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We hear a lot about the importance of saving money, but what if learning how to spend is just as important?
Michael Hansberger, certified financial planner and owner of the upcoming Mission Financial Planning in St. Charles, Missouri, says many of his clients are struggling with the spending side of the financial equation, and he hopes they can improve on it.
“You’ve built all this money, and now you don’t want to spend it,” he says.
For example, retirees are often reluctant to spend their money when they are no longer making money, and they often know that their money must continue for the rest of their lives.
But Hunsberger says that by coming up with a spending system, you can enjoy your later years.
Below are five ways to develop an expenditure plan:
Make sure your savings are solid
Before you start spending, it is best to make sure you have enough savings to meet some of your short-term and long-term goals, says Aja Evans, financial therapist and author of “Feel Good Finance.”
“I come up with an amount you feel like it’s ‘safe’,” she says, whether it’s $5,000 or $50,000 for your emergency fund —
Then, once you reach that number, you’ll create a plan that includes your spending.
Investigate your financial worries
If you grow up in a family where parents are very modest or rare, Molly Ward, a Houston, Texas-based impartial advisor and CFP-certified divorce finance analyst, can be difficult to embrace the art of spending as an adult.
“We all have money bags and will help you check your money thinking. Where does it come from?” Ward asks.
“They either worry, fear or worry about something devastating in places where they don’t have enough money, so they “rely resort to hoarding money” clients who support their money.
People struggling with this worry can put excessive cash in low interest rate accounts that are overly cautious and safe but less interested.
That type of behavior is often associated with people who have experienced financial trauma and difficulties as children, Evans says.
“They never want to go back to that situation,” she says.
“I’m not telling people to spend their savings, but I don’t want them to just sit on an account. Sometimes they need to take small risks so they can grow,” she says.
Consider professional help if necessary
In some cases, they say that financial therapy can help you explore patterns of behavior you want to change.
“Think about getting additional support,” she says. “Many of this behavior may come from deep-rooted anxiety.”
If you are looking for a financial therapist, you can find it using the Financial Therapist.
Build your spending muscles
Evans said that having a careful plan and budgeted purchase, such as getting a massage or having a family dinner, helps people get used to spending in a thoughtful way.
“You’re starting to build muscle and saving habits so that your spending feels safe and comfortable,” Evans says.
For example, it may seem like you’ll end up buying a plane ticket or booking a hotel reservation for your dream vacation.
Ward says that the development of spending systems helps to make the process more controlled.
She likes to create a list of potential splurges outside her monthly budget and review them all at the end of each quarter before deciding whether to buy the items. That way, she is not constantly spending excessive amounts on unplanned items.
“It’s going to be even more special. You were waiting for the item, and you reward yourself,” she adds.
Developing a sustainable spending system
Establishing certain habits, such as regular reviews of spending, such as subscriptions, or cutting in areas that have creeped upwards, is a way to help create a sustainable balance between spending and savings, says Ward.
“You may have a roommate, a spouse, or a friend. You can learn together or share saving tips once a month,” Ward says. “Instead of a book club, there is a money-saving tips club. We can learn a lot from each other.”
“I’ve seen success when people have a system for their pay and they incorporate fun money into that system,” she adds.
For example, perhaps 10% of your salary could go towards a discretionary category that allows for some splurge.
Also, if you receive a wind drop in the form of tax refunds, bonuses, or inheritance, the word suggests applying the same concept.
“Give yourself permission to spend up to 10% on something you love that means to you,” she says.
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Kimberly Palmer writes for Nald Wallet. Email: kpalmer@nerdwallet.com. Twitter: @kimberlypalmer.
In this article, how to create an expense plan was originally featured on Nerdwallet.
Original release: March 6, 2025, 2:34pm EST
