I think what many people really want from money is the ability to stop thinking about money. Having 'enough' money means they can stop thinking about it and focus on living life. But what is ‘enough?’ Money is complicated. Everyone is different, which is part of what makes this topic fascinating. There are no black-and-white rules.
Having worked with affluent Canadians for a decade I can say there a few things that jump out when it comes to the art of spending money. I recently read this exchange with Former General Electric CEO Jack Welch: Jack once nearly died of a heart attack. Years later he was asked what went through his mind while he was being rushed to the hospital in what could have been his last moments alive. “Damn it, I didn’t spend enough money,” was Welch’s response. The interviewer, Stuart Varney, was puzzled, and asked why in the world that would go through his mind. “We all are products of our background,” Welch said. “I didn’t have two nickels to rub together [when I was young], so I’m relatively cheap. I always bought cheap wine.” After the heart attack Welch said he “swore to God I’d never buy a bottle of wine for less than a hundred dollars. That was absolutely one of the takeaways from that experience.” “Is that it?” Varney asks, stunned. “That’s about it,” says Welch. How you spend money can reveal an existential struggle of what you find valuable in life, who you want to spend time with, why you chose your career, and the kind of attention you want from other people. There is a science to saving and spending money – how to find a bargain, how to make a budget, etc. If you develop an early system of savings and living well below your means – congratulations, you’ve won the science portion. But there’s also an art to spending. A part that can’t be quantified and varies person to person. If you can never break away from the science and insist on a heavy savings regimen well into your retirement years, is that still winning? In my practice as a CERTIFIED FINANCIAL PLANNER® (CFP), one of the challenges I experience is actually getting clients to spend money in retirement. Even an appropriate, conservative amount of money. Keep in mind, this is after they have a well-constructed financial plan that, for all intents and purposes, protects them from running out of money. Frugality and savings can become such a big part of some people’s identity that they can’t ever switch gears. So let's revisit what your attitude about spending money says about you. If part of your identity is based on being an excellent saver, you may value security and are comforted by the knowledge that your portfolio keeps you safe. Watching your investments compound might give you more pleasure than you would get from spending it. If you value hard work and sacrifice, you take joy in seeing what you earned. Consider how you felt when you got your first paycheck from your first job. You probably had a joyous feeling of, “I did this. I earned this. With my own hard work.” Going from not being able to buy anything to able to buy something is an amazing feeling. The gap between struggle and reward is a big part of what makes people happy. I can still remember my first pay cheque from Tim Hortons – ah, what a glorious feeling it was! Sometimes the joy of spending can diminish as income rises because there’s less struggle, sacrifice, and sweat represented in purchases. It’s not that spending won’t make you happy – but it won’t be as thrilling and adrenaline-inducing as it was when there was more struggle behind each dollar. If you value experiences and rewards, you may be able to enjoy the fruits of your labour more. Spending money can help you connect with others and inject more 'fun' into life. Focusing on maximizing your present experience ensures you don't have regrets like Jack's above. As I think more about, and dig deeper into, this topic we can see that living a 'Rich Life' is less about money and more about mindset. Having sat down with hundreds of Canadians over 10 years in our practice, I can assure you that we all have different versions of a 'Rich Life' and no one has the best answer. Mine is different than yours, and yours will be different than your parents. One thing I know for sure; the peace of mind I build for clients with their personalized financial plan, based on their values and goals, is the most rewarding part of my job. It's the confidence and clarity to use their money for exactly what it is – a tool to achieve what they value most. Yours in wealth and health, Brandon Yanchus
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AuthorBrandon Yanchus is a CERTIFIED FINANCIAL PLANNER™ with over a decade of experience. This is his personal blog where he shares what he's learned helping families, professionals, business owners and retirees grow and protect their wealth. Archives
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