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HERE’S A FINANCIAL topic on which I claim scant expertise: spending. Still, I’ve belatedly been getting a lot of practice.
Over the past four years, I’ve spent more freely than at any time in my life. While part of it might be explained by post-pandemic splurging, mostly it’s because I finally convinced myself that I had more than enough saved for retirement. Added to that has been my recent cancer diagnosis, which has prompted Elaine and me to take our spending to a whole new level, as we attempt to cram a retirement’s worth of travel into the limited time I have left.
I can’t claim to be entirely comfortable with all of this. To counter my unease, I fall back on seven rules that—I hope—will make my spending less impulsive and more thoughtful.
1. The dollars that bring the greatest happiness are those we don’t spend. If we don’t have enough set aside in a bank or investment account to feel financially secure, we’ll suffer ongoing money stress, and the stuff we buy likely won’t come close to compensating. How much do we need to feel safe? The sum will differ for each of us. For me, today’s amount is considerably larger than it was when I was in my 20s and 30s, and more oblivious to risk.
2. Lower fixed costs mean fewer financial worries. Want to stress less about money? The two key steps, I believe, are not only keeping at least a little money in cash investments, but also holding down fixed living costs such as mortgage or rent, utilities, insurance premiums, property taxes and so on. The lower these costs relative to our income, the more financial breathing room we’ll have.
3. Don’t spend under the influence. We might think we’re independent thinkers who make clear-eyed purchase decisions based on our own unique personal preferences. The reality: Our consumption choices are often heavily influenced by corporate marketing, what our friends purchase and how our parents spent when we were growing up.
For instance, my father loved to eat out, and I think I’ve long been influenced by his behavior. Indeed, in the four years since I moved to Philadelphia, Elaine and I have tried many of the city’s finest restaurants. But now, I’m wondering whether I’m suffering from restaurant fatigue—because I’m just as happy when we sit in the park, eat a takeout salad and surreptitiously drink a bottle of wine.
4. Ponder pleasure per dollar spent. Just as our inexpensive dinners in the park deliver as much happiness as pricey restaurant meals, the pleasure from other small purchases is often disproportionately large relative to the price tag.
For example, while I continue to be wowed by the six-figure remodeling project we undertook last year, I can’t claim that the happiness I’ve received has been proportional to the cost. Yes, the cumulative pleasure might be 1,000 times greater than that from a takeout pizza—but, let’s face it, the pizza would only cost $20.
5. Looking forward. I like to book our vacations far in advance. Why? With the help of the internet, I enjoy researching countless possible trips and, along the way, I get to take all kinds of wonderful vacations in my head. And once we settle on a destination, there’s the chance for months of eager anticipation, which is often almost as much fun as the trip itself.
6. A gradually rising standard of living is a great pleasure. For our December flight to London for my son’s wedding, I booked us seats in premium economy—a marked improvement over regular economy, where I tend to sleep fitfully and arrive feeling wretched. Premium economy is the small luxury I’ve allowed myself in recent years for overnight flights to Europe. After all those decades in economy, it feels like a huge improvement.
After I booked our London tickets, I noticed on the British Airways website that I could upgrade us to a flatbed for $1,064 apiece. My younger self would have considered that an unthinkable extravagance. My older self jumped at the chance. Okay, maybe not jumped. But my dithering over the decision probably only lasted 10 minutes.
7. Giving can be as satisfying as spending. Given my diagnosis, I could spend with reckless abandon—and I certainly shouldn’t be fretting over a $1,064 flatbed. But every dollar I spend is a dollar that won’t go to Elaine and my two kids, and that’s more important to me than my own comfort. Whether it’s family, friends or charity, there’s great pleasure in being generous with our time and money—a pleasure that outweighs and outlasts anything I can imagine buying.
Jonathan Clements is the founder and editor of HumbleDollar. Follow him on X @ClementsMoney and on Facebook, and check out his earlier articles.
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Thank YOU Jonathan! Your observations are valuable to those folks experiencing the ‘Good’ retirement we like.
I’ve followed many rules of wealth accumulation until they became habits. Many of which, my spouse couldn’t follow and caused her to flee the family. Such is life.
The two sons will have a trust to begin managing when I pass which will be a very good inheritance.
My money is mine to spend.
So, now in the twilight years spending the earned bounty is actually fun!
The money gives great freedom and fosters spontaneity. When cost isn’t a consideration, fun follows.
It’s breaking those old habits that has to be learned first.
JC:
I loved this article. I retired in January of 2024, and since then I have had expenditure after expenditure that was previously “unplanned.”
Some have been home repairs, like replacing and upgrading my electrical panel, replacing a built in microwave, replacing a dishwasher, repair and upgrading my whole house water filter system, and on and on. None of these expenditures were foreseen, as my home is only 6 years old. Total costs…@$5,000-6,000.
Another major expenditure is for a kennel, (@$800)and then a fence for my large back yard. Wooden, 120′ X 30′ X 4′ site built, with 4 gates.($7,000) Why did I need a kennel, and then a fence? Because a puppy showed up in my front yard on the Friday evening of this past Labor Day. She had a slight limp and “road rash” on her left cheek. We suspect that some as_hole threw her pout of a car near our drive way. (We live on 6 wooded acres in a semi rural area.) Of course, we also had Vet bills for shots and spaying and heart worm treatments, etc.
We did not have a fenced yard, so the only place we had to keep her was in our garage or in our yard, on a lead fixed to the ground. I had planned to get a dog in a couple of years, when we had finished the majority of our traveling in retirement, but… Of course, we also had Vet bills for shots and spaying and heart worm treatments, etc. another $600.
But she is such a sweet dog and she never stops wagging her tail.
My wife and I have always been “cat people,” and although we both had dogs in our families as children, just never had one in our 50 years (so far) marriage. In fact, in the past 18 months, we have fostered 27 kittens and 4 adult cats, and we regularly feed 3-4 ferrels as well. A friend of ours is involved in a TNR (Trap Neuter Release) program in our community, and we have been volunteers to help with all the kittens born from un “Fixed” cats. We keep them and care for them until they are old enough to be “fixed” and then for an additional 3-4 weeks, until they can be put up for adoption.
I imagine that in additional to the charitable donation I give the clinic annually ($2,000) we probably spend $300-$400 a month on cat food and other cat related items.
Since my wife and I have no human grandchildren, we feel like these fur babies are our substitute.
In a funny way, I guess caring for animals has become somewhat of a “purpose,” which all the books on retirement say you need to have for a successful retirement. For those readers who were raised Catholic, we feel that maybe St. Francis is putting these animals in our lives to help him fulfill his mission as the Patron Saints of Animals.
As I looked at your 7 enumerated ideas, I found myself saying Yep…Yep…Yep…Yep…Yep…Yep…Yep…JC is right again!
We have the ability to afford to spend the money, since we have sufficient income and investments to last our lifetimes…we have the feeling of having, ENOUGH.
We have trimmed unnecessary expenses, as we have no debts and no mortgage.
I have reached that point in life where I question whether a purchase is really “worth it.” In most cases if I want something, I have already got one like it already. (Here I refer to my desire, some might say passion, in buying guns. HA!). My wife’s passions are relatively cheap, as her hobbies are cheap.
Tied closely to the above, we don’t eat out much anymore because, 1. We cook better than restaurants do and 2. At home, we get better service and do not have to deal with “the public” and their lack of social graces. We do still have the occasional Jersey’s Mike sandwich or McDonald’s Fish Filet, but eating out just doesn’t have the appeal it did in prior years.
Looking forward is top of mind currently as we want to take 3-4 major trips in 2025-2026. We want to spend a month or more in PA/Ohio, at least 6 weeks in Florida, at least 2 months “living “at the beach,” in NC/SC, and lastly a 4-6 week trip to Germany/Ireland. The only other real travel we want to experience is the famous “Alaskan Cruise.” Other than that, we will be doing road trips to see certain things in the USA, like Mt. Rushmore (again), Niagara Falls, Custer Battle Field in MT, Gettysburg, PA and others. Most likely we will spend $10-$15K annually for the next few years, not counting the Trip to Europe. I have over 500K miles on Delta and 500K miles on AA, so we will fly to Europe on Business Class, using miles.
As far afar as the gradually increasing standard of living goes, that is also planned for. In 5 years, I will be turning on 2 income annuities, providing an additional $30K of income annually, for life. I am 74 now and my wife just turned 70 this month. While I am not wasteful, neither am I “cheap.” If we fly domestically, it is always first class. When we stay in hotels, they are usually 3-4 star.
You mentioned the “flat bed.” ABSOLUTELY!
JC…”God Loves You and so do I!” (This was a benediction type expression that was well known as coming from Pastor Robert H. Schuller, of The Crystal Cathedral, in Garden Grove, CA.)
Ah the joy of anticipation. My husband was a spontaneous person, and loved to surprise people. It took years to convince him that I had more joy in knowing plans as I could savour in advance as well as during and afterwards. This can apply to many no cost events, like walking a trail or having neighbours over for coffee. Eventually he stopped trying to surprise me ( and started surprising our children in law instead!)
Re #1
How do you calculate the money you need to feel safe and where do you keep that safe money? Thanks
Thanks for the question. You might start by reading this page of HumbleDollar’s money guide:
https://humbledollar.com/money-guide/what-stock-bond-mix/
Nice post! Glad you bought the flatbed! We miss you at Bogleheads!
I would wager that a majority of the readers of this blog are pretty good savers, which may suggest that they are also not very good at spending. I am certainly guilty of both. We can never save too much and we’ll only be comfortable spending more when we’ve saved more. Alas, we will likely never save “enough,” as we can never quite define what that amount looks like. And, spending more than we need to live (i.e., on something we don’t absoutely need) requires violating the years of effort and discipline it took to save what we have in the first place.
At age 76, however, I will concede that in the unlikely event that I should live to 100 (my long term planning horizon, in case you wonder), there should still be plenty in the bank and it might not hurt to spend a little more in the meantime. It only took me 10 years of retirement to get to this point and I’m hoping that I haven’t left it too late!
re #4 sometimes spending on your home can be a good investment. Hopefully the house is worth more because of it. That is a good feeling in the long run
Two recent modest expenditures: one giving immediate pleasure and the other the pleasure of anticipation: 1) Finally, a new very modest refrigerator (due to space and color considerations), but with an AUTOMATIC ICE MAKER! I love the sound of the ice dropping into the bin. I just have to remember to turn it off so I don’t have ice spilling into the rest of the freezer; 2) A $250 deposit on a group tour to Central Asia a year from now. I didn’t even shop around because I was pleased with the company that took me and my grandson to Iceland a couple years ago. And next trip to visit the kid in China, before or at the same time as Central Asia, will be in Premium Economy. Hope your December trip across the pond is wonderful, Jonathan and Elaine.
Just wanted to comment that if you take a day flight to London you avoid the hassle of sleeping on a plane. Likely you will need to fly from JFK (NYC) and you will possibly find premium economy from around $1700 Round trip. Leave around 9 am and arrive 9 pm local time. Grab a late dinner at your hotel and get to sleep around 3 am. You will lose half a day in London but no overnight on the plane.
When I lived in New York, I took the daytime flight to London a few times, and it is great. But from Philly, there are only overnight flights. It’s just not worth it to me to travel up to NYC to catch the daytime flight.
You are singing to the HD choir with this article Jonathan.
Chris and I have a favorite Lebanese restaurant. Often we just split a large Fattoush salad and a bottle of Kefraya, Those, along with the delicious homemade pita bread leaves big smiles on our faces and a very reasonable check at the end of our meal.
We have made similar observations. We have a Giving Account set up with Fidelity Charitable that we funded several years ago from an investment windfall. I have added to it a few times with appreciated stock. It is the basis of our charitable giving. We paid off the mortgage 15 years ago and paid cash for our current condo.We are beginning a “final” remodel on our condo to update our bathrooms for us to try to age in place. It’s not cheap, but it may buy us another 10-15 years living in our own home. We still have not got into traveling mode. After over 10 years of care giving, we are still trying to decide where we want to go (if anywhere). We may try being a snow bird for a few months as Michigan winters are cold. Being frugal and having cash gives you many options.
Something to consider is the happiness you’d probably bring to your wife and kids if they had the opportunity to see you “extravagantly” treat yourself given your recent diagnosis. The inheritance would be nice but I’d much rather see my father/spouse have no limits to their enjoyment rather than have the money later.
Completely agree. It’s a couple thousand bucks, not a beach house or a private jet. I’d absolutely want my loved one to be as comfortable as possible on one of their final trips.
Jonathan, I agree with all the points you made. It’s nice to retire with money in the bank from not over spending and living within you means. It would drive me crazy to have the large credit card bills most people have.
Paying off my mortgage was one of the best things I ever did. Which I did long before I retired.
Most of the time I can resist corporate marketing. When I haven’t, and convinced myself I really needed something, then a year later I tell myself I must have crazy and should have thought more before buying.
I hate paying full price for anything and will wait sometimes months or a year or more for a sale or black Friday. I do like to buy things that are higher quality. Usually the best is the cheapest in the long run, but not always, sometimes second best is the best deal. It drove me crazy recently when I bought a new heavy wool Mackinac coat from Johnson Woolen Mills at full price. No matter how much I searched I couldn’t find it at discount or on sale anywhere. They never have sales, but the quality is so high I know it will last forever. At least the shipping was free.
Same as you, I book ahead for vacations, mainly to get the best deal. Also when I was younger, I could never justify a first class plane ticket. Now I think they’re the best thing in the world. Big SUV rental vehicles are nice also. The last two years I’ve gone with extra large Ford Expeditions. They actually aren’t that much more expensive than a medium size car (at least at Avis) and the extra room and ride are wonderful.
I’m single, so don’t have a immediate family to leave money too but I do give God his share. I heard Jon Templeton say once that a person will never be truly successful unless they tithe on a regular basis. The Bible says God will bless you now if you do, plus earn treasure in heaven. I don’t know how he does it but I have more money now in my wallet, and in the bank, then before I started tithing on a regular basis. Its just amazing.
Jonathan, timely article. I just read this related article/quiz in the todays Washington Post-
Do you spend money more like a millennial or a boomer? Take this quiz to find out
https://wapo.st/3XFsLFb
My results came out across the board…not much like a Boomer !
LOL. It says I spend money like a millennial. I’m a young Boomer. Although I just read an article about how people born between 1956-65 (I was born in 1960) are sociologically kind of in-between. I think they called it the “Jones Generation”? I’ve never really felt that aligned with older Boomers.
My grown children would identify me with being cheap. I consider myself a value person. 😃
Regarding number 2:
I just performed some back of the envelope calculations to determine our fixed costs which I know are low as we have no mortgage, nor car payments.
Our fixed costs are just over 32k broken down as follows-
1) Groceries- 10k
2) Medicare premiums- 8k, Plan G, so only out of pocket is Medicare deductible (from 2020-2023 had Affordable Care Act policy, or Advantage plan, so cost was < $100 for the year coverage for two, and with the annual rebate of excess charges we were actually paid to have insurance
3) Housing- 7k for property taxes (we don’t have a palatial house, NH is a high property tax state)
4) Insurance- 4K-property, car, 2 million dollar umbrella policy
5) Electric- $1,500- when we built our house in 2016 we bit the bullet and bought all LED bulbs, and all new appliances
6) Propane- $1,500- this includes heating, hot water, and cooking costs
I know that if disaster should hit the US economy we can hunker down and survive practically on peanuts
I was interested in your fixed expenses exercise and decided to try it myself. Obviously not all of us have the same expenses, but for me your list was missing a few basic costs: federal & state income taxes, internet and TV services, cell phone service, gasoline & car repairs, long term care insurance, and charitable giving. Just for consideration.
You mention the following were missed:
federal & state income taxes, internet and TV services, cell phone service, gasoline & car repairs, long term care insurance, and charitable giving. Just for consideration.
Rather than using the term fixed costs it may have been better to use the term minimal costs to survive, or what is necessary to survive, not wants.
With that said at 32k in income the federal taxes would be minuscule as the married filing jointly standard deduction is 27.7k.
One cell phone for us would be a necessity, but I’m sure one can get a very low monthly plan.
If necessary we could only utilize our newer vehicle which is a Toyota with only 36k miles, so upkeep would be minimal and usage could limit gasoline costs.
I propose that all else could be considered superfluous, or put another way wants not needs.
Income taxes? Water/sewer/trash? Gas? Dental/vision? Part D/drugs? Maintenance? Telephone and TV?
Water and sewer are covered with a 8 year old well and septic, and I don’t pay for trash pickup.i go to the transfer station every 2-3 weeks. (We are heavy recyclers, and compost our kitchen scraps.
Dental/vision are on self paid, but 1 cleaning every 9 months, and only two lifetime cavities at 67 years old. Vision exam/glasses every two years (really hard to put dollar figure on).
Did miss Part D drug $120/year for me. Wife is on an Advantage Plan for first year eligibility, next year will be traditional so she will have $120/year as well.
House maintenance costs are nearly nonexistent as house is only 8 years old.
For others see above post.
I was kind of wondering about David’s list too. 😉
So much overlap Jonathan. I’m 64, retiring in the next year. We recently nixed a large (think mid 6 figure) remodel, not because we couldn’t afford it, but because we decided we liked the security and possibility that that money afforded us in the bank. The joy from the remodel would be real, but limited. And – once I hit 60, we only ever cross the pond in Premium Economy. Who knows, perhaps soon I’ll take the plunge on a lie-flat seat offer.
We live in California, so “crossing the pond” is a heavier lift than from the East Coast—10 hour flight, usually, plus a nine-hour time difference. We’ve taken three trips to Europe in less than two years, and I’ve learned a couple things.
First, even with lie flat seats, I may or may not get good rest on the way there. I need to build in a buffer day to adjust after we get there rather than jumping right into a full itinerary.
Second, if the flight is during the daytime, premium economy is a perfectly adequate splurge, especially if it’s only six hours or so. You get more leg room and a nicer meal. You don’t need lie-flat seats if you’re going to be awake eating and watching movies the whole time. Our trip to Spain last year ended with a long flight from Munich to SFO, over 10 hours, but it left at 11:30 a.m., meaning that our entire flight was during hours we’d normally be awake. We did have United Polaris seats, but in hindsight, we decided that had been a waste of money (or specifically, points and airline miles).
Agreed, I’m on the east coast and I don’t always spend FF miles for business class crossing the Atlantic at night, and certainly not coming back in daylight. Once there, I spend the afternoon sleeping, and then get up for dinner and I’m fine for the rest of the trip. But I won’t fly the Pacific again except in business class with lie flat seats.
I appreciate #2, keeping fixed living costs as low as possible. Ah – insurance. The past few years have jolted some of those fixed costs – with car insurance jumping 17% in places; homeowners insurance spiking across the board. The Wall Street Journal this week reported that such insurance premiums are likely to stay at these higher levels despite lessening inflation. A reset of fixed living costs for many.
For those on Original Medicare, prices for Part D insurance premiums this year will be all over the board. My Part D plan was $3.30; in 2025 will be $38.30. A friend’s plan announced a zero premium in 2025, but marked increases in drug tiers. Lots of musical chairs to find the best plan for each individual. Medicare Advantage plans are likely to add more costs too. It’s critical this year to make an informed choice, otherwise more fixed cost shocks in January. Unfortunately, many folks don’t check each year.
I shop Plan D every year. My broker and I model the out of pocket cost of the drugs I am on + premium. I switched last year to save about $1000. Don’t anticipate that big an opportunity this year but I have set up a meeting with the broker for mid-October. I’ll check the Part B premium, as well, but for my Plan G, it generally is pretty much competitive with other choices.
I would be shopping for a new plan in any case, but I got a notice that my current Part D plan’s monthly premium would go from $5.20/month to $40.20/month! Copays for tiers one and two would also go up.
This is not unexpected as the annual drug costs to the insured will be capped at $2,000 next year. When I was taking medication for rheumatoid arthritis my annual cost was around $6,000.
Good points about the “hidden costs” and increases for health insurance, but please be careful of switching to or signing up for Medicare Advantage plans. We have heard some awful stories of friends NOT being able to get needed tests and treatments due to the Insurance Company not approving some of these. We have never had (nor heard of) any such denials from Traditional Medicare. We are very happy with Medicare and our supplemental policy.
Nice piece, Jonathan. Didn’t you also gain some structural improvement during renovation by dealing with a formerly shared wall? Each day which ends without the house collapsing is a good day.
Yes, last year’s remodeling uncovered some structural issues, which were dealt with as part of the project and added considerably to the cost. When you open up walls, you never know what you’re going to find….
Great points and “rules” to live by in retirement. As to #6…
6. A gradually rising standard of living is a great pleasure.
One of my mantras in retirement has become…”If we don’t fly first class (or lie flat seats) our kids will!”
Enjoy your UK trip, Jonathan!
Let’s hear from Elaine and the kids about how they’d like you to spend ‘their inheritance??