When Can I Start Spending My Money?

Two common problems show up the moment you start earning real money. Depending on your environment, family, values, education, and many factors outside your control, you may either 1) fear spending or 2) spend without thinking.

This does not apply to everyone. Plenty of people were lucky enough to grow up in a home that taught money management from childhood. This post speaks to two extremes that look different at first glance yet share the same excess. So the real question is:

When do I know I can start spending my money?

Yes, it is smart to save, cut back when needed, and make sacrifices for the future. It is still your money, and you should not feel bad about enjoying it while you can. Live within your means, of course. Save for later, of course. Never forget how to enjoy spending part of your money on the things you love.

A client once told me he did not want to go out, spend, travel, or do much of anything because he wanted to leave savings to his entire family in his will. I said: “It is great that you want to leave something for your kids and grandkids, but the day they read your will you will be six feet under and you will not even see them enjoy that money.”

His reaction was instant. He stood up, started pacing around his office, and said: “I am going to take my whole family on a trip to Europe with all expenses paid.”

In that moment he realized he could spend his money to make his family happy and share the experience with them. It is not only about leaving them something later. There is no better gift than the memories of good times together.

You know you can start spending your money when you can save enough to be solid in an emergency and to invest. The rest is idle cash that does you no good: spend it.

Depending on your age, a few points matter:

1. Save, but only a percentage of what you earn
   Saving matters for rainy days and emergencies. Set aside a percentage that feels comfortable and that will cover real problems: car repairs, illness, a kid breaking a leg at school, and so on.
2. Spend more
   Exactly: spend more. Stop trying to hide every last cent under the mattress. That mindset hurts more than it helps. It makes you tense every time you spend, tense every time something unexpected costs money, and tense while you hunt for ways to spend less on things you actually need (water, gas, electricity, clothes, even food in some cases). If you have a household financial plan, keep a healthy balance between what you save, what goes to fixed costs, and what you spend on enjoyment.
3. Learn how to save the right way
   Saving just to save does not grow your finances. The day an emergency hits, you can still end up with nothing useful. Save so you can invest. Whether that is a bank investment account, projects, businesses, stocks, funds, or bigger opportunities, put your money to work for you instead of working only for it. You will notice you start earning extra money you can then spend on things you used to refuse to pay for.
4. Spend on experiences
   Spending on experiences tends to make you happier, leaves less regret about the money, and helps you grow.
5. Stop buying to impress
   A lot of people buy to impress friends, family, and strangers on the street. Be a smart spender, and you will see you do not have to fear spending when you only spend on what you need plus a few things you truly want (your sweet spot. We all have a few).

Do not fear money, and do not neglect it either. Not everyone is lucky enough to have enough money to even think about these questions, but money is not an impossible resource to build. I have had money and lost it all, twice. Each time I found a way to earn even more than before. If you did it once, you can do it again. So do not die with more savings than you can spend in a lifetime: use it.