're in your 40s and the novelty has worn off. You're just another 40-something year old knuckle-head going through a midlife crisis.
The best time to own the nicest car you can afford is when you have kids. You want the safest car possible to protect them in case of an accident. God forbid something were to ever happen to them, you would be willing to pay ANYTHING to save your children.
Spend More Luxuriously On Your Home
Comfortable shelter is the same thing. The rental stock is generally inferior to the ownership stock. Due to rent control, many landlords haven't updated their apartments in years.
Sure, you may be saving money renting your same 1 bedroom in your 30s as in your 20s. But you're also crimping your lifestyle if you can afford to buy or rent a two bedroom or three bedroom apartment or home.
The best time to own the nicest home you can afford is when you have children. Therefore, when it comes to spending, try to spend it up. Who knows, your home might actually appreciate in value over time!
I'm currently in the process of upgrading homes again. However, my wife isn't a fan. Here are some risks of upgrading homes nobody really thinks about.
You're going to be middle-aged and feel proud of yourself for saving X amount of dollars. Meanwhile, someone who spent what they could afford has been living a much better lifestyle for the same time period.
Therefore, everyone must eventually choose a decumulation age and start spending more. There really is no point making so much money and dying with millions. This means you wasted a lot of time, energy, and stress during your younger years chasing money.
Spend More Money On Living Better
One of the reasons why the housing market is so hot is because we're all spending a lot more time at home. Therefore, the more time we spend at home, the more we appreciate our homes and want a nicer home.
During the pandemic, people have clearly realized there's no point making money if you don't spend your money on nicer things. If there's ever a time to spend more for a better life, it's during a pandemic.
Great vacations are priceless because of the everlasting memories they provide. Instead of flying off to Greece, you decide to experience your 3rd staycation in a row to save money.
Meanwhile, you're getting older and you're no longer as nimble as you once were to hike those great mountains. It's harder for you to sit comfortably on an airplane for longer than 3 hours because of deep vein thrombosis and numbness in your legs.
Now, what's better? Living a better lifestyle that you can fully afford, or saving an extra buck or two?
Related: Practice Taking Profits To Pay For A Better Life
Life Is Finite, Please Don't Die With Too Much Money
Most of us who are educated and who work hard are going to die with TOO MUCH money in our bank accounts. I know retirees who have great pensions with no mortgage and very little expenses still try and save as much money as they can.
Well guess what? That's kind of counterproductive, because saving money while you are retired is like saving money to spend in death.
I'm likely saving too much money by putting away 70% of my after tax income. It's been instilled in me ever since I got my first crappy job at McDonald's to save the majority of money and not spend.
But if future stock market returns are low, the opportunity cost of not investing is also lower. As a result, you should consider spending more of your stock market gains on a better life today. Remember, stocks provide no utility.
Spending Money Is Still Hard For Me To Do
It's very hard for me to spend more, largely because I feel I have everything I need. After more than 25 years of saving and investing most of money, I have this inability to spend money on myself.
It would be nice to have an ocean view vacation home in the South of France. But that seems like just too much hassle.
The only thing I'm thinking of purchasing is new car in 2025 once my car turns 10 years old. As a father to two young children, a safe car is paramount. My Range Rover Sport has been good to me since December 2016. I'm excited to get a new one!
After maxing out your 401K and IRA and then saving 20% of your disposable income after retirement contribution, I say we should spend guilt-free the remainder on whatever we darn please. If we try our best and fail at spending all our disposable income on living life, then saving the rest isn't so bad.
Please repeat after me. There's no point making money if you don't spend your money. Revenge spend to your hearts delight. Buy things with your tremendous investment gains since the pandemic began.
If there's ever a time to use money to improve the quality of your life, it's now!
Spending Money Aggressively Now In Middle Age
In October 2023, I decided to follow my advice and buy a luxury home for my family. I think spending money on a place you spend over 18 hours a day using is a good use of funds. The home was listed in 2022 for a million dollars more, taken off the market, and then re-listed in 2023 for less. I figured now was the time.
The downside is that I'm no longer financially independent and have to go back to work! But I won't go back to full-time work. Instead, I will go back to part-time work once my daughter goes to school full-time. She's four now.
It felt weird selling stocks to buy a much larger home. I also felt nervous not having the same amount of liquidity as before. But you know what? There's no point making money if you don't spend it. I don't think I'll regret my decision several years from now.
Related: Retire By A Certain Age, Not By A Certain Financial Figure
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Both my wife and I negotiated a severance package from our jobs at 34 years old. Since then, we've been able to travel the world and live more free. We also became parents to two children. It has been a blessing to negotiate a severance and walk away from our jobs with money in our bank accounts.
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WTF are you supposed to do with it. I was going to just quit my job 10 years before retirement age, but mentioned it to my mother who thought it was a bad idea and convinced me not to. I was going to buy a nice new apartment to upgrade from the one bedroom in a plain 1950s building I bought a third of a century ago, where some MF built a wall maybe 30 feet from all my windows, but in every single direction, unless I look straight down at the ground a few stories below. I stopped going hiking on weekends decades ago when my father asked me what the train fare was, then laughed at me when I told him. I can’t go anywhere, because my mother doesn’t go pout by herself anymore, and only for doctors appointments. I have enough clothes, and despise the shit small monopolist supermarket left after the others, and all the health food stores, where I would prefer to shop, and all the produce stores were pushed out by landlords jacking up rents so only chain drug stores, banks and nail salons can afford it. So, there isn’t even a place that I want to spend anything on groceries left. What the f are you supposed to do with it so you don’t die? Burn it?
Great article but I almost 100% disagree. I am 34 making around $300k and I rent one bedroom. Exactly like you described. And I only spend money on something I really really need. Don’t get me wrong. I am not going to live in the hole with roaches and rates. My $2500/month new 1BD is great and I rent it. I don’t need more. I don’t need a car. I prefer to walk and it’s free. I don’t eat a lot. I like to travel, however I will find the cheapest option booking far in advance with flexible dates. So I spend 35% of my net income. 65% I always save – it’s a must. And I love seeing over half a million bucks in my accounts. It gives energy and confidence in tomorrow. This is a great feeling. Something that’s difficult to describe. Believe me or not it makes me sleep better at night. I don’t need luxury stuff. Instead I would prefer more savings.
Very important indeed, you can’t take your money to your grave. The queen of England just found out
Vacationing domestically makes sense if it genuinely brings you happiness. “Seeing the world” is overrated; everything looks the same everywhere, for the most part, and humans are humans. You can spend plenty of money in your own home city/country. Other than that, you’re absolutely right. Becoming rich is hard; reward yourself for it, however makes you happiest.
I hear you. Once you see 5 Gothic European churches, they all start looking the same!
Lots of people save excessively not because they want to most about it or watch their bank account increase, they live out of fear. For example, a medical condition they have that could bankrupt them in the future, or having lots of potential dependents in the future.
With the state of medical care in many countries, this is sadly not a completely irrational fear.
Here is one thing that I would love to do. Save enough money for retirement (obviously) and make sure that when my time comes I have enough left to help my loving family.
I have experience from both sides of the spectrum. My mom is one that never does anything that costs money, lives on her parents property so she doesn’t have to pay rent or property tax, and eats cheap/low quality food. She always brags about how much money she has and how her costs of living is so low.
I agree with a commenter below about spending money on your kids. If the parents always work yet never take vacations or spend time with the kids, the kids will never really know their parents. If you do put work over your family, then you should have never gotten married or had kids in the first place.
Now, spending money on kids doesn’t mean trips to Italy. Heck, take them camping. Kids don’t care what they do as long as they can do it with you. They are not going to say “this is lame, I wish I was at Disneyland,” if you start the family off going camping. If you decide to take trips when they’re older, they’ve already be used to staying at home so they won’t want to do anything.
DONT RENT, BUY A HOUSE. And here’s the reason. In 2020, house values are going up roughly 10-15% a year, year over year, which is a pretty good return for retirement.
In summary, Save some for retirement but get a nice house in a good/safe location and spend the rest on the family. This will create a family bond that lasts well after they leave the house. Once the kids leave, then you can funnel the extra money into your retirement account. Additionally, you have a house that you lived in for 20+ years that appreciated upward at 15%. So as you can see, you spent time with the family and you still have enough money for retirement.
Whether or not the advice given is smart, let me just point out that there aren’t too many oceans on the southern side of France.
What does that mean exactly? We only get one shot at life?
It means you can’t go back in time to do things over again. Make the most of NOW in order to live like a King or a Queen in the future.
Geography. There are zero oceans on the southern part of France. Southwest and West yes. North no. East no.
The Mediterranean is in the south of France – Cannes, Nice, Marseilles, etc. Technically the Med is a sea, not an ocean, but you’re just being a jerk to call someone on that.
If you have kids, consider them to be what you spend money on. Forget the big house, cars, boats etc. Live simply when you have kids so you can spend as much time with them as possible while they’re young. If you don’t, you’ll be wishing on your death bed that you had, and you won’t care at all about the money you have.
I – in no way match any of the levels of income etc that is mentioned in the post. However, my concerns and fears and self crazy-making on this subject are really messing with my life and my health. I’m in my early 60’s. I have worked since I was 14 like most in my age space. I lost a husband and inherited a fair amount. I never stopped working. I worked a special event while he was in the funeral parlor. I was so afraid. My parents were $10 over the bracket to get any federal assistance so I helped support them. Mother died while hording cans of garbonzo beans – depression baby syndrome. It has been loss after loss and worry after worry. I can’t let it go or make any sense of any of it. I cant really articulate in the post the intricacies of how I manage things…but I work any job and make between $100 per hour to $15 per hour never willing to turn down work. But I’m tired. My weakness is my love of my home and it is very nice and is my source or joy along with my pets. My worry is to be destitute at the end I guess. I’ve just seen to much of that and it haunts me.
Late comment for an old post but I just recently found your blog. Love this post as I am struggling right now with this very concept.
I lived frugally in college, med school, specialty residency, and for the past 8 years after finishing. My wife has been a SAHM for the last 6 years and my income for the first 4 years were 200-250k. Only recently has it spiked up to about 700-800k after I became a partner. In the past 8 years, we have paid off approx 525k in student loans. We have a net worth of approx 3m and our retirement portfolio is about 2m. My income for 2015 should be right about 950k yet I cannot convince myself to trade in my 2001 civic with 190k miles for a nicer used Lexus/Acura that I can purchase for 25k. I love cars yet I have been saving for so long now I feel guilty for spending money on anything that is not absolutely necessary. It is a terrible place to be.
Wow! Amazing how your income has ramped to high!
If it makes you feel better, I finally traded in my 14 year old Land Rover for a sexy new Honda Fit! It costs $20,800 out the door, and way more than my old car, but it’s still under my 1/10th rule for car buying, and I LOVE it.
I’ve slowly learned to spend more of my wealth. Perhaps set aside every year 1%-5% of your income to just blow while maintaining a large savings rate. Cheers
Wow – personal response from the man himself, I am honored!
Thank you for your kind words. My income has hit a peak as our specialty is slowly being dragged down by the insurance companies/hospitals. I will be more than happy to remain in the 500-600k category in the next few years (if our group doesnt get bought out by a hospital) if things go well. I just worked a ton of extra shifts this year – hence the spike in income.
Bottom line – I seriously love this post and your reasoning as it has really helped me put things in perspective (btw – I have no idea how you saved 70% – wow!). I am almost 40, have 2 little ones, and I have worked non stop with zero vacations so far. Having said this, I will be purchasing a new car this month and plan that vacation my wife has always asked for. Life is short, gotta live it sometimes I suppose.
I think the comment above is good “a frugal person knows their priorities and looks to save on the less important stuff, but spends more freely on the truly important things.”
You know, since my last post in October (almost a year ago), I have gotten much better at spending money. :) My husband and me have started going out to movies, gigs, plays etc at night time and getting a babysitter for our son. I have employed a house cleaner which is probably the thing that has made the biggest difference. It makes me happy too, to help someone who needs a job. We are eating nice cuts of meat now. Plus I have planned some dream family holidays – one of them is a 5 day cycle trip where the organisers carry our bags from accommodation to accommodation. Plus I am giving some money to helping younger family members who are unemployed and on the bones of their bum in South Africa.
I think this is a great post – it won’t suit everyone as Lucky P and STC have said (5% or less of people have a lot of discretionary income) – but I have appreciated hearing peoples views and discussing these things with others who are in the same boat. Cheers !!!
Welcome back!
Check out my adventures driving for Uber as a way to reign in spending.
I totally admit, i liked the title of your writing…If i make 300K/yr, I am willing to spend 100 K as long as I can save atleast 50%….BUT 300 K is way too much than what i make… watever i make, i like to save 2.5K but somehow there are unseen expenses, eat outs, buying stuffs, upgrading your gadgets etc and so on that its really hard to even save 30%…And vacations and buying the car i love is just a dream unless I start saving 70% and live in a low profile for few years??
I think your article suits to people who already make good money, settled down or own a business on auto pilot …. and having no worries, if then YES i would spend up to $120 K a year LOL
It seems all your scenarios start or are based on wildly high income and investment success.
If you are 35yo and making over $250k you’re not dealing with issues of progressive income required to survive, you have plenty of discretionary income to spend with low risk to your future. Half that to even 100-125k in high cost of living cities on the coast and you may be comfortable but probably not enough room in an aggressive saving budget for wealth and retirement to purchase a sports car for 30k…. Further the average income is more like $50-80k with slow increases for inflation.
Similarly your investment and tax advice include assumptions that infer $3M+ in investments (30k in CDs and 25k interest sounds great but most people are lucky to have a ten of that invested based on average wages and investment potential) creating passive income well above that amassed by 20-30 something’s and not possible if they are not saving every discretionary dollar possible vs buying non-essential large purchases like an expensive old high maintenance car.
If every reader made $250k steady income before they were 35 and had amasses over $3-5M in wealth then they most likely would not be reading this web page which describes wonderful pipe dream goals but is wrought with unreasonable inflation for the mechanics to work out as ideally as you describe.
I understand this is simply an enticing site to lead readers to your web partners but please attempt to scale the article assumptions to match something plausible to 50% vs. 5% of the population.
ThX
STC
Good to read all these comments. I have always scrimped. But over the last 3 years, my husband and I started a business *we are 50yrs old) and are now making $300K p.a. after tax, which is alot of money, we have also paid off our mortgage. We have a huge garden and I would like some help but to date we have been paying students at $15 phr or having free help from travellers in exchange for board. Now I am thinking of getting a gardener as we have a very large garden, but his rates are $40 p/hr adding up to $350 per day. Obviously we can afford it, but I am really struggling with the concept, because we have always been DIY people, and you know, it seems so indulgent and expensive to employ a gardener when I could be doing it myself… So while our income has tripled, we pretty much are living in a similar way, with me looking for the cheap cuts of meat, cheap grocery products, $10 bottles of wine etc; it’s really hard to increase spending after a lifetime of being so careful with money. Now we have upgraded to takeaways once a week, when before it was once a month. Still, obviously we can afford a nice restaurant meal – but it’s really quite difficult to change a mindset ! Unfortunately, it’s not something I can talk about with friends; no one would sympathise !!!!!!!
I agree that yes you should enjoy it, but like others said there is a balance. I will continue to save, invest and do all the right things and keep learning about money.
The right thing to do is if you want to take that 15 thousand dollar safari trip of example. Set aside some money for it every pay check. If your earning 100k plus its probably not hard to do. But if it takes you 2 or 3 years to save for it and then go on that vacation its not that bad as you still have contributed to all your retirement accounts first.
But say your expenses are way too high or your earning way too little, then yes you need to consider things. You can enjoy things but you may be limited to what you can actually do. Bottom line could be you may need to simply earn more money to enjoy new things in life.
I also think people hoard money because of that’s how they grew up. They started making little and did everything they could to save every dollar. But when incomes grew people still have those old habits in them that hold them back.
What about a strategy of “splitting” raises? Half to increased savings, half to “lifestyle inflation?” Wouldn’t that give the best of both worlds? You still accumulate wealth, with an eye toward financial independence, but get to have some fun along the way?
Sound like a good strategy to me! The good thing is that you will eventually bore from lifestyle inflation and end up saving more over time IMO.
How’d you find my site btw? Welcome aboard!
*chuckles* I hang out on the fringes of the PF world. I believe that it’s actually through comments you left on MMM’s site that lead me here. Yours is one of many feeds in my Google reader that I check in on occasionally. Here, I tend to read the newer posts, and “link surf” back into older things, commenting when I find something to which I think I can contribute.
Nice. I loved getting beat up by the commenters on MMM! So fun!
If your vice is computer hardware, then good luck my friend. There will always be something more expensive, faster, sexier for sure!
Oh, and when it comes to my vice, big and horrifically overpriced computer hardware, there’s always some newer, bigger, better, faster, whateverer…
I don’t anticipate inflating out of the fun of that any time soon… ;)
I’m considering three variables that you might not be here:
1. What if nothing you buy or spend toward ever makes you happy? What if misery and regret plague EVERY decision you make? Do I work and make more? Okay, still unhappy. Do I spend on this great ? Okay, still unhappy. When there is no happiness, there is no need to blow money. Sadness is free.
2. What if you’re putting away money so your descendants will do better? I know they’ll generally just blow it, but real wealth is built on relentless saving early on (and by “Early on,” I’m talking decades) followed by an eternity of wealth through prudent long-term investing. This is a reasonable sacrifice to make IMO. Give me suffering today so that someday, someone might be happy. Depressing, but what else is there?
3. What if you’re building wealth because you aren’t going to die? If you were immortal, would your way of life change?
If I may ask, how is it “a dime a dozen” to get a six-figure job? I’ve never made that much. I’ve never broken the $50k barrier thus far.
I write from the perspective that I’ve been saving a lot, and remind myself and others that we should spend too. I’ve saved 50%+ of my after tax income for 13 years, and 70%+ for the past 5 years. But, nut I am retired at 35 and loving it to be frank!
If you just look up the median pay for the top 20 MBA graduates, you will see thousands of 29 year olds make over $100,000 for example. If you want to make $100K+, just got to go work in the fields that pay such levels.
I have been out of college for almost 2 years now and will have a net worth of $100,000 by the end of the year (markets-willing). I graduated with a net worth of $30,000 and I have grossed 6 figures for the 2 years since I graduated.
During university, I was pretty cheap and miserly with my money. My parents paid for a lot of my expenses while I was on campus and I did internships each year. One of my goals after graduating was to keep the lifestyle inflation down, but still feel happy about what I’m spending money on. I now spend about $3,000 per month, but I am on track to save about $55,000 for the year. I’ve been banking my vacation time so that I can take a 4-week vacation next year. I just haven’t decided where I’m going yet!
Part of it is that I’ve just never been very good at spending money and part of it is that I really don’t know how to spend the amount of money that I earn each year. I just have no emotional or physical need to do so. Last year, I bought a brand-new car with cash for just over $20,000. I’m saving up for a down payment on a house, but I don’t know if that’s really what I want to be doing in a few years. I’m investing 20% of my gross income towards retirement, including maxing out my 401(k). I enjoy what I do for work, for the most part, but ideally, after working for a few more years, I would spend a year or two traveling the world using my down payment savings.
I’m at a point where money isn’t the limiting reagent in what I’m doing – me deciding what I want to do is the problem. So until I come up with a better plan than what I’m doing right now, I will continue working at the career that I enjoy and saving money. I try to not work too much more than 40 hours per work so that I can enjoy my time outside of work as well.
I like to think we have a good mix of saving ans spending. Sometimes, I worry a bit that we should be saving more, but we’re hitting over 20% in retirement and we’re on track to have 529 plans fully funded for 4 year degrees for each kid by 17. But, if I face a layoff, the whole picture changes, so you’ve gotta balance risk with saving for a rainy day with actually enjoying the product of your hard work!
We PF bloggers have a bit of an edge over others in that we could help support ourselves somewhat with freelance and blog income in the event of an emergency.
Great post. Balance is key. I admit saving and find great deals is a lot of fun, but if you go overboard, what’s the point? You can’t take it to the grave. Happy medium, people!
I’m with you. From the examples of my friends and relatives, I agree that if you do not spend money, you will not earn.
I really appreciate your point about having too much money when you die. Too many people I know died with millions of dollars but were not happy at all. You really need a balance in life.
My website is . Could you comment on a few of my articles too?
Thank you,
Kyle Steiner
I don’t make that much and I don’t mind saving. I’m trying to get less attached to material things and use my money on travel and fun times with friends instead. I’m on a declutter mission this year and it feels so good getting rid of stuff!
I LOVE, LOVE decluttering! Zen Habits has a good post on decluttering and meditation which hit spot on.
When we are free of things, we feel light and free. At least I do.
I really just enjoy spending money on vacations and adventures. They are so fun and so worth it!
I have a few friends that make over $250,000 a year but they live and look just like me (minus the occasional trips overseas). Originally they inspired my post called “Reasons To Spend Money – I Don’t Want A Coffin Full Of Dollars”. I personally think they should spend more money and enjoy life more fully. Not so much on material possessions, but more along the lines of experiences and memories (taking videos and photos as they go). Like you said above life is limit, make the most of it while you can.
Nobody want to ski in Aspen when they are in their 80s or 90s?
For someone like me, I have to settle for the typical middle class beach vacations (mainly in Florida and South Carolina, and maybe in the future Georgia or Mexico), but you can bet if I had the money, I would be traveling much much more.
I wonder though if your friends are relatively even more at ease inside despite living the same lifestyle as you. The fact they are making that kind of money alone makes them happier since there’s little worries. Could be!
You got it! Over they years I’ve come to realize that they are doing what they want, working the way they want and vacationing the way they want. They have complete freedom to do as they please whenever they want. So they are happy.
Yep, I think I’m reaching that stage myself. When I went to grad school, it was so fun b/c I didn’t care about grades, just learning. As I get older and save more, work becomes more fun b/c I don’t depend on it as much to survive anymore. It’s freeing!
While I’m no where near your friend making $300k, I find the more I make, the more nervous I become about spending money! When I first graduated college, it was freeing to make $20k per year. I knew I’d never save a lot with my salary, so I freely spent on luxuries like $80/hr voice lessons twice a month. I paid of my credit cards each month and either broke even or put a little bit of savings in the bank.
Now that I’m making $90k, I can’t bring myself to paying for voice lessons, or other expensive purchases. I’m addicted to seeing my bank account numbers increase. Granted, my job isn’t stable (I work for startups so my job will never be stable) and I only have $130k in the bank right now. I keep telling myself I need $1M in the bank to feel comfortable, $4M to spend freely. But deep down I know if I ever had $4M in the bank I’d be too scared to spend that as well… at least in terms of buying anything that would be considered a luxury at that level of networth. I’d still be driving my busted ’99 Toyota (ok, maybe I’d buy a new used Toyota) and I’d be scared to see my networth go down.
Still, I’m waiting for that $1M networth threshold to feel comfortable to make major life decisions/changes like having kids and buying a house.
$130,000 cash in the bank after 5 years post college is a very good sum of money! You did graduate 5 years ago from your previous comment right?
You’re right. The more you have, the more you don’t want to lose it, b/c it took so long and you worked so hard to get it.