How do you get more comfortable spending your money?

Analyst 2 in RE - Comm

Main question is is the title. Background below if you need more of an explanation.

I made $160k last year and my 60k bonus just hit the bank account before the a long weekend. I had a couple of things I wanted to blow some money on: a gaming PC ($2k, I'm into the technology), trip with a girl I've been talking to running about $3k, upgrading my warddrobe for a couple thousand...

But when it comes time to pull the trigger on these purchases, I can't do it. I have about $140k saved at 25, and I still can't get comfortable spending it. Biggest purchase I have made in my life were courtside seats at an NBA game ($>1k). I know people who make half what I do and still manage to spend on $800 shoes.

How do you get to that level of comfort with your spending? I obviously don't want to spend all of it, but I feel like I'm hoarding it and not living enough. Anyone else like this?

Comments (41)

Jan 19, 2020

Check this article out
He's got an interesting approach to this concept.

https://www.bloomberg.com/opinion/articles/2020-01...

thots and prayers

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  • Analyst 2 in RE - Comm
Jan 19, 2020

This is a good article, thanks. An additional part of the problem is that I'm young. I technically could buy a car and still spend less than I earn. But I'd be giving up all of the compounding growth over the next 40 years of that $40,000. That becomes less of a problem the older you get.

Jan 19, 2020

I have a huge bias when it comes to very fast cars, and absolutely think they are worth every penny. That being said, a rule of the wise over at Bimmerpost is not buying any car(s) that are more than 1% of your liquid net worth. I personally couldn't do it but I see the appeal.

thots and prayers

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Most Helpful
Jan 19, 2020

There's nothing wrong with not being behaving likematerialistic sheep. Personally I only spend on things that make sense, and never buy anything I don't need. I think it's a fundamentally better way to live. Do not feel obligated to buy dumb shit because your friends do it!

Yeah I splurge on nice things here and there, but even then I always buy carefully. For example, I have a couple hundred grand in watches right now but they were all purchased far below market and I have a few dealers who would pay me a bit above breakeven for them if I need the liquidity.

I remember my first big paycheck...my business partners bought themselves super cars and I bought some Subway and then invested the rest. I ended up making 7 figures on that batch of investments

Also...IMO, unless you can afford to buy it 5x over comfortably, then you can't afford it.

So yeah, if you can't afford to drop $15,000 on a $3000 vacation then don't fucking do it.

Discipline and not being attached to materialistic shit= crucial to living a fulfilling life IMO. Even if you aren't religious...there's VERY good reason all religions preach avoiding the trappings of materialism.

Do spend on health, taking care of others, education, taking big chances, experiences (to an extent)

I'm not saying don't enjoy things, but do not feel obligated to spend money or equate buying expensive things with being successful. That's not how it works. Otherwise what's the point in making more money? So you can live paycheck to paycheck with more meaningless bullshit?

BTW, if it's only $60,000 you should save and invest for when a good opportunity pops up. Maybe a friend is launching a startup and you know him well + initial traction is good...or maybe you join an amazing PE fund and have the opportunity to buy into a top performing fund at a good price?

  • Analyst 2 in RE - Comm
Jan 19, 2020

I think you missed the point on every level. Talking about stuff that I actually want (these are not "flexes" like jewelry or cars), can easily afford (I said how much money I have in the post), but can't seem to pull the trigger on because I also want to save / invest / be ready when I join a PE fund with the opportunity to co-invest

How do people strike the balance between enjoying themselves and saving for the future?

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Jan 19, 2020

I think you may have missed my point...which is that you don't need to spend money to enjoy yourself?

Jan 24, 2020

Enjoying yourself =/= spending money. I tend to get very little emotional value/happiness from buying stuff. I got way more happiness out of the last 20$ book I bought than from my smartwatch which costed 400$. The only thing that I like to spend on are vacations, since I see them as buying eexperiences and memories.

Jan 19, 2020

You made 160k last your and have 140k saved up. But you can't bring yourself to spend 3k for a vacation or 2k for a computer. You see yourself that this behaviour or way of thinking is strange. The spending of 5k is pretty insignificant given your current financial situation and expected future earnings. In my opinion this is probably caused by some underlying issue. Either you are scared of being without a safety net or you have some strange believes about personal finances (like the article above mentioned). Either way, you have to figure that out yourself first before anyone can give actionable advice.

On a side note, my grandfather is like that too. Worked as a doctor all his life and saved up ~1mn. But he is completely incapabale of spending money for things that would make his life easier. Everything is considered an unnecessary luxury. He lived through WW2 and a bombed out house and I know that's the issue. But I think everyone can see how refusing to pay 200 for a chair that is easier on the back, for instance, is unreasonable given the financial situation and the added life quality. (Living in Europe, so he receives adequate pension payments, the savings are barely used.)

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  • Analyst 2 in RE - Comm
Jan 20, 2020

Thanks for the response. I think you're right - the underlying issue is my upbringing. My parents were successful but didn't work in high finance / consulting and don't fully understand the potential income growth that comes with it (they topped out at $300k per year)

If your career tops out at 300k per year I think your savings plan should be more aggressive. But hopefully that isn't the case with anyone on a finance forum

Jan 20, 2020

First of all, you can make your own gaming PC and save some $$, plus its kinda fun ($2K is a lot).

Second, I wouldn't pay for a vacation for a GF unless we were getting married at some point, but that's just me.

Third, will having that $5K in your bank really make a difference? No, not at all. Will you be sitting here 5 years from now, saying, wow, I'm really glad that I have that extra $5K in savings? No, you won't even know the difference.

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Jan 21, 2020

Agree with the part about not bringing a gf on a trip unless it's very serious

Array

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  • Analyst 2 in RE - Comm
Jan 21, 2020

Why wouldn't you guys bring a non-serious girlfriend on a trip?

It's so hard to get my group of guy friends to agree on where to go, and even then the coordination is difficult. We recently did an inexpensive trip together and although it was a great time, it was a huge pain to make everyone's schedule work.

I got the idea that it would be easier to pay for a girl to come along on a trip that I plan myself, so I get to do exactly what I want (mostly) wit a lot less hassle. And you get laid. Granted I've never done something like that before so it's still just a thoight... Maybe this is a topic for another thread.

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Jan 20, 2020

Expensive shoes are truly an investment. The $500-$1500 you would spend pays for itself considering you would have these shoes for 10+ years, which you definitely not get with $150 shoes.

Allen Edmonds, Graziano and Girling, C&J, Church's, John Lobb.

Jan 20, 2020

Buy an walk-up apartment building in a nice neighborhood. -Done

Jan 20, 2020

I've always thought that making the money was the hard part. Try sliding your feet into a fresh pair of Gamo loafers and feel how the other half lives. Also, get yourself some tailored shirts and full-canvassed suits - the IRR in terms of pssy is well into the double-digits %%.

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Jan 20, 2020

I had/have this same problem. In the same position as you but a year older than you. You will stop living this way, at least with regards to the vacation, once you go on it and have the time of your life. I just went with my girlfriend to Hawaii that I bought after last years bonus and it was worth every penny.

You realize that the $3k-$5k you spend on that vacation creates memories, pictures, experiences that are truly out of this world. You also realize at the end of the day thats really not that much money (you can even rationalize it that this is what you saved PTO for and you are getting paid anyways). Book the vacation and revisit this post after you get back from it and you will get what I am saying. Traveling is one of life's greatest joys and its one of those things that is hard to regret doing (no matter the cost, because $5k in the grand scheme of things is not a lot of money considering how much money you are making - and you dont have kids or anything like that by the sound of it).

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  • Quant in HF - Other
Jan 24, 2020

I'm also thinking of buying a gf after bonus day

Jan 20, 2020
Analyst 2 in RE - Comm:

I made $160k last year and my 60k bonus just hit the bank account before the a long weekend. I had a couple of things I wanted to blow some money on: a gaming PC ($2k, I'm into the technology), trip with a girl I've been talking to running about $3k, upgrading my warddrobe for a couple thousand...

What is money for if not to exchange for goods and services?

With your savings rate, it's not like you're irresponsible. Buy the PC and enjoy your hobbies. Take your girl on vacation and make some memories. Get some new clothes and look the way you want to look.

Live a little.

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Jan 21, 2020

There's this song by Dae Dae - "Spend that sh**" I would check that out or play it in airpods as you are in watch/clothing store.

Jan 21, 2020

What helped me get more comfortable, as I can relate to what you're describing, was shifting my mindset on how I was saving my money. I'm sure you've heard people use the line "make sure you pay yourself first" every paycheck. I pay myself by maxing my 401(k) and HSA (and soon will be opening up a 529 and contributing heavily), and then I contribute a pretty healthy amount to a high-yield savings account and I consider that money gone...I don't have a plan for using it and I don't want to use it. The rest goes into my checking account, which in my mindset is the "leftover" money that I can feel comfortable spending because I've already done the savings that I feel are necessary (and you don't have to just use the low savings targets that you read on self-help websites; you can save 50%, 60%, whatever you want). If your savings plan is aggressive enough such that anything left over can be considered "okay" to spend, then you should feel comfortable in spending it. I make sure that each month my checking account either stays roughly the same as the month before or increases, and if that is the case then I know I'm fine because I already diverted the rest of the money to the savings plan that I created.

As @fundinvestoraz said above, $5K is nothing in the long-run / grand scheme of things. Part of the reason you make money should be to spend it and have fun and experience cool / new things. I had a college instructor who was semi-retired after he sold his family business. He probably made single-digit millions from the sale and made a little over $100K as an instructor in a very, very low COL city with no family. So this guy should in theory have been able to spend pretty freely, but he drove a two-decade old car and would make fun of students who bought Starbucks every day saying things like "If you invested that $5 a day instead, you'd have $x0,000 more when you were 70". But why would you want to sacrifice a coffee and drive a 20 year old rusty car just so you had an extra $x0,000 when you're 70? What are you going to do with that? You can't go on a vacation because your back gives out if you walk more than 100 feet, you can't go anywhere with your friends because they all passed away or are in a nursing home, etc. I always just laughed at that guy and wondered what his millions of dollars would do for him when he's sitting in the same nursing home as a guy who made $40K a year his whole life.

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Jan 21, 2020

Imagine dying with more money than your kids/family know what to do with it and you personally didn't get to live life how you wanted to because you were too frugal/didnt want to spend money on a couple of trips or experiences

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Jan 21, 2020

A lot of it is security and freedom. I think it's good to have a large cash cushion in-case you run into a severe health problem. Maybe I'm paranoid due to severe health problems (spinal stenosis) in the past though.

Jan 21, 2020

Perhaps you find a way to mentally set aside a small chunk of money ($7500-$10000/yr?) and make it a personal mandate to spend 100% of it on larger-ticket, life-enhancing items/experiences. Earmark these funds on January 1 (or January 21) and treat the act of earmarking those dollars as having already spent them. They can never go back into your savings, so you feel the "loss" now, not when it comes time to actually make a purchase.

Now the question is "Do I really want to use my fun money on this instead of that?" instead of "Should I really spend $x on this?"

Jan 21, 2020

if you're saving well, don't let anyone tell you how to spend your money, that's point number 1. not your girl, not your parents, not your colleagues, nobody. it's your money, and you're doing better than most, so don't change.

in terms of pulling the trigger on reasonable things ($3k trip as you mention), I'm guessing you came from an upbringing where money wasn't plentiful, that will take time to adjust, but you can do it in steps. I'm not saying go out and start buying expensive shoes you don't need or expensive watches, it doesn't sound like that's your style.

I went through a bit of that, where the first time I booked a plane ticket that cost $500 my palms were sweaty. create a travel/slush fund and don't commingle that with personal savings. this will be an account that's designed to be spent and rebuilt, spent and rebuilt, etc etc. figure out what amount you need in "slush" on an annual basis ($10k is a good starting point). transfer that amount into this new account NOW, and then don't go over budget. it's easy to pull the trigger when you can say "I've set this aside for travel" but it's hard when you say "I'm dipping into my savings for this trip, idk man"

best of luck homie

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  • Analyst 2 in RE - Comm
Jan 21, 2020

Genuinely curious as to how you progressed that far in comp? That is if your handle of 2nd year analyst in CRE is accurate

  • Analyst 2 in RE - Comm
Jan 21, 2020

I'm an investment banking analyst that covers real estate. So my title is accurate and inaccurate at the same time

Jan 21, 2020

First, don't ever feel like you need to spend money. Also don't feel that what you spend on has to be super expensive.

Second, don't ever to be fearful to spend money on things that make like easier. For example, if you make 30K a year (hopefully you're not working much), you should be doing your own laundry. If you make 300K, its okay to have someone do it for you. The more money you make, the more time becomes a valuable commodity, where as the less money you make (hopefully you have more time), the more money because a more valued commodity.

Think about Warren Buffet, the guy makes more money than all of us yet lives the way he wants and still eats breakfast at McDonalds.

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Jan 23, 2020
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