Much has been written about saving, investing, and planning for tomorrow.  What is discussed less in written form is how to spend all those dollars you’ve saved.  How you formulate your spending decisions is very personal.  Even so, there seems to be fewer guidelines when determining how to spend what you have.  A planner may assist by understanding all your financial complexities and tie spending together in a sustainable financial plan.  Communicating this early and often tends to generate the best outcomes for clients.  Even so, I’ve found that it’s tough for some clients to spend their money on themselves in areas of fun today.

When you have spent four decades of your professional life saving and investing “for tomorrow” it’s more difficult than you think to “flip the switch” and enter a consumption mode.  Often, those who have recently repurposed their time struggle with this.  It’s also a struggle for those still working and finding a balance on spending.  Retirees grapple with who they are now as their professional identity changes after leaving their employer.  No longer are they the Rockstar employee, partner, or collaborator they previously were.  What comes next tends to take time, reflection, and perhaps some soul searching.  The answer may be made clearer by having purpose in defining what exactly they are retiring to in the first place.  Many recent retirees may readily answer what they are retiring from.  I’ve heard various answers over the years, most seek more control of their time and where they choose to spend it.  As you look forward, how easy is it for you to define what you are retiring to?  This is a helpful question to begin considering in your 50s (or sooner) as it relates to your spending.  How might you answer this question today?

Self-reflection is helpful as is talking with your significant other and close friends who may have recently repurposed their time.  They may provide different perspectives and perhaps some things they would do differently if given the chance.  Often, it’s helpful to answer questions you have never been asked and to ponder other perspectives.  As a result, this may open up more possibilities and have you closer than they think to achieving what you want.  Having seen clients work and retire, make good and bad decisions, there is a lot to consider as you contemplate your own spending to and through retirement.

The good news is a comprehensive plan should address the transition from working full or part time to repurposing your time as you want.  Identifying the right assets to cover general expenses ensures essential costs are covered.  What about spending for fun?

Years ago, we created a “future fun happiness now” discussion category as part of our review process.  This allows clients to share with us what they are up to for fun these days.  Granted, some of this fun has been tempered the past twelve months, but things are changing.  Clients are sharing all sorts of priorities and activities that bring them joy and happiness.  As we cover this topic at least twice a year a seismic shift began taking place in our practice.  Clients moved the conversation away from “one day we will…” to “what do we need to do now to make this a reality.”  By actively addressing personal priorities and goals that are “fun based” our work began raising awareness on steps to take to make it happen.

Many financial plans cover traditional topics such as college education, investing for retirement, and perhaps paying down the mortgage.  It’s not common to find financial plans or planners actively discussing spending on future fun and happiness now topics.  The message I see most often in the marketplace is one sided coming from the advisor telling the clients to save, save, save.  What might be possible if, in addition to savings, clients were asked to discuss and share where they are spending their resources in areas that make them happy?

I’ve noticed a trend taking place as new clients join our firm.  Few of them, if any, have ever had serious conversations with their previous advisor on their definition of spending for fun.  I find that fascinating as saving and investing for tomorrow without having some fun along the way leads to what maybe a very boring journey.  It’s an interesting moment, sitting live with clients (Zoom for now) and watching their wheels turn on making big personal discoveries in the area of fun and spending.  It’s exciting to participate and help channel their energy in the right direction, both for fun and essential needs.

Other changes take place to when clients are actively discussing and planning for fun.  They tend to get more engaged in the planning process and ask questions that integrate other financial and life decisions together.  It’s natural to be more responsive when you have an idea of what you want.  I believe this is really what planning and a conversation with your planner should be about.  It’s not having the same conversation once a year and reviewing the 65-page report with red graphs.  No, a real effective planning conversation is dynamic and follows a process.  It’s interactive, engaging, and fun.  Yes, as plans are created tough questions will arise, it’s not an easy journey.  All possibilities on tomorrow blossom from goals and values today.

Two actions make spending on fun a reality.

First, its best to set the money aside in advance in a checking or savings account.  It’s important not to commingle these monies with other dollars that serve other purposes such as your cash reserves or general monthly spending.  For couples, who may have differences on what to spend where, it’s helpful for each of them to have a personal fun account.  This removes the guilt from spending that often arrives when you don’t have a plan or when all your money is living in one account.  Life is simply too short to carry regret or ill feelings around money.  It’s easy to forget that money is simply a tool that gets things done.  Second, set up a financial plumbing system that supports your goals by moving money into your fun account.  An account that’s not being refilled from your plumbing system won’t be helpful, or much fun.  Whatever you decide to move towards your account for spending today, make sure the process is automated so you may turn your attention to other priority/s.

Planning and spending may co-exist together successfully.  It’s not one or the other, it’s both when you have a plan and update it each year.

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