Live It Up

Dennis Friedman

THE HOLIDAY SEASON is here—and retailers will be looking to make up for the sales they lost during the pandemic. Let me offer some advice you won’t hear elsewhere: Go ahead and splurge.

What do I want for Christmas? To be honest, not much. But then again, my wife and I have been spending money in 2020 as if Christmas were a year-long event. We remodeled the house, filled it with new furniture and bought a new car.

What I probably need is not more material things, but something that could make me a better person. A behavior transplant would do the trick. Something like persistence. Indeed, a little more persistence would be a good attribute to have going into the new year. It might help me to eat better, exercise more and generally live a more fulfilling lifestyle.

As I grow older, I tend to make excuses for indulging and for not having the willpower to do the right thing on a consistent basis. I’ll say to myself, “I’m not getting any younger. Why toe the line? Live it up and enjoy yourself.”

I had a lot of perseverance when I was younger and saving for retirement. I would contribute diligently to my 401(k), IRAs and savings accounts. I benefited financially from this unrelenting behavior. It’s probably the main reason I have a comfortable retirement today.

Saving for long-term goals, such as a starter home, the children’s college education or your own retirement, requires an unwavering commitment. This is one of the most difficult parts about accumulating wealth. You could argue it’s more important than asset allocation and investment selection.

Why is it so difficult? You have to delay gratification, forgoing smaller rewards today for larger rewards later. That irresistible luxury car, bought on a whim, can derail the best-laid financial plan to purchase a home. But this year was not the time for me to save money diligently—and perhaps you, too, should be a little less frugal.

As a retiree, you adjust your spending based on how well your investment portfolio is performing. My portfolio is doing well this year, so I’ve been spending money. I’m retired and not concerned about losing my job. I have money invested in the stock market, and I stuck with my funds through the collapse and rebound of the market.

After this year’s startling rally, I felt flushed with cash. It was a good time for me to open my wallet and take advantage of my stock market gains. It might be a while before I get this chance again. So instead of rebalancing my portfolio into bonds or cash, I rebalanced it into a new sofa, remodeled kitchen and a new car.

I actually felt good about spending money this year. When I saw four people working on our house, it made me feel like I was helping to keep people employed during the pandemic. I was doing my small part to keep our economy going. Consumer spending accounts for almost 70% of economic growth. During these difficult times, our economy is more dependent than ever on our ability to spend.

If you can afford to spend money and there’s something you want or need, this holiday season might be a good time to make that purchase. It doesn’t have to be a large expenditure. Even an extra takeout meal from your favorite local restaurant would suffice. At this time of need, such purchases are a small but important way to spur economic growth and help others.

Dennis Friedman retired from Boeing Satellite Systems after a 30-year career in manufacturing. Born in Ohio, Dennis is a California transplant with a bachelor’s degree in history and an MBA. A self-described “humble investor,” he likes reading historical novels and about personal finance. His previous articles include Don’t DelayTry Not to Slip and Go Long. Follow Dennis on Twitter @DMFrie.

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