February 25, 2025 • 17 mins
One of the biggest ironies in retirement is that the people who save and invest the most often struggle the most with actually spending their money in retirement. In this video, I’ll walk you through a simple framework to make spending easier—without guilt or second-guessing.
I’ll share a compelling client story, a personal experience, and actionable steps you can take to shift your mindset and enjoy the retirement you’ve worked so hard for. If you’ve ever hesitated to spend on things you value, even when you can afford to, this is for you.
We’ll cover:
- Why our money habits from the past shape how we spend (or don’t spend) today
- A five-step process to help you feel comfortable spending in retirement
- A practical tip that makes it easier to say “yes” to the things that truly matter
🎯 Don't let a scarcity mindset hold you back—start living your best retirement!
Questions answered:
1. Why do some retirees struggle to spend money, even when they have more than enough saved?
2. How can retirees overcome a lifetime of saving habits and confidently spend on things they truly value?
Submit your request to join James:
On the Ready For Retirement podcast: Apply Here
On a Retirement Makeover episode: Apply Here
Timestamps:
0:00 - A pertinent story
3:24 - A personal story
5:10 - Steps 1& 2—acknowledge and evaluate
7:05 - Steps 4 & 5—Identify values and make it easy
9:44 - Healthy tension
12:30 - Step 5—Withdrawal and set aside
14:49 - Wrap-up
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
One of the great ironies of retirement planning
is that oftentimes the peoplethat have saved the most and
invested the most for retirementare those same people that have
the most struggle when it comesto spending money in retirement
.
So in today's video, I'm goingto walk you through a simple
framework that makes spendingmoney in retirement easier, and
I'm going to do so by sharing aclient story, a personal story,
and then some steps you can taketo make this process easier.
(00:22):
This is another episode ofReady for Retirement.
I'm your host, james Canole,and I'm here to teach you how to
get the most out of life withyour money.
And now on to the episode.
There's one story that alwayscomes to mind when I hear people
talk about their challengeswhen it comes to spending money
in retirement.
This story goes back a coupleof years.
I just started meeting with acouple of new clients.
(00:44):
The husband was successful, hada business sold a business.
Wife was successful, had abusiness, sold a business.
Wonderful people, greatportfolio, great position to
support all their goals thatthey had in retirement.
We started working together andwe started writing some
projections and saying, basedupon the portfolio that you have
, what can you support when itcomes to your retirement.
We ran through theirprojections and saw they could
(01:05):
support a very comfortableretirement and even then have a
whole lot of money left over atthe end of retirement than they
had going into retirement.
In other words, we startedsolving for how much more money
could you spend before youactually start running the risk
of truly outliving your money?
And as we ran these projections, we started showing them they
could spend an additional sixfigures per year for the rest of
(01:26):
their retirement and still bein a great position to not
outlive their money.
So we walked away from thismeeting and they were excited.
They saw this.
This was eye-opening and theythought that they were just
going to start living and theywere living a comfortable
lifestyle.
But they saw this and I thinkwhat was going through their
mind is oh my goodness, it'sgoing to be easy now to go spend
.
It's going to be easy tounderstand that we can spend and
will spend more now that weknow we can spend more.
(01:50):
So that was the thought processthat rationally understanding
we can do this makes it so thatwe will go do it and it will be
easy to do so.
So we had that meeting and maybea week or so later they were
actually in town.
So I'm down in San Diego.
They were in town visiting andwe got together for lunch and
I'll always remember at lunch astory that they told me they
were visiting here in San Diego.
They had gone out to a nicedinner and they got back to
(02:11):
their hotel room.
When they got back to the hotelroom the husband was thinking
you know what?
I actually want something fordessert.
And he went over to the littlemini bar in the hotel and he saw
a bag of M&M's and that bag ofM&M's and that bag of M&M's
sounded delicious to him.
So he went to grab that bag.
But then he read the menu rightnext to it that said M&M's $5.
And he saw that and he thoughtwhy on earth would I pay $5 for
(02:33):
this bag of M&M's?
And instead of taking that andsaying you know what James just
showed us and modeled out for usthat we could spend way more
money than we're actuallyspending and still be completely
fine for the rest of ourretirement Instead of that he
put that bag down, walked downthe street a few blocks to a
7-Eleven where he could purchasethat bag of M&Ms for a couple
bucks and then walked back andit was just this interesting
(02:55):
story where he said, james, youhad just finished showing us how
much more we could spend.
And then this simple bag ofM&Ms that I really wanted that
moment, instead of just spendingthe $5, because in the grand
scheme of things, that'sabsolutely nothing based on the
financial position that we're inI went and took a very long
about way to get that same bagof M&Ms to save a couple bucks.
(03:15):
So why is that?
Why is it?
There's a disconnect between wecan look at our portfolio, know
what we can spend, but then wehave so much trouble actually
doing so.
So we're going to walk througha simple framework, a simple
process.
If that's you, if that storyresonates, what can you do to
make spending actually prettysimple?
And, by the way, I thinkeveryone has this type of a
(03:35):
story.
I remember as a kid.
So I grew up.
My dad was a pastor.
I was the oldest of four.
My mom worked some jobs hereand there, but was mostly
staying home to take care ofkids.
Money was very tight and sothat was the mindset that, as a
child, was ingrained in me.
My parents were incredibly hardworkers.
This had nothing to do withworking hard or not working hard
.
It just had to do with thereality of the financial
(03:56):
situation, which is there wasn'tmuch money.
And so you develop thissomewhat of a scarcity mindset
or the savings mindset that wehave to preserve what we have
because what we have is scarce.
I then grew up a little bit andmy friends and I in high school
we all loved the San DiegoPadres and we would drive down
to Padres games every once in awhile.
And I remember back then whenwe would do that.
Parking was $5 to get paid,parking next to the stadium.
But instead of paying that $5,we would drive around the
(04:19):
stadium for 30 minutes, 40minutes, 50 minutes sometimes,
looking for a free place to park.
We'd park half a mile away, afull mile away, doing anything
we could to save that $5.
Now that's a relatively simplething.
But why do I share that?
I share that because in thatmoment that mindset served me.
That mindset helped me.
Money wasn't incrediblyabundant, so you needed to do
(04:41):
what you needed to do to savethat money.
But as I've gotten older I'vehad to ask myself does that same
mindset still serve me?
I still will get off thefreeway, sometimes off the 163
going into downtown San Diego.
Still a mile out away from thestadium, in my mind a
subconscious starts looking forparking spaces, of understanding
where is that free parking?
(05:01):
What are the parking lots thattend to be less expensive than
if we park right next to thestadium?
But here's the difference.
As a teenager, as I mentioned,that was a helpful mindset.
Money wasn't abundant, so it'simportant to do those little
things to save a dollar here ora dollar there.
As I've gotten older and as I'min a different financial
situation, I still have thatsame mindset.
I still have some of those samethoughts.
(05:22):
So I think the first step, aswe talk about a process to make
it easier to spend money inretirement, is to acknowledge
that feeling, acknowledge thosethoughts that come up.
I still have that same thoughtdriving into San Diego, even if
I'm not going to a Padres game.
It's just a subconscious partof the operating system that was
developed at a certain periodof my life that no longer serves
(05:42):
me, no longer helps me.
So the first step is toacknowledge that I can drive in
and say okay, I see that.
I feel that I recognize what mybrain is thinking.
But step two is to say, is thathelpful or is that unhelpful?
When I was a teenager, that washelpful.
That mindset, that thoughtprocess.
It was helping me to save money.
My guess is, for those of youwho are struggling to spend
(06:04):
money in retirement, there'ssome point in your life where
your operating system, the wayin which you make decisions, was
developed based upon some typeof a money experience probably a
money experience based uponscarcity or a lack of money or
some financial hardship that youwent through.
Those experiences, whether weknow it or not, whether we're
conscious of it or not, are thethings that are shaping the way
(06:25):
that we view money.
Those things don't just go awayovernight, even once your
portfolio balance and yourincome level increases, even if
it increases quite dramatically,like it had for my client.
So that's the second step Onceyou recognize the feeling, feel
that, acknowledge it, know thatit's there.
Step number two is saying isthis serving me or is this not?
It might be and, as I mentioned, as a teenager that absolutely
(06:48):
was helping me.
Now, as I'm older, if I'mdriving down to a Padres game
and if I bring my wife and twokids, that thought process is
not going to serve me Wastingtime trying to find parking a
mile away so I could then walk amile with a three year old, a
seven month old and my wife.
That's probably not the bestway to save a few bucks.
Now, today, parking is going tobe more than $5, but even if
it's $20, $30, $40, I canrecognize the fact that that
(07:12):
thought process, that desire tosave money, is not serving me in
that situation.
So that's step number two.
Step number three is to simplyask yourself what do you want to
spend money on?
And maybe a better way of eventhinking about that is take the
money out of it.
Ask yourself what do you value?
What's important to you?
Is it those experiences at thePadres games?
Is it your health?
Is it a hobby?
(07:32):
Is it travel?
Is it adventure?
What are the things that areimportant to you?
So take money out and identifythat Could be charitable giving.
It could be travel, as Imentioned.
It could be doing differentthings with different people.
I mentioned it could be doingdifferent things with different
people, but start with that.
So it's that simple.
Step number three is identifythe things that are meaningful
to you and do it when you're ina rational state of mind, not
the emotional state of mind,like I might be when I'm trying
(07:54):
to find parking, like I might bewhen it's easier to say I'm not
going to valet because it'seasier to go, spend 20 minutes
finding a parking spot and thenwalking to the restaurant.
Step number four, then, is tocreate a system that makes
saying yes to those things thatyou value easy.
For example, let's say, healthis something that's important to
you.
Identify that.
(08:14):
Step number two how do you makeit easy to pursue that?
Well, maybe you go sign up forpersonal training lessons at the
local health club.
Maybe you get a nice gem, maybeyou get something that you
wouldn't otherwise feelcomfortable spending money on,
but by by paying for thoselessons, it's going to commit to
you going to that.
There's going to be a forcingmechanism that's going to keep
you committed to that becauseyou've paid for it, because
you've identified it in advance.
(08:36):
Or maybe fun is something that'simportant to you, but you can't
bring yourself to go out andspend that money on a nice
dinner.
You can't bring yourself to gospend money on the activities
that you see other peoplespending money on.
Well, what if you startedhanging out more with the
friends that do those types ofthings.
Maybe you have friends.
On every Wednesday night theygo to dinner and a movie.
You might not be able to bringyourself to do that if you had
(08:56):
to make the decision everysingle week to do that on your
own, but if you surroundyourself with those friends that
are doing the types of thingsthat you want to do, it becomes
easier.
There's going to be thathealthy peer pressure that moves
you closer to doing the thingsthat you want to do.
So you're not relying on yourown discipline.
As odd as it is to say thatspending is a discipline, it can
be.
You don't want to have to relyupon that.
(09:17):
Rely upon the system that saysI'm going to create an
environment that makes it easierto do the things I want to do.
In this case, the environmentis the friends.
These friends are already doingfun things going out to these
types of a dinner.
Spend more time with them.
Now be careful with this,because if you say you know what
?
I don't enjoy golfing, but youstart hanging out with your golf
friends and now, all of asudden, that peer pressure is
(09:38):
taking you to the golf courseand you're spending all this
money on something you don'teven like doing that's just
wasteful.
You're not going to feel goodabout it, so don't spend money.
Don't create systems that makeit easy to say yes to things you
don't enjoy doing, but make itvery easy to say yes to the
things you do want to enjoydoing, the things you do want to
align your spending with.
For me personally, this systemif we want to call it that is my
(09:59):
spouse.
My spouse's name is Ashlyn andI remember when we got married
she was a very good saver, but Ithink that when we did get
married she recognized the factthat, okay, james is kind of the
money guy.
James is also naturally a saver, so she felt less pressure to
carry that by herself and shefelt a little bit more free to
spend.
Now I'm actually grateful forthat because, left to my own
devices, my tendency would be tosave, would be to invest, would
(10:22):
be to say no to certain thingsand instead save that money,
defer that money for otherthings.
Her tendency, and what she'shelped me to do, would now be to
say, well, no, let's take thatother trip, let's go to dinner
and get the appetizer and thedessert which would have been
unheard of when I was growing upor before I got married, that
just wasn't something that I did.
So there's this healthy tensionof I didn't have to have the
(10:44):
discipline to make thesedecisions to spend and again
backing up, big picture verydifferent financial situation
now versus earlier in my life oreven as a young adult.
So that, of course, should be agiven.
Don't start spending more ifyou're not in a good financial
position to do so.
But what I'm specificallytalking to is those people that
are in a good financial positionand still struggle to spend
money in retirement.
But for me, that was a system.
(11:06):
There was this healthy tensionof, okay, I could sit back and
objectively say you know whatdoes getting an appetizer and a
dessert when we go out fordinner?
Is that adding to theexperience we're going to have
together?
The answer in many cases is yes.
So when I look at the extramoney required to do that and
think, okay, well, what's thealternative?
That's something that I'm gladabout.
In this situation my wife helpsme to do more of.
(11:29):
When it comes to taking trips,I am glad my wife pushes for
more trips and more experienceson those trips that I would not
have felt comfortable spendingmoney on earlier in life.
But now there's this forcingmechanism, now there's this
system that I don't have to makethese decisions on a one-off
basis.
We have this healthy tension inboth directions, and so that
can be your spouse, that can bea friend group, that can be your
(11:51):
spouse, that can be a friendgroup, that can be anything.
But the more you have a systemto help making spending money on
the right things easier, thebetter off you're going to be,
because, if it just comes downto do, you have the willpower to
make these one-off decisionshere and there and everywhere.
That willpower is probably notgoing to last.
You're probably going to revertback to, or default back to,
that tendency that you have,which is to not spend money and
(12:12):
save it instead.
So those first four steps arealmost like the structural
things that you need to do.
When you have those feelings,it's difficult to spend.
Acknowledge it, number one.
Number two is ask yourself isthis still serving me, or is
this no longer serving mebecause I'm in a different
financial position and I nowvalue things differently?
Number three identify what doyou actually value, what do you
(12:33):
want to spend money on?
And then, number four createsome type of a system that makes
spending in those areas easier,so you're not having to rely
upon willpower.
Step number five is more of atactical thing.
I did a podcast episode severalmonths back now and I invited a
guest on named Ben, and Benshared his experience where he
actually retired early in 2017.
And he had waited to retireuntil he hit his retirement
(12:56):
number.
And then he hit it and heretired, but he was terrified to
actually spend money and heactually shared how, from 2017
until the time that we'retalking, his portfolio had more
than doubled, but he wasn'tspending any more money.
That mindset didn't change,even as his net worth in his
portfolio increased by asignificant amount.
So he shared a very simple tipthat he found actually started
(13:18):
to work for him, and I thoughtthis tip was genius.
He said that what he now doesat the beginning of each year is
he identifies the things thathe does want to spend money on
and he pulls that money out ofhis portfolio on the first of
the year and sets it aside in aseparate account, a separate
bank account.
So let's assume travel, forexample.
Maybe he's identified that hewants to spend $25,000 this next
(13:39):
year on travel.
What Ben does now is he takesthat $25,000 out in January,
puts it in a travel bank accountbecause in his mind that money
is now already spent.
When it comes time to take thetrip, it's just a matter of
transferring the funds that havealready mentally been spent.
The beauty of this is, if Benwere to wait until he actually
took his trip to pull money outof the portfolio, that's the
(14:01):
thing that hurts.
That's the thing that feelsunnatural.
We're so used to putting moneyinto our portfolio that taking
it out is actually where thepain comes into play.
So he's hacked his system wherehe's saying I'm not going to
have to experience that painmultiple times throughout the
year because chances are I'mjust going to avoid it.
If it comes time to take a tripand I haven't actually pulled
that money in my portfolio yet,I'm somehow going to convince
(14:22):
myself not to take the tripbecause that money is better off
in my portfolio.
But if I take it out ahead oftime, my mind thinks that money
is already spent and all that'sleft is actually transfer it to
pay for the trip when that tripcomes.
So I thought this was abeautiful tip.
One of the best things that youcan do is, at the beginning of
the year, look out for the next12 months.
This doesn't have to be ayearly thing, but at some
(14:43):
regular interval say what do Ivalue, what do I want to spend
money on, estimate what thosethings might cost, and then pull
that money out of yourportfolio as if you've already
spent it, right then and therePut that in a savings account
and then it's not going to be asdifficult to actually spend
that money when the time comesin retirement.
So, as we start to wrap this up, if this is you, if you're that
(15:04):
person that has done well butstruggles to actually spend
money in retirement, first thingis to recognize that that's a
very common thing.
You are where you are becauseyou are who you are and that's
not going to magically changeovernight.
You, that person whose identityis that of a saver, that's not
automatically going to changeovernight just because you want
to be able to spend money a bitmore freely.
That's where it's important tofollow this process.
(15:27):
When you do have those feelingslike it's difficult to spend,
recognize that In my case, Istill have those feelings when
it goes time to pay for parkingor to pay to valet a car.
Those feelings, as a teenager,come up of.
Ah, I could just go parkfurther away and walk.
But what I can do is I canrecognize step number two that
that feeling is no longerhelpful.
That feeling is no longerserving the intended purpose I
(15:48):
have with my money today.
What you then do is understandwhat things do you value?
How can you create a system tospend money on those things?
And then the practical tip isto set money aside early on so
that you simply have to transferthat money to pay for the thing
later, as opposed to having topull it from your portfolio.
So I hope that was helpful.
If you haven't done so already,please make sure that you
(16:08):
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If you are interested in that,this community is completely
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There's a link in the shownotes to where you can get
access to the community.
It's called the Root Collective.
Check it out, join there, jointhe discussion with other people
(16:29):
just like you.
Knowledge.
No other conflicts of interestexist regarding these
testimonials and endorsements.
Hey, everyone, it's me againfor the disclaimer.
Please be smart about this.
(16:55):
Before doing anything, pleasebe sure to consult with your tax
planner or financial planner.
Nothing in this podcast shouldbe construed as investment, tax,
legal or other financial advice.
It is for informationalpurposes only.
Thank you for listening toanother episode of the Ready for
Retirement podcast.
If you want to see how RootFinancial can help you implement
(17:16):
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We work with clients all overthe country and we love the
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You should always consult afinancial, legal or tax
(17:37):
professional who's familiar withyour unique circumstances
before making any financialdecisions.
One of the great ironies of retirement planning
is that oftentimes the peoplethat have saved the most and
invested the most for retirementare those same people that have
the most struggle when it comesto spending money in retirement
.
So in today's video, I'm goingto walk you through a simple
framework that makes spendingmoney in retirement easier, and
I'm going to do so by sharing aclient story, a personal story,
and then some steps you can taketo make this process easier.
(00:22):
This is another episode ofReady for Retirement.
I'm your host, james Canole,and I'm here to teach you how to
get the most out of life withyour money.
And now on to the episode.
There's one story that alwayscomes to mind when I hear people
talk about their challengeswhen it comes to spending money
in retirement.
This story goes back a coupleof years.
I just started meeting with acouple of new clients.
(00:44):
The husband was successful, hada business sold a business.
Wife was successful, had abusiness, sold a business.
Wonderful people, greatportfolio, great position to
support all their goals thatthey had in retirement.
We started working together andwe started writing some
projections and saying, basedupon the portfolio that you have
, what can you support when itcomes to your retirement.
We ran through theirprojections and saw they could
(01:05):
support a very comfortableretirement and even then have a
whole lot of money left over atthe end of retirement than they
had going into retirement.
In other words, we startedsolving for how much more money
could you spend before youactually start running the risk
of truly outliving your money?
And as we ran these projections, we started showing them they
could spend an additional sixfigures per year for the rest of
(01:26):
their retirement and still bein a great position to not
outlive their money.
So we walked away from thismeeting and they were excited.
They saw this.
This was eye-opening and theythought that they were just
going to start living and theywere living a comfortable
lifestyle.
But they saw this and I thinkwhat was going through their
mind is oh my goodness, it'sgoing to be easy now to go spend
.
It's going to be easy tounderstand that we can spend and
will spend more now that weknow we can spend more.
(01:50):
So that was the thought processthat rationally understanding
we can do this makes it so thatwe will go do it and it will be
easy to do so.
So we had that meeting and maybea week or so later they were
actually in town.
So I'm down in San Diego.
They were in town visiting andwe got together for lunch and
I'll always remember at lunch astory that they told me they
were visiting here in San Diego.
They had gone out to a nicedinner and they got back to
(02:11):
their hotel room.
When they got back to the hotelroom the husband was thinking
you know what?
I actually want something fordessert.
And he went over to the littlemini bar in the hotel and he saw
a bag of M&M's and that bag ofM&M's and that bag of M&M's
sounded delicious to him.
So he went to grab that bag.
But then he read the menu rightnext to it that said M&M's $5.
And he saw that and he thoughtwhy on earth would I pay $5 for
(02:33):
this bag of M&M's?
And instead of taking that andsaying you know what James just
showed us and modeled out for usthat we could spend way more
money than we're actuallyspending and still be completely
fine for the rest of ourretirement Instead of that he
put that bag down, walked downthe street a few blocks to a
7-Eleven where he could purchasethat bag of M&Ms for a couple
bucks and then walked back andit was just this interesting
(02:55):
story where he said, james, youhad just finished showing us how
much more we could spend.
And then this simple bag ofM&Ms that I really wanted that
moment, instead of just spendingthe $5, because in the grand
scheme of things, that'sabsolutely nothing based on the
financial position that we're inI went and took a very long
about way to get that same bagof M&Ms to save a couple bucks.
(03:15):
So why is that?
Why is it?
There's a disconnect between wecan look at our portfolio, know
what we can spend, but then wehave so much trouble actually
doing so.
So we're going to walk througha simple framework, a simple
process.
If that's you, if that storyresonates, what can you do to
make spending actually prettysimple?
And, by the way, I thinkeveryone has this type of a
(03:35):
story.
I remember as a kid.
So I grew up.
My dad was a pastor.
I was the oldest of four.
My mom worked some jobs hereand there, but was mostly
staying home to take care ofkids.
Money was very tight and sothat was the mindset that, as a
child, was ingrained in me.
My parents were incredibly hardworkers.
This had nothing to do withworking hard or not working hard
.
It just had to do with thereality of the financial
(03:56):
situation, which is there wasn'tmuch money.
And so you develop thissomewhat of a scarcity mindset
or the savings mindset that wehave to preserve what we have
because what we have is scarce.
I then grew up a little bit andmy friends and I in high school
we all loved the San DiegoPadres and we would drive down
to Padres games every once in awhile.
And I remember back then whenwe would do that.
Parking was $5 to get paid,parking next to the stadium.
But instead of paying that $5,we would drive around the
(04:19):
stadium for 30 minutes, 40minutes, 50 minutes sometimes,
looking for a free place to park.
We'd park half a mile away, afull mile away, doing anything
we could to save that $5.
Now that's a relatively simplething.
But why do I share that?
I share that because in thatmoment that mindset served me.
That mindset helped me.
Money wasn't incrediblyabundant, so you needed to do
(04:41):
what you needed to do to savethat money.
But as I've gotten older I'vehad to ask myself does that same
mindset still serve me?
I still will get off thefreeway, sometimes off the 163
going into downtown San Diego.
Still a mile out away from thestadium, in my mind a
subconscious starts looking forparking spaces, of understanding
where is that free parking?
(05:01):
What are the parking lots thattend to be less expensive than
if we park right next to thestadium?
But here's the difference.
As a teenager, as I mentioned,that was a helpful mindset.
Money wasn't abundant, so it'simportant to do those little
things to save a dollar here ora dollar there.
As I've gotten older and as I'min a different financial
situation, I still have thatsame mindset.
I still have some of those samethoughts.
(05:22):
So I think the first step, aswe talk about a process to make
it easier to spend money inretirement, is to acknowledge
that feeling, acknowledge thosethoughts that come up.
I still have that same thoughtdriving into San Diego, even if
I'm not going to a Padres game.
It's just a subconscious partof the operating system that was
developed at a certain periodof my life that no longer serves
(05:42):
me, no longer helps me.
So the first step is toacknowledge that I can drive in
and say okay, I see that.
I feel that I recognize what mybrain is thinking.
But step two is to say, is thathelpful or is that unhelpful?
When I was a teenager, that washelpful.
That mindset, that thoughtprocess.
It was helping me to save money.
My guess is, for those of youwho are struggling to spend
(06:04):
money in retirement, there'ssome point in your life where
your operating system, the wayin which you make decisions, was
developed based upon some typeof a money experience probably a
money experience based uponscarcity or a lack of money or
some financial hardship that youwent through.
Those experiences, whether weknow it or not, whether we're
conscious of it or not, are thethings that are shaping the way
(06:25):
that we view money.
Those things don't just go awayovernight, even once your
portfolio balance and yourincome level increases, even if
it increases quite dramatically,like it had for my client.
So that's the second step Onceyou recognize the feeling, feel
that, acknowledge it, know thatit's there.
Step number two is saying isthis serving me or is this not?
It might be and, as I mentioned, as a teenager that absolutely
(06:48):
was helping me.
Now, as I'm older, if I'mdriving down to a Padres game
and if I bring my wife and twokids, that thought process is
not going to serve me Wastingtime trying to find parking a
mile away so I could then walk amile with a three year old, a
seven month old and my wife.
That's probably not the bestway to save a few bucks.
Now, today, parking is going tobe more than $5, but even if
it's $20, $30, $40, I canrecognize the fact that that
(07:12):
thought process, that desire tosave money, is not serving me in
that situation.
So that's step number two.
Step number three is to simplyask yourself what do you want to
spend money on?
And maybe a better way of eventhinking about that is take the
money out of it.
Ask yourself what do you value?
What's important to you?
Is it those experiences at thePadres games?
Is it your health?
Is it a hobby?
(07:32):
Is it travel?
Is it adventure?
What are the things that areimportant to you?
So take money out and identifythat Could be charitable giving.
It could be travel, as Imentioned.
It could be doing differentthings with different people.
I mentioned it could be doingdifferent things with different
people, but start with that.
So it's that simple.
Step number three is identifythe things that are meaningful
to you and do it when you're ina rational state of mind, not
the emotional state of mind,like I might be when I'm trying
(07:54):
to find parking, like I might bewhen it's easier to say I'm not
going to valet because it'seasier to go, spend 20 minutes
finding a parking spot and thenwalking to the restaurant.
Step number four, then, is tocreate a system that makes
saying yes to those things thatyou value easy.
For example, let's say, healthis something that's important to
you.
Identify that.
(08:14):
Step number two how do you makeit easy to pursue that?
Well, maybe you go sign up forpersonal training lessons at the
local health club.
Maybe you get a nice gem, maybeyou get something that you
wouldn't otherwise feelcomfortable spending money on,
but by by paying for thoselessons, it's going to commit to
you going to that.
There's going to be a forcingmechanism that's going to keep
you committed to that becauseyou've paid for it, because
you've identified it in advance.
(08:36):
Or maybe fun is something that'simportant to you, but you can't
bring yourself to go out andspend that money on a nice
dinner.
You can't bring yourself to gospend money on the activities
that you see other peoplespending money on.
Well, what if you startedhanging out more with the
friends that do those types ofthings.
Maybe you have friends.
On every Wednesday night theygo to dinner and a movie.
You might not be able to bringyourself to do that if you had
(08:56):
to make the decision everysingle week to do that on your
own, but if you surroundyourself with those friends that
are doing the types of thingsthat you want to do, it becomes
easier.
There's going to be thathealthy peer pressure that moves
you closer to doing the thingsthat you want to do.
So you're not relying on yourown discipline.
As odd as it is to say thatspending is a discipline, it can
be.
You don't want to have to relyupon that.
(09:17):
Rely upon the system that saysI'm going to create an
environment that makes it easierto do the things I want to do.
In this case, the environmentis the friends.
These friends are already doingfun things going out to these
types of a dinner.
Spend more time with them.
Now be careful with this,because if you say you know what
?
I don't enjoy golfing, but youstart hanging out with your golf
friends and now, all of asudden, that peer pressure is
(09:38):
taking you to the golf courseand you're spending all this
money on something you don'teven like doing that's just
wasteful.
You're not going to feel goodabout it, so don't spend money.
Don't create systems that makeit easy to say yes to things you
don't enjoy doing, but make itvery easy to say yes to the
things you do want to enjoydoing, the things you do want to
align your spending with.
For me personally, this systemif we want to call it that is my
(09:59):
spouse.
My spouse's name is Ashlyn andI remember when we got married
she was a very good saver, but Ithink that when we did get
married she recognized the factthat, okay, james is kind of the
money guy.
James is also naturally a saver, so she felt less pressure to
carry that by herself and shefelt a little bit more free to
spend.
Now I'm actually grateful forthat because, left to my own
devices, my tendency would be tosave, would be to invest, would
(10:22):
be to say no to certain thingsand instead save that money,
defer that money for otherthings.
Her tendency, and what she'shelped me to do, would now be to
say, well, no, let's take thatother trip, let's go to dinner
and get the appetizer and thedessert which would have been
unheard of when I was growing upor before I got married, that
just wasn't something that I did.
So there's this healthy tensionof I didn't have to have the
(10:44):
discipline to make thesedecisions to spend and again
backing up, big picture verydifferent financial situation
now versus earlier in my life oreven as a young adult.
So that, of course, should be agiven.
Don't start spending more ifyou're not in a good financial
position to do so.
But what I'm specificallytalking to is those people that
are in a good financial positionand still struggle to spend
money in retirement.
But for me, that was a system.
(11:06):
There was this healthy tensionof, okay, I could sit back and
objectively say you know whatdoes getting an appetizer and a
dessert when we go out fordinner?
Is that adding to theexperience we're going to have
together?
The answer in many cases is yes.
So when I look at the extramoney required to do that and
think, okay, well, what's thealternative?
That's something that I'm gladabout.
In this situation my wife helpsme to do more of.
(11:29):
When it comes to taking trips,I am glad my wife pushes for
more trips and more experienceson those trips that I would not
have felt comfortable spendingmoney on earlier in life.
But now there's this forcingmechanism, now there's this
system that I don't have to makethese decisions on a one-off
basis.
We have this healthy tension inboth directions, and so that
can be your spouse, that can bea friend group, that can be your
(11:51):
spouse, that can be a friendgroup, that can be anything.
But the more you have a systemto help making spending money on
the right things easier, thebetter off you're going to be,
because, if it just comes downto do, you have the willpower to
make these one-off decisionshere and there and everywhere.
That willpower is probably notgoing to last.
You're probably going to revertback to, or default back to,
that tendency that you have,which is to not spend money and
(12:12):
save it instead.
So those first four steps arealmost like the structural
things that you need to do.
When you have those feelings,it's difficult to spend.
Acknowledge it, number one.
Number two is ask yourself isthis still serving me, or is
this no longer serving mebecause I'm in a different
financial position and I nowvalue things differently?
Number three identify what doyou actually value, what do you
(12:33):
want to spend money on?
And then, number four createsome type of a system that makes
spending in those areas easier,so you're not having to rely
upon willpower.
Step number five is more of atactical thing.
I did a podcast episode severalmonths back now and I invited a
guest on named Ben, and Benshared his experience where he
actually retired early in 2017.
And he had waited to retireuntil he hit his retirement
(12:56):
number.
And then he hit it and heretired, but he was terrified to
actually spend money and heactually shared how, from 2017
until the time that we'retalking, his portfolio had more
than doubled, but he wasn'tspending any more money.
That mindset didn't change,even as his net worth in his
portfolio increased by asignificant amount.
So he shared a very simple tipthat he found actually started
(13:18):
to work for him, and I thoughtthis tip was genius.
He said that what he now doesat the beginning of each year is
he identifies the things thathe does want to spend money on
and he pulls that money out ofhis portfolio on the first of
the year and sets it aside in aseparate account, a separate
bank account.
So let's assume travel, forexample.
Maybe he's identified that hewants to spend $25,000 this next
(13:39):
year on travel.
What Ben does now is he takesthat $25,000 out in January,
puts it in a travel bank accountbecause in his mind that money
is now already spent.
When it comes time to take thetrip, it's just a matter of
transferring the funds that havealready mentally been spent.
The beauty of this is, if Benwere to wait until he actually
took his trip to pull money outof the portfolio, that's the
(14:01):
thing that hurts.
That's the thing that feelsunnatural.
We're so used to putting moneyinto our portfolio that taking
it out is actually where thepain comes into play.
So he's hacked his system wherehe's saying I'm not going to
have to experience that painmultiple times throughout the
year because chances are I'mjust going to avoid it.
If it comes time to take a tripand I haven't actually pulled
that money in my portfolio yet,I'm somehow going to convince
(14:22):
myself not to take the tripbecause that money is better off
in my portfolio.
But if I take it out ahead oftime, my mind thinks that money
is already spent and all that'sleft is actually transfer it to
pay for the trip when that tripcomes.
So I thought this was abeautiful tip.
One of the best things that youcan do is, at the beginning of
the year, look out for the next12 months.
This doesn't have to be ayearly thing, but at some
(14:43):
regular interval say what do Ivalue, what do I want to spend
money on, estimate what thosethings might cost, and then pull
that money out of yourportfolio as if you've already
spent it, right then and therePut that in a savings account
and then it's not going to be asdifficult to actually spend
that money when the time comesin retirement.
So, as we start to wrap this up, if this is you, if you're that
(15:04):
person that has done well butstruggles to actually spend
money in retirement, first thingis to recognize that that's a
very common thing.
You are where you are becauseyou are who you are and that's
not going to magically changeovernight.
You, that person whose identityis that of a saver, that's not
automatically going to changeovernight just because you want
to be able to spend money a bitmore freely.
That's where it's important tofollow this process.
(15:27):
When you do have those feelingslike it's difficult to spend,
recognize that In my case, Istill have those feelings when
it goes time to pay for parkingor to pay to valet a car.
Those feelings, as a teenager,come up of.
Ah, I could just go parkfurther away and walk.
But what I can do is I canrecognize step number two that
that feeling is no longerhelpful.
That feeling is no longerserving the intended purpose I
(15:48):
have with my money today.
What you then do is understandwhat things do you value?
How can you create a system tospend money on those things?
And then the practical tip isto set money aside early on so
that you simply have to transferthat money to pay for the thing
later, as opposed to having topull it from your portfolio.
So I hope that was helpful.
If you haven't done so already,please make sure that you
(16:08):
subscribe to this channel to getmore content like this.
Also, a relatively newannouncement we have a
retirement community wherepeople like you can talk about
their struggles with things likethis, to talk about helpful
tips and tricks.
If you are interested in that,this community is completely
free.
There's a link in the shownotes to where you can get
access to the community.
It's called the Root Collective.
Check it out, join there, jointhe discussion with other people
(16:29):
just like you.
Knowledge.
No other conflicts of interestexist regarding these
testimonials and endorsements.
Hey, everyone, it's me againfor the disclaimer.
Please be smart about this.
(16:55):
Before doing anything, pleasebe sure to consult with your tax
planner or financial planner.
Nothing in this podcast shouldbe construed as investment, tax,
legal or other financial advice.
It is for informationalpurposes only.
Thank you for listening toanother episode of the Ready for
Retirement podcast.
If you want to see how RootFinancial can help you implement
(17:16):
the techniques I discussed inthis podcast, then go to
rootfinancialpartnerscom andclick start here, where you can
schedule a call with one of ouradvisors.
We work with clients all overthe country and we love the
opportunity to speak with youabout your goals and how we
might be able to help.
And please remember, nothing wediscuss in this podcast is
intended to serve as advice.
You should always consult afinancial, legal or tax
(17:37):
professional who's familiar withyour unique circumstances
before making any financialdecisions.
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