I recently faced a significant financial dilemma.
I needed a new set of golf clubs.
Now, “needed” may be a bit of a stretch. My irons were about ten years old and still perfectly functional. But I try to play golf at least once a week. I love the game. I travel to play it and happily pay green fees at great courses.
And yet I agonized over spending $1,000 on irons. Even writing this makes me wince.
I researched them. Checked prices. Wondered whether I really needed them. Considered stretching another year or two out of the old ones.
This was not a financial-capacity problem, which makes the whole thing so ridiculous.
I’ve been saving since I was 16. I’m a financial advisor. I have a plan. I knew I could comfortably afford the clubs. And yet, there I was, debating it anyway.
It gets even sillier when you consider that I will spend far more than that on a golf trip without nearly as much internal debate.
Around the same time, I read a Wall Street Journal article about what it called the “frugal rich,” people with significant wealth who are perfectly happy buying the store brand, clipping a coupon, or skipping an expensive upgrade, while spending freely elsewhere.
It caught my attention because I see this all the time. In our clients. In friends. And certainly in my own family.
A client once told me he was struggling with whether to buy a $30 pair of slippers or the $120 pair he really wanted.
This particular client had a very successful exit and could comfortably afford many pairs of $120 slippers. He just wasn’t sure slippers were worth $120 to him.
At the same time, he travels internationally several times a year, spends generously doing it, and has been extremely charitable.
That contrast has always made sense to me.
For me, travel is the easy example. We travel a lot. Sometimes it is a big week overseas. Sometimes it is a short golf trip. Sometimes it is simply getting somewhere warm for a few days in winter.
I rarely regret spending money on travel. It gives our family time together and creates memories. Even better, those memories keep popping up in the random photo slideshow that runs on the big screen in our living room every day, so as a family we get to relive them.
Apparently I am willing to fly somewhere to play golf and pay pricey green fees. I am just less enthusiastic about constantly upgrading the equipment required to do it.
That is the point. The things that matter to us are not always obvious from the outside.
As our income and savings have grown, our spending has not increased across the board. I’m still pretty frugal about clothes and groceries. I have never cared much about driving something flashy. I still enjoy negotiating a car purchase more than any reasonable person probably should.
But we spend considerably more on travel than we once did.
We have also spent more on our home.
Not because we wanted a bigger or more impressive house for its own sake. We wanted a place that made daily life better. More room to have friends over. A place where our kids and their friends want to hang out. Closer to their schools and the people we spend our time with.
It costs more to maintain. There is a pool. There is more space. None of that is particularly efficient. But it improves our life in ways we actually care about.
There is an important distinction between spending more because you can and spending more because something genuinely matters to you.
Many of the wealthiest people I know live extremely well, but you might never know it from looking at them.
They do not necessarily drive exotic cars or need the most expensive version of everything. They comparison shop, buy the Kirkland brand, negotiate a bid, and occasionally agonize over a pair of slippers.
Then they will take their entire family somewhere wonderful. That is not inconsistency. It is prioritization.
The opposite can happen too.
Someone works hard for years, builds a successful business or career, accumulates real wealth, and reaches a point where money should create more freedom. Then everything gets upgraded at once.
The house gets bigger. The cars get nicer. The recurring expenses grow.
Before long, the person who worked so hard to get off the financial treadmill finds himself right back on it, only at a much higher monthly number. More money, but not necessarily more freedom.
That is where financial planning can be useful in a way that has very little to do with spreadsheets.
We do not want to be the authority on how someone spends their money.
Our job is to be a mirror, to reflect back what they are spending and show them what it means for the plan.
If someone wants to spend more on travel, buy a second home, help their children, remodel the kitchen, fly business class, give more to charity, or buy a very expensive pair of slippers, those are personal decisions.
The plan helps answer a different question:
Can you do it without compromising the things that matter most?
Interestingly, many of the families we work with have more capacity to spend than they think they do.
That can be one of the best outcomes of planning.
Not permission to spend recklessly. Permission to spend confidently.
There is no prize for choosing the cheapest option every time. There is also no prize for buying the most expensive one.
The real benefit of having money is being able to direct it toward the parts of life that matter most to you.
· Time
· Experiences
· Family
· Friends
· Security
· Generosity
· A little less friction
And occasionally something completely unnecessary that simply makes you happy!
What’s it all for, otherwise?
Spend extravagantly. On what matters.
Happy planning,
Brian