Learning How to Spend Money (While Enjoying Every Dollar Spent)

Mad Fientist: Hey, what’s up everybody? Welcome to the Financial Independence Podcast. I know it’s been a while since I’ve been in touch, but as I mentioned in my last post, things have been busy around here with two small kids, but this episode is a long time coming. I know I’ve been promising this for at least a few years now, and it’s a topic that I’ve been actively focused on since 2019, and it’s getting better at spending money.

And I realize that’s a crazy thing for some of you out there to hear that this is a problem. And I completely admit it’s a great problem to have, but I think it’s a very real problem with people that pursue PHI because we’re so good at saving and we’ve saved all our lives and we’ve built an identity around saving, and then all of a sudden you’re just meant to flip a switch and change over to spending and it’s a lot harder than it sounds. So this is something I’ve been working on since 2019 because that’s when I first asked Ramit Sethi from iwillteachyoutoberich.com to come onto the podcast because I figured he was the ideal person to help me become a better spender.

And he was, it was a great episode. I asked him back onto the podcast in 2023 to catch up again and review my progress and answer a few other questions I had with regards to spending. And both of those episodes are great. So if you haven’t heard those, I’ll link to them in the show notes, but this is something that I’ve been focused on since 2019.

And even though I’ve been making gradual progress, it’s not fast enough because I’m 43 now, and your peak spending years are 40 to 60. So I’m already over 15% of the way through my peak spending years, and I’m still talking about getting better at spending, like it’s some future thing that I need to do and actually I need to do it now.

And this really hit home. Over the last few months, because we sent our 3-year-old off to nursery, which I guess in America is preschool. And it was a shock, and I took it way harder than I expected to. I was just like, oh man, this is the first time that our son’s like doing something without us and starting his own life.

Without us in it. And it was, it was a big eye-opener and made me realize, okay, this time is so precious and there’s not that much of it. Because in 10 years, in a decade, he’s gonna be a teenager and maybe be too cool to hang out with us. So that was a big slap in the face to say, okay, you need to get better at this now, and there’s no point having a ton of money when you’re 60 and the kids are outta the house.

It’s time to get better at this now, and it’s time to do it quickly. So this episode is a compilation of everything I’ve learned over those last six years, the things that have worked best for me. So hopefully it’s useful to you no matter where you are on the five Journey because. The money’s gonna be spent eventually.

And if it’s all given away after you die, that seems like a shame. And as Bill Perkins said, in Die With Zero, “When’s the party?” And that’s also a great interview to listen to if you haven’t heard that one yet. I’ll link to that in the show notes. But yeah, when’s the party and there’s gonna be a party, and when is it?

And that’s what I’m starting to think of now, and I definitely wanna be a part of it. So, to kick things off, I’ll start with something that helps to unwind some of those previous habits that were useful for saving towards FI but have now become less useful when I’m post-FI. And that is less specific tracking.

Pre FI, I had a spreadsheet that broke down all of the spending categories, and I was able to tally ’em up every month and see how they changed and all that sort of thing. And that you can still download that spreadsheet at madfientist.com/spreadsheet. And that was the one that served me well to get to FI. But after FI, I don’t need to or want to track all of those individual categories. It’s a waste of time, mental energy, and it’s actually counterproductive because what gets measured gets managed, and I don’t wanna manage it anymore. I don’t wanna see that I spent over budget on restaurants the month before, and then not go out to a restaurant this month because of it.

I don’t care. It shouldn’t matter, and it doesn’t matter. So the first thing that I had to do was just. Streamline my financial tracking and just track the main thing, which is net worth. And that’s really all that matters at this stage. So if you go to madfientist.com/post, you’ll find my post-FIRE spreadsheet that I created, and that’s what I’ve been using instead ever since I left my job because I just don’t care about the details anymore.

And it’s more a big picture thing. And I’ve actually built some custom software that I’ve been also using. So if you wanna become one of the beta testers for that, make sure you’re on the email list. And if you’re not, you can just go to madfientist.com/advice, and you can sign up to the email list there.

But it’s something that I’m gonna hopefully be releasing next year, and it’s been helping me to not only keep track of my spending at a level that I want to, but also makes it more fun to spend that money and save for specific things. So that was the first big change. And then the second one is trying to recalibrate my brain because I don’t know about you, but my brain is trapped at 20.

I still feel like I’m 20. I still feel like I can do the things. I can do it when I was 20, and I am definitely far from 20. So I still sort of feel like I have the net worth I did at 20. So, for instance, back in college, if I had a friend come up to me and say, do you wanna go out for dinner? And they picked a place that was gonna be over 10 bucks, I’d be thinking twice about it. because I’m like, oh, 10 bucks. That’s a lot. I don’t need to blow 10 bucks on dinner tonight. And it’s crazy. But 10 bucks still feels like a lot of money to me because of that. And that was like sort of my like cutoff number of, all right, this is something I should second guess, or I shouldn’t second guess this.

So, to recalibrate my brain. I took $10 and I divided it by my net worth at the time. And then I’ve multiplied that by my current net worth to find out, alright, what is $10 equivalent to now? And that calculation is mind blowing because it was really the first time that I appreciated that random number in the bank that I’ve been looking at for all these years and it’s, it made it seem like, whoa, okay. I am on a whole different level these days, and these small purchases, or even medium purchases, or even what I would consider very large purchases are in fact insignificant in the grand scheme of things. And that was very eye-opening. So that college calculation was probably the biggest thing that was able to change my mindset that I’ve done in the past 10 years of working on this problem.

A similar calculation. I actually just came across in Nick Maggiulli’s new book, The Wealth Ladder, that’s really good is his 0.01% rule, which is very similar and it helps you recontextualize your spending as you climb the wealth ladder. So, looking back on my college days, that made sense that $10 was like, oh, geez, yeah, that’s gonna be, I need to think twice about that.

But 0.01% of my current net worth is way higher than $10. So. It’s a great, easy way to figure out what kind of expenses you really need to be concerned about and what you can pretty much ignore completely, which has made life a lot more enjoyable for someone who used to scrutinize every single penny that came out of his pocket, which leads nicely into another thing that’s been beneficial and that is worrying less about efficiency.

And this was from Ramit’s episode in his interview with me and he described that, you know, as systems get larger, sometimes there’s more waste. So you can’t have a perfectly efficient system as you’re trying to grow and experiment and spend more. So back in the olden days, I would, you know, dwell on any sort of expense that wasn’t necessary, and I would make do with what I had instead of getting what I actually needed because spending money was the last resort. And it was only because I couldn’t find any other solution, and it had that negative connotation. Whereas now I realize that, hey, yeah, I’m not gonna be perfectly efficient with my spending and sometimes I’m gonna buy something that I don’t need or use money in an inefficient way.

And that’s okay because it means I’m pushing the boundaries. I’m trying to expand my comfort zone with spending, and it just comes with the territory of having a larger overall system. And that’s been really helpful. Actually, it sounded crazy when he said it to me way back in 2019, but it’s helped me make some spending decisions where I otherwise wouldn’t have.

Because if I’m on the fence and I’m like, oh, should I really, or do I really need this now? I tend to just go for it. And yes, sometimes that’s the wrong call and I regret it a little bit later, but. I know at the end of the day, it’s not the end of the world and it’s not worth even expending any mental energy on.

So it has been helpful in that sense. So those are some of the ways that I’ve tried to change my thinking around spending. But I’ve also tried to reconceptualize expenses themselves. So the first thing that’s helped me make that purchase decision or, or pull the trigger on something is if it could also be a investment.

So obviously FIRE people love investments and I can hear Ramit’s voice saying, “Why can’t you FIRE guys do anything that’s not an investment”, and I get that. But if you can make it an investment in your head, it does help. So for example, we bought a nicer house than I probably was comfortable with at the time, and I’m very glad I did.

But the way I was able to get over that was like, well, this is an investment, so if this is the wrong call, then I could sell it again for hopefully is what I bought it for maybe more. So I was able to pull the trigger and try it out and I’m, like I said, I’m really glad it did. I love, we love our house and it’s not overly extravagant or amazing, but it’s great and we’re really comfortable here and I’m glad we didn’t go cheaper. because again, money isn’t just meant to sit there in an account. It’s meant to be used. So I’m glad we used it in the way we did.

And another example was like synthesizers for my music project. So there’s oftentimes that I need a certain type of synth. And yes, I could buy the entry level cheap mass produced one from China that’s plastic and it’s probably gonna break in five years. But when I reframe it as an investment, then it makes me get the best that there is because I know that maybe in 10 years it’ll be a classic. And then I could sell it for a lot more in 20 years if I wanted to.

And it’s gonna last for 20 years. So again, thinking of it ass an investment helps me pull the trigger on the top of the line thing, which is great in so many ways because then I get to have this beautiful machine that sounds a lot better than the cheap version. It’s nicer to look at. It’s more likely to not break down or break in general.

And it could be an investment one day and if it is, great, but it’s just as likely that it won’t. Maybe it’s just gonna be a mass produced thing for the next 20 years and it’s gonna be not an investment. But thinking of it in that sense does help me pull the trigger. And again, I’ve been so happy that I’ve bought the things that I’ve bought rather than the cheaper alternatives, which 10 years ago, I would’ve definitely just automatically gone for the cheaper alternative.

Something related to this one is fun business expenses. So if you do have your own business, then. If something you want could also be classified as a business expense, that also helps me get to the purchase decision in the same way that if it also could be considered an investment does.

Another thing I’ve started doing is having a fun/splurge account, and it’s not a separate account or anything, but it’s just an allocation of money that I know every year I’m gonna spend on splurges.

And a splurge to me is just anything that seems ridiculous at the time, but I wanted to try it. For example, we usually go to the States at least once a year. And for the past three years I’ve rented a fancier car than I otherwise would’ve. And that’s come out of my splurge fund. And it’s been a lot of fun.

So, you know, three years ago we rented a Tesla Model Y that was fun. And then we rented a Jeep Wrangler Unlimited for our beach trip and had the top down all the time. And that was fun for that trip. And then this last trip we rented a luxury SUV because I didn’t even know what a luxury SUV would entail.

All three of those examples ended up being a lot of fun. I can look back on those trips and I can remember what we did in those cars. Would I want to spend all that money to buy a luxury SUV, I don’t think so. But it was a lot of fun to try it out for a month when we were in the States.

Some more examples of things that have come outta my splurge fund and it’s been like fancy Airbnbs for. Having friends and family come with us to places. So we went to Stowe for a ski trip and we rented a big fancy house that could fit our friends and their family and, and we had a great time with a weekend out in Stowe.

Same happened in Durham. When we went to visit some friends there, we rented a really central place and invited my parents and my grandma to come and they came up from Florida and it was a really fun trip.

And did the same thing on this last trip. In Savannah, we rented this Victorian house right on Forsyth Park, and it was a great central location and a beautiful house. And again, we invited family to come up and spend a few days with us and it turned into a fantastic trip and loads of great memories.

So the reason, the fun splurge account works for me is because it’s a set amount of money that I know I need to spend every year. So I end up spending it and I find reasons to spend it. And that sort of pushes me beyond my comfortable spending boundaries.

And I’m trying to take that to the next level and sort of having an annual spend amount that I need to spend every year.

I realized this was a good idea when people would give me gift cards for Christmas or something and I’d have so much fun spending it because I knew I couldn’t save it. And I wouldn’t feel guilty about blowing the whole a hundred dollars or whatever it was. And it made it a lot more fun. And I would always find something that I wanted and I would enjoy that thing after I bought it.

And usually I, it was something that I wouldn’t have bought in the first place, but since I had this gift card that needed to be used, I would just use it and it was great. So taking that idea to my actual life and saying, okay, well this is how much we need to spend this year and figure out a way to do it.

Whatever you don’t spend, you can give it away at the end of the year, but no matter what, it’s all gone at the end of the year. So that’s something I’ve been trying to do the past couple years, but if failed, I’ve never actually hit my target. But 2026, I’m determined, so that money is definitely gone. I’ll calculated it in January and then it is gonna be gone by the end of December.

Even if it means giving it away to a good cause. So that’s my goal for 2026 and I am determined to actually do it this year.

In preparation for that, I’ve turned off automated dividend reinvestment in my taxable account. So now I see that cash is piling up there and I know I have to use it. So that’s another structural change tip I guess, that you can make to force you to spend more rather than invest more. Because if you’re like me, investing is just on autopilot, it’s inertia. That’s what I do. It’s the easiest thing to do. It’s I do it naturally. Spending’s the opposite. So turning off dividend reinvestment in your taxable accounts will push you towards the spend rather than the invest.

Which leads me to something else that Ramit said in one of our interviews, and that was “Why pay less when you can pay more?” And at the time I thought he was absolutely insane. I thought that was the craziest thing he said in any of the interviews with him. But now I can appreciate it and it’s when I’m trying to hit these spending targets and I have the option between something that’s cheap and maybe not exactly what I need or expensive, and it’s exactly what I need.

I now go for that expensive thing because I know I’m gonna struggle to hit my spending targets, so I might as well go for the thing that will actually give me exactly what I’m looking for. And it’s been fantastic. It’s the first time in my life where I actually have tools to do the exact thing that I needed to do instead of just making do with whatever’s cheapest or whatever I have on hand.

And this made me enjoy my stuff more because it does work, it’s high quality and it fulfills a purpose, and it’s. Usually a joy to use, so it’s been beneficial all around. But yeah, it made me realize that why spend less when you can spend more? That Ramit said all those years ago that I thought was insane, actually makes a lot of sense when your mindset shifts a little bit.

I was speaking to JL Collins a little while ago about this exact topic, because I think we’re both trying to push ourselves in this area. And he recounted a conversation he had with Mr. Money Mustache way back in the day, and they were, I think in Ecuador for one of the Chautauquas or something, and they were out at the shops and JL was trying to decide whether to buy something or not.

And Mr. Money Mustache was like, well, “Yeah, just go ahead…everything’s free”. And that outlook makes a lot of sense to me now, where if the portfolio is at a certain level and your life is at a certain spending level that you’re very comfortable in, and it’s not like you’re gonna go out and buy a super yacht or something that’s gonna just destroy your finances, pretty much all of these daily purchase decisions you can act like as if everything’s free.

That has been helpful to make these purchasing decisions because even though I’m trying hard not to have money influence my decision making, it’s so ingrained in my brain after 40 years of hardcore savings that if I try to make a decision and act like it was free or if I had unlimited money. Then I sort of make the decision based on whether I really want or need that thing rather than do I really need it?

Could I save that money? Could I just not spend that money? And it takes money outta the equation a little bit mentally. I’m still nowhere near the level that I can pretend everything’s free. But trying to think like that when I’m making a decision has been helpful and pulling the trigger on something more often than not.

But even if I’m trying to think of everything as being free, that doesn’t mean going for the top end immediately. And something I’ve been trying to do is incrementally improve.

So before our daughter arrived and when our son was still free to fly, we experimented a little bit with different airline tickets.

So yes, if everything’s free, we could have just booked first class and that would’ve been that. But instead, we tried out premium economy first, and then we tried our business class. And incrementally improving those experiences led to a lot more happiness and satisfaction than if we had just jumped from economy to first class, because we first got to experience the thrill of premium economy and the extra leg room and all the things that came with booking a premium economy flight. And then the next time we flew, we were able to experience another big bump in excitement with business class and the lounge that came with it and the better food and all of that, and the lie flat seats.

So incrementally improving allowed us to have multiple experiences of leveling up and enjoying that. So that was a good decision to make. And now that our daughter’s here, we’re back in the back of the bus because it’s easier and less stressful just having a row to ourselves. But I’m glad we had those experiences and I’m sure one day we’ll go back up to the front once everyone’s a bit older and traveling better, and it’ll provide those same exciting benefits that it did the first time we tried them.

So another thing we’re not doing is increasing our fixed costs by a lot. Last year I was on the Afford Anything podcast and I was talking to Paula about how we’re trying to increase our spending. And she asked if that just meant that we were just adding a bunch of fixed costs to our lives that we paid every month. And I said, no, actually it’s the opposite. And it’s the opposite by design, because I think adding a bunch of fixed costs would then stress me out a bit because it’s like, okay, these, these costs are here forever.

And if the market tanks, it may be stressful because I won’t be able to unwind those fixed costs. So actually, all of the experimenting we’ve been doing with spending has been just one-off costs, and that’s made it a lot of fun because I know the portfolio is generating money and I know that money is going to regenerate every month.

So. It’s like every month is a new adventure. So after we bought our house, like for a couple months, I just went ape shit on Amazon and I was buying all of these things that I had wanted to buy over the past decade of renting, but I never did because I didn’t want to have all this stuff that we had to move, because we moved like once a year when we were renting. So it was all the time it felt like we were moving and I didn’t want to have any more stuff to move. So I had all this pent up demand and so yeah, after we moved into our house, I just went crazy on Amazon for a couple months and then that died down because I bought everything that I wanted to buy.

So then it was like the next month it’s like, all right, what are we gonna do? So that month we just took a special trip or something, and then that was what? We spent the money on that month, and then the next month maybe I bought a new synthesizer, new piece of music gear, and that’s where the spending went that month.

And I think that’s made it a lot more fun than going out and increasing your fixed costs once and then having to pay that every month. And then sort of wondering if you could unwind that if you needed to. And yeah, every month’s a new adventure.

So something else that I’m not doing and is a big change for how I used to live is, I’m not waiting.

So, for example, old me would think, okay I really want to buy a mountain house one day, so I’m just gonna save, save, save, invest. One day I’ll be able to buy my dream mountain house and ski all the time and do all these other fun winter stuff. And that’s what I would’ve done. I would’ve just buckled down, saved hard for as long as it needed to take, and eventually I would’ve got there.

But now I can still have those long-term dreams of, yeah, maybe having a mountain house one day, but instead of just hardcore saving today’s for this future enjoyment, I can save for something long-term, but I also need to do that thing now and enjoy that experience now in a different way.

So I mentioned some new software that I’ve been building over the years, and that was the key driver of that, was to take these long-term things and realized that the money that I’m saving for those long-term things can generate an annual income that I should use for that thing now.

So. I have a piece of my portfolio set aside for maybe buying a house in the mountains one day, but every year I definitely need to be using 4% of that amount to rent an Airbnb in the mountains for a couple weeks or a month, and as that portfolio chunk grows, then the longer our trips should become. And maybe one day we realize, hey, actually we’re spending a month in an Airbnb in the mountains, and that’s actually enough and I don’t need to buy the mountain house and live there for 12 months of the year.

Maybe a month’s good, or maybe it’s two months. But anyway, it’s not just living for the future anymore. It’s, yes, you can still plan for long-term things and you can invest for the future, but it’s making sure you’re prioritizing now and using the money now and not just saving it for some future date.

So I think those are the main ways we’ve increased our personal consumption, but the other side of the coin is that we’ve also become more generous with our money, which is something I’ve been trying to do over the years and pushing myself to give away more. And there’s been a lot of positive progress in that area as well.

So one of the rules I’ve given myself is that if I’m ever deciding whether to tip two amounts, always go for the high one.

So that’s just a simple rule that’s helped me. Give more and share more, and also relieve a mental burden. because I feel like I’m constantly deciding how much I need to tip. And yeah, it’s just easy to just go with a high number and forget about it. And the same goes for friends’ causes. If somebody’s running a marathon and they’re raising money for charity, or if any friend or family member is supporting a cause and they’re wanting to raise money for it, it’s just, okay, go in and, and absolutely give every single time and give on the upper end of what you feel comfortable with.

And finally, I’ve also had a lot of fun and success with doing one-off things that come to mind. So for example, I know that my parents, it was their bucket list to go to the Ryder Cup, and I figured out a way to get tickets and book them tickets to the Ryder Cup and we made a really fun trip to Rome out of it, and we met them there and then they got to go to the Ryder Cup for a day and took that off their bucket list and it was a great use of money.

Another example was a band that my high school friend and I used to love back in the day. We’re going on tour and we decided to go to it. And I just surprised him by booking front row tickets to the show, and we had such an incredible time. And being that close was even better than I expected, and it made the experience so much more fun.

And again, that was definitely worth the money, and he appreciated it. And we had such a nice time feeling like we were just back in high school again, seeing one of our favorite bands. But yeah, we were way closer than either of us probably expected. So that was another great use of money.

And to be honest, I think all of the experiments we’ve done have been positive, and it makes me excited to do more experiments in the future.

So I’d say. If you’re FI or on your way to FI, I think you should push yourself a little bit more to spend, because it does take a while to get better at it, especially if you’ve saved for your entire life like I have. because I’m nearly a decade into post-FI life, and I am still feeling like I’m only just getting started and trying to figure this out.

And something I realized is my portfolio is growing way faster than my imagination is, and I am running out of things to try. So the earlier you can start figuring this out, the better. And if you have the savers’ mindset, like most people in the FIRE world, I don’t think you have to really worry about getting out of control.

There was only one time that I thought, is this how this happens? Is this how people just spend all their money and never save anything and wind up in debt? And that was after we moved into our house. When I mentioned earlier that I went ape shit for a few months because I just had so much pent up demand and I knew there were so many things that I wanted to buy, and for a while there, there was just like nonstop Amazon boxes arriving. And my wife thought I had just gone crazy. because she’s like, “What are you buying?” “Why are we getting so many packages in mail these days?” And for a minute there I thought, oh geez,, I’ve fallen off the deep end, but, you know, after two months and I got everything that I had wanted to get, and then it just completely dropped off.

So that was the only time I worried about the sustainability of my new newfound love of spending. And yeah, then it’s, it’s dropped off since then. So don’t be afraid to get outside your comfort zone a little bit. And but, you know, don’t get stressed about it. It’s meant to be fun. This is a great problem to have, and it’s a fun problem to address.

So if you are getting stressed or if you’re not sleeping well at night, then obviously back off a little bit, but you need to feel a little uncomfortable to break out of your old habits and try some new things. So hopefully this episode inspires you to spend a little more and to try some stuff out and gave you some new ways to think about things.

And like I said, I’m working on that software to help with this. And if you want to become a beta tester, then get on the email list. because there’s gonna be an email going out within the next month. And to be honest, it may not make it past beta testing. It may not make it into a public release. It may just be one of these things that just lives, and the people that use it, use it. And then I don’t do anything else with it. But we’ll see.

But if you want to try what I do have done, then go to madfientist.com/advice and you can put your email address in there and you’ll hopefully receive an email over the next month to tell you how you can get access to it.

But hope this episode was helpful anyway, and hope you’ve been doing well since I’ve last been in touch, and hopefully it won’t be as long until the next one comes out!