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Careful saver or carefree spender? Why it’s best to be a bit of both

Do you remember what spending money was like when you were a child? 

I was thinking about this not too long ago on a trip to London with my son Otto.

He loves dropping coins in the hat for buskers, tapping in and out from tube journeys with my debit card, and even ‘paying’ with contactless when we go out to eat. 

Does he make the connection yet between these outings and the meaning of money? It’s hard to tell – he is only three!

But it’s worth remembering that, while our appreciation of money changes over time, a lot of our spending habits in later life come from those we pick up when we’re young. It’s therefore important early on to understand how to strike a balance between spending wisely, and not being so anxious that you’re afraid to spend at all.

It’s fine to ‘waste’ money… no, really.

It sounds strange coming from a financial planner, but there are times when it’s ok to ‘waste’ money. That is, if you can afford it, then you shouldn’t be afraid to stretch for that meal out, the luxury coffee, or the more expensive car model. But it takes practice, for some.

Think about it: if you’ve worked hard and saved up all your life, but you’re constantly worrying about spending it, then you can’t really enjoy the benefits. I talked last month about a client so fixated on saving, they said that when the time came, and they didn’t need to save any more, they found it hard to stop.

The key is knowing when to control that desire to spend. When is it time to be more sensible and batten down the hatches? If you have a plan for what you can comfortably afford to spend, then it’s possible to be careful and carefree, at the right time.

Knowing how to spend it

It’s really not surprising that if you’ve been saving up and ‘gone without’ for a long time, then you may need some advice on how to spend it. This is where having a financial planner can be very useful. We can show you where and how you can get that careful/carefree balance.

What works for one person, isn’t for everyone. Many might choose to spend their money on seeing the world. But for one of my clients who’s an airline pilot, they’ve already been everywhere. For them the emphasis is on how they can work less and find other ways to enjoy life with the money they’ve earned. 

No-one’s ever going to convince a real spendthrift to perform an about-face into a freewheeler (and nor should they). So we can look at this in a different way instead. What other lifestyle changes can you make? The emphasis doesn’t need to be on material things – it’s not all about buying stuff. Instead, your aim might be working less – or meeting up with friends more.

You can try this tactic: think back to how you saw money when you were younger. What would 20-year-old you think of what you’re earning by age 40? 

They’d probably be mightily impressed – even if you’ve increased your spending with every pay rise, and it might not seem that much ‘extra’ to you, it would to them. When I first got a student loan (for £2,700) which had to last 12 weeks, I couldn’t have imagined that one day that would be a monthly salary.

So perhaps one solution is to go back to that feeling of what having money felt like when we were younger. Rediscovering that feeling of getting your first pocket money, book voucher or Saturday job pay packet. It’s easy to forget about the excitement of money when we get older, but it’s worth recalling if we want to remember how to enjoy it in a ‘carefree’ way. 

Changing behaviour

Another idea would be to ask yourself, what does ‘success mean to you? Johnny Cash once said it was “having to worry about every damn thing in the world, except money”. 

Real enjoyment doesn’t have to be about getting on a boat and sailing around the world. It’s doing more of the same things you like – going out for dinner twice a week instead of once for example. 

All having money should do is alleviate you from worrying about money. And that’s where we come in as financial planners. We can advise you on the best course of action, help nurture you when you need it into new behaviours, so that your finances are always something to enjoy, rather than worry about.

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