The Art of Spending Money

Canadians for the most part (and more specifically, my clients) are really good at saving
and accumulating wealth. I see it day in and day out; folks automate their savings like clock work each and every month for decades at a time and slowly the 8th wonder of the world works its magic. Of course, I'm talking about compounding interest.

Fast forward and what seemed like a daunting feat at age 25 is now almost here, you’re ready to retire as your nest egg has grown larger than you could have ever imagined. This is exactly where I see those heading into (and already in) retirement have the biggest problem. They don’t know how to spend their money!

I have come to the conclusion that retirees don’t have a savings problem in this country,
but they might have a spending problem. At first I thought spending was like a science, but the longer I work with clients the more I see it as an art. Art can’t be distilled into a one-size-fits all formula. Art is complicated, often contradictory, and covers things like individuality, greed, jealousy, status, and regret. But, I think you can use money to build a better life. I think buying nice stuff can bring you joy. I love ambition, hard work, and, most of all, independence. Still, after working with clients for 13 years I am constantly amazed at how bad most of us are at knowing what we want out of money, or how to use it as anything more than a benchmark of status and success.

Here are a few ideas that resonate with me:

1. There are two ways to use money. One is as a tool to live a better life. The other is as a yardstick of status to measure yourself against others. Many people aspire for the former but spend their life chasing the latter.

2. Money is a tool you can use. But if you’re not careful, it will use you. It will use you without mercy, and often without you even knowing it. For many people, money is a financial asset but a psychological liability. Blind lust for more can hijack your identity, control your personality, and wedge out parts of your life that bring greater happiness.

3. Spending money can buy happiness, but it’s often an indirect path. Money itself doesn’t buy happiness, but it can help you find independence and purpose which are both key ingredients for a happier life if you cultivate them. A big, nice house might make you happier, but mostly because it makes it easier to have friends and family
over, and the friends and family are actually what are making you happy. 

4. Enduring happiness is found in contentment, so those happiest with money tend to be those who have found a way to stop thinking about it. You can value it, appreciate it, even marvel at it. But if money never leaves your mind it’s likely you’ve found yourself with an obsession, where it controls you. The best use of money is as a tool to leverage who you are, but never to define who you are.

5. If you’re confused about what a better life would look like, “one with more money” is an easy assumption. But that can sometimes mask deeper problems. Money is so tangible that it’s an easy goal to strive for, and pursuing it can become the path of least resistance for those who haven’t discovered what truly feeds their soul. 

6. Everyone can spend money in a way that will make them happier. But there is no universal formula on how to do it. The nice stuff that makes me happy might seem crazy to you, and vice versa. Debates over what kind of lifestyle you should live are often just people with different personalities talking over each other. 

No one can predict the future and what will happen with one’s health, interest rates,
inflation or even the economy. But here is what I believe; using wealth to create incredible experiences with those you love pays the biggest dividends today and in the years to come.