5 Times When You Should Spend Your Money


My job is to help high net worth individuals and business owners save and invest. But today I want you to know that sometimes it’s good to spend your money. I write this with some trepidation. I don’t want to encourage anyone to spend money needlessly. I do want to encourage you to save and invest as much as you can. But sometimes spending either makes good financial sense or it’s a reward that you deserve. Considering spending money in situations like these:


  1. Spend when the item you’re buying may well increase in value

This concept comes up mainly with young people. When they’re in an apartment and thinking of buying a home they sometimes hesitate. Buying a house costs a lot of money. It will change the monthly budget. It’s a big commitment. But people of any age who have saved for a home and won’t have to spend more than about 25% of their monthly income on house payments are often wise to buy. Homes tend to increase in value. Your own home usually gives you a lot more space and comfort. Homes are often among the most valuable assets business owners and high net worth individuals own.


  1. Spend when your saving and investment needs are met

I’m old enough to know business owners and high net worth individuals who experienced the Great Depression. Other business owners have lost a fortune when a family business failed. Still others high net worth individuals have lost hundreds of thousands of dollars due to a family member’s gambling habit or addiction. People who’ve been through drastic poverty or drastic financial losses can become hyper-concerned about spending a penny. They go beyond being frugal. For example, I know one millionaire who owns just one pair of shoes and refuses to consider another pair until the shoes he has wear out. People like this man impose unnecessary financial suffering on themselves. Do be thrifty. But don’t be so hyper-concerned about every cent that you deny yourself or your family the basic necessities.


  1. Consider spending on things you deeply believe in or to build an inheritance of memories

Try thinking of the concept of “inheritance” differently. The inheritance you leave, instead of being purely money, could also feature a set of fond memories you can create together as a family while you’re still alive. Would your family rather have $10,000 more when you die or would they rather take a long discussed dream cruise or vacation together? Money doesn’t last but memories can.

Or you may have devoted thousands of hours to a charity, house of worship, or cause that means the world to you. A financial gift to that excellent local hospital, life-changing social service agency, or worthy cause may be more meaningful to you and to others during your lifetime.


  1. Spend when spending will save you money in the long term

I know a man who hesitated to buy a new car because he could get a used one for less. But he did buy new and still has that “new” car 20 years later. He spent more 20 years ago but has saved more in the long run by not having to replace his car. The window on one side no longer goes down and it has about 150,000 miles on it but the car runs well and my friend’s enjoying it.

Another simple example is the Entertainment book (or any coupon book.) It might cost you $20 but if it saves you more than $20 on items you would have bought anyway, then you come out ahead. The key, of course, is actually buying a book with coupons for restaurants, retailers, and other things that you would ordinarily frequent.


  1. Spend when doing so may motivate you to save and invest more

Saving and investing come first. But if you save and invest too much without ever spending money on yourself, you risk losing your true self. You risk living your life to save instead of living to do what you really want. If you give yourself goals that make you happy, such as buying your dream house or dream car, you may have a better chance of saving successfully. Giving yourself big goals that excite you and that you can visualize provide a huge amount of motivation.

Spending is often not wise. But like anything in life we should not overdo the restrictions we place on our spending. If you have a sound financial plan and if you are on your way to your saving and investment goals, adding a little thoughtful spending adds some excitement and spice to life.


Gene Thomas Offredi, CFP®, RFC™ Contact Gene at the Summit Investor Coach website or call 203.453.1017. Download Gene’s free guide Plan, Retire, Relax on the Summit Investor Coach website.