Not worrying about spending

[LivingAlmostLarge]

Is there an income or point where you can stop worrying about how much you spend? Either you have no debts and just income so it doesn't matter? Or enough income to cover everything?

I ask because I know we preach frugality here, but I have a friend who is very wealthy. Well more than a few. They can pretty much afford everything they want no worries about anything. To them they eat out every meal, pay for whatever they want, and still won't run out of money. They worked hard to earn it, got some from family, and are definitely in the wealth section.

But even those who I know didn't come from wealthy families but make a lot now, spend without worry. Do you think if you made say $500k there wouldn't be a need to worry about eating out all the time? Or buying uggs @ $150 for a 4 year old? Or paying $100 for a north face jacket? These are all things I can't fathom doing and can't afford obviously, but they can. And I know they are all very conservative saving for college, retirement, paying off homes in 10 years, etc. But they think nothing of dropping $9k on airfare to europe, or $20k for a 2 week vacation.

I just wondered it is possible to earn enough that however you much you spend you can still earn enough to not worry right? But how much do you need to make $500k?

[cardtrick]

For me, that would depend on how much my net worth is. If I had $25 million, I could spend 500K a year and still be worry free. That's a 2% withdrawal rate. You most likely will never run out of money, at that withdrawal rate.

[lamar411]

My wife and I have gotten to the point where we make enough money, have saved enough money, that what we spend really doesn't matter. Our ideals on money won't change. While we splurge on vehicles, we stay modest on our home, clothes, and food. Vacations are also something we don't spend tons of money on, but we do manage to take a 2-3 a year. Usually short due to conflicting schedules.

My wife still shops at Goodwill and other thrift stores. The irony of driving a $50k lexus to a thrift store is not lost on me, but oh well. Definitely lucked out, she is extremely reasonable with all her shopping and I can't complain one bit.

We did not come from wealth, but came to America with a big dream and are loving the ability to live it to the fullest.

[kork13]

These are all things I can't fathom doing and can't afford obviously, but they can. And I know they are all very conservative saving for college, retirement, paying off homes in 10 years, etc. But they think nothing of dropping $9k on airfare to europe, or $20k for a 2 week vacation.

I just wondered it is possible to earn enough that however you much you spend you can still earn enough to not worry right? But how much do you need to make $500k?

Last question first: Depending on how the horde is invested, it would "only" take about $15M-$25M moderately invested (3%-5% real returns) to produce a $500k/yr in after-tax income. So depending on exactly HOW wealthy someone is, it would not be difficult at all to have that level of income.

Quite honestly, if I had that sort of income & wealth, I wouldn't bat an eye at spending money in order to enhance my quality of life. Whether that's quality clothes, homes, and other "things", or quality experiences, like travel, dining, and entertainment. Money, in my view, is a means to an end...use it to whatever ends fulfill your life. That might even be to live meagerly in New Guinea developing upstart medical clinics.

Although I'm certainly not to a point where I can drop $20k for a spur-of-the-moment European vacation, I think anyone can get to a point where they can be more free with their spending if they choose. It's all about priorities. If I'm saving aggressively and meeting all of my financial goals & then some, I'm willing to spend with fewer restrictions. If I have enough income (or income-generating wealth) that I can meet & exceed all of my goals then still have extra that I don't have to worry about meeting other needs, I'm going to be looser with the purse strings.

I think what can be mistaken is the difference between spending frugally & spending within your means. With a "normal" low- to middle-income, those two things can be equivalent. But when your means are exponentially higher, frugality really doesn't gain you much besides more money (which you already have plenty of). So why not put that money to some good use in your life & the lives of others?

[LivingAlmostLarge]

That's the point. There is a level isn't there of income whether passive or earned where what you make is substantial enough that it doesn't matter how much you spend you can't out spend?

[Like2Plan]

I always expect to have to keep an eye on spending. I don't know if worry is the right word, though. I know we have enough to cover the basics.

I know that we can't afford to go out every night to a sit down restaurant. Lucky we prefer our home cooked meals as a general rule, eh?

I can see spending some money on an occasional luxury, but it will not be without some thought.

[Augustine]

Unfortunately, frugality is a difficult habit to break, because irrespective of how much money you earn; there will always be a risk that you can lose it all one way or the other. You therefore wouldn't be tempted to see how quickly you can spend yourself to poverty.

Suppose you spend no more than 10% of your net worth on a vehicle. With a net worth of $1,000,000, that's a maximum of $100,000, so you could still claim to be frugal at that level. However, someone with a net worth of $100,000 following the same principle will spend no more than $10,000 on a vehicle and will think you are insane to spend $100,000 on a vehicle.

Different levels of income will certainly have different spending thresholds and that is why you may have to look at the expenditure in relative terms.

[bjl584]

I suppose if I won the Powerball for $100M, then I probably wouldn't care about money or spending anymore.

I don't think I could ever spend that much in my lifetime. But, there are people out there that have more than that and somehow manage to die broke. I think that Michael Jackson was close to a billionaire at one point and he died totally broke. But, I would think that if you weren't totally reckless, then anything over $20M in assets should be more than enough to last your entire life.

[feh]

That's the point. There is a level isn't there of income whether passive or earned where what you make is substantial enough that it doesn't matter how much you spend you can't out spend?

I think whether it is passive or earned makes a huge difference. In the case of earned income, I would still watch my spending closely, because you never know when that income will stop.

Passive is another matter. Personally, I don't like spending large amounts of money frivolously, so I wouldn't be buying $50K+ autos even if I could "afford" it. I'd rather donate it, or create a trust for my heirs.

[Nika]

Is there an income or point where you can stop worrying about how much you spend? Either you have no debts and just income so it doesn't matter? Or enough income to cover everything?

I ask because I know we preach frugality here, but I have a friend who is very wealthy. Well more than a few. They can pretty much afford everything they want no worries about anything. To them they eat out every meal, pay for whatever they want, and still won't run out of money. They worked hard to earn it, got some from family, and are definitely in the wealth section.

But even those who I know didn't come from wealthy families but make a lot now, spend without worry. Do you think if you made say $500k there wouldn't be a need to worry about eating out all the time? Or buying uggs @ $150 for a 4 year old? Or paying $100 for a north face jacket? These are all things I can't fathom doing and can't afford obviously, but they can. And I know they are all very conservative saving for college, retirement, paying off homes in 10 years, etc. But they think nothing of dropping $9k on airfare to europe, or $20k for a 2 week vacation.

I just wondered it is possible to earn enough that however you much you spend you can still earn enough to not worry right? But how much do you need to make $500k?

I did not even associate uggs or North Face jackets with wealth. They are solidly middle class markers. Now Hermes bags, on the other hand... that I can't imaging buying, even if I got rich. You got to grow up in that kind of money for it not to matter that much.

As for when not to worry about going out and buying some luxuries? When goals are being met. When I know our retirement is covered, our child's education is covered, our house is paid off, and there is one rental property (just for diversification) and perhaps a vacation house outside NYC that has a yard. If I covered all these things, I would not worry and spend the rest of the money that don't need to be allocated for other things. We are not at this stage yet. We are on track with retirement and son's savings, but can only swing a 1,000sf co-op (NYC prices). And yes, we do spend 10-20K on vacations, but that would not have changed the outcome of our real estate situation. But we live our lives and try to enjoy. There has to be some balance to enjoying life now and enjoying it later.

[ua_guy]

We'll always worry about spending. The focus changes over time for us, though. In our early 20's it was how to make ends meet given random and variable expenses on sizeably small incomes, to now in our mid 30's, how to best save even bigger portions of our disposable income. We already save, but now we're getting in the habit of trying to really get ahead, and that too means sacrifice in the same way.

[figuringmoneyout]

I think there is an income level or wealth level where I would be able to stop thinking about what I'm spending, but I somehow don't think I'll achieve it in my lifetime. Maybe that's defeatist? Not sure, but I think I'll just always worry about spending and have to watch my budget and be frugal.

[rmhop81]

Is there an income or point where you can stop worrying about how much you spend? Either you have no debts and just income so it doesn't matter? Or enough income to cover everything?

I ask because I know we preach frugality here, but I have a friend who is very wealthy. Well more than a few. They can pretty much afford everything they want no worries about anything. To them they eat out every meal, pay for whatever they want, and still won't run out of money. They worked hard to earn it, got some from family, and are definitely in the wealth section.

But even those who I know didn't come from wealthy families but make a lot now, spend without worry. Do you think if you made say $500k there wouldn't be a need to worry about eating out all the time? Or buying uggs @ $150 for a 4 year old? Or paying $100 for a north face jacket? These are all things I can't fathom doing and can't afford obviously, but they can. And I know they are all very conservative saving for college, retirement, paying off homes in 10 years, etc. But they think nothing of dropping $9k on airfare to europe, or $20k for a 2 week vacation.

I just wondered it is possible to earn enough that however you much you spend you can still earn enough to not worry right? But how much do you need to make $500k?

different people have different thoughts when it comes to money. Just bc someone chooses to be flashy and go out on the town every meal doesn't mean they are loaded and can afford it...for all you know they could be broke and live paycheck to paycheck. The guy driving a beater down the street you may think is poor and in fact he could be a millionaire.

To some people appearance and having nice things is everything to them. We truly don't know people's situation, but with expensive items we automatically assume they are rich. People who barely have everything or drive a beater for a car we assume they are poor.

My dad has always been extremely frugal all his life. He drives an 11 year old hail damaged suburban to work where he is one of the main bosses. All the people under him drive BMW, Mercedes, Lexus etc.

The point is...there are people out there that even if they make $500k/year they will still spend like they were making $50k.

[LivingAlmostLarge]

Trust me they are loaded. No Nika I think even if I made $500k I couldn't buy stuff like northface at $200 pop for kids shoes because they are kids shoes. Or $100 jacket they wear one season. I'd still be buying costco jacket for $20. It's too much in my nature. I couldn't change. I couldn't spend $20k on vacation even if we made $500k because again because I wouldn't think I have enough.

But as to knowing? Trust me you don't just set aside $500k for college in a trust for your kid at 30 from your trust fund unless you're loaded. And you don't own 4-5 homes each other a couple million unless you are loaded.

[disneysteve]

I think even if I made $500k I couldn't buy stuff like northface at $200 pop for kids shoes because they are kids shoes. Or $100 jacket they wear one season. I'd still be buying costco jacket for $20. It's too much in my nature. I couldn't change.

I think this really nails it. It isn't about how much you have. It is about mindset. Having more money doesn't change a frugal person into a spendthrift. I would never buy a child $100 shoes because I know they'd outgrow them in 3-6 months. However, now that my daughter is 18 and done growing, I would consider spending $100 if I had unlimited funds (or at least a lot more than I have currently).

It comes down to value, not cost.