Issue #179: Savings are meant to be spent (... right?)

Hi y’all —

Happy Day After Valentine’s Day! I hope you’re reading this newsletter surrounded by roses and cheesy greeting cards — or, in my case, the wrappers of no fewer than 10 Reese’s peanut butter cups.

Between the Rihanna concert Super Bowl and day of love, it’s been a busy week already. But honestly? I’m over February. I’m way more focused on the future: I’m planning a trip to Europe with my mom this summer, and the Jonas Brothers are about to announce a tour.

Both are exciting! And both are expensive. Luckily, I’m prepared; I’ve been saving money for months in my “vacation” and “concerts” buckets. The only problem? When I think about depleting those funds — and watching my balance go down — my stomach starts to hurt.

Is this normal? Should I feel guilty about spending my savings?

First of all, Cullen Rogers — chief investment officer at savings app Qapital — says I should know that this reaction is extremely common. It's difficult for most people, he says, to get their finances to a place where they feel comfortable splurging.

But beyond that, he encourages me to consider what’s driving my guilt.

Do I feel awkward about spending my savings because I don’t have an emergency fund, and I think I might need that money in case of a crisis? Is it because I’m buying concert tickets instead of contributing to my 401(k)? Am I racking up credit card debt that I can’t afford to pay off just for the chance to see Nick Jonas’ newly grown-out curls in person?

For me, the answer to all of those questions is no, so he recommends I take this as an opportunity to revisit my financial plan. That involves thinking about what my priorities are — and not overcorrecting out of some imagined duty that I quote-unquote should.

“If you’re just throwing money into a retirement account and not spending anything, that’s not necessarily the most healthy, either,” Rogers says.

If I love traveling and going to shows, as I clearly do, there’s nothing irresponsible about spending my hard-earned cash on them. Especially if I set very defined goals for my income.

That includes recreation. Fun is a crucial category in any budget, says Cindy Scott, a certified financial planner with Schwab Intelligent Portfolios Premium.

“Putting thoughtful plans together to go enjoy yourself with whatever — travel, concerts, throwing dinner parties, clubs you want to join — that should be part of [it]," she says. “Give yourself permission to enjoy the things that light you up.”

Reviewing my plan can give me confidence. Scott says that when I can check all the boxes — bills, emergency fund, retirement accounts, etc. — it may help me feel better about spending my savings.

“You can have a conversation with yourself and remind yourself, ‘I’ve planned for this. I’m taking care of everything else. Nothing in my financial plan is suffering because I’m going to take this vacation,’” she says.

My guilt could be tied to my upbringing; I’m likely dealing with a money script or scarcity mindset that’s influencing my adult behavior. With this in mind, Scott says, I have to reframe that moment where I see that savings balance fall off a cliff.

“That is the purpose of it,” she adds. “It’s going to get high, and then it's going to drop to zero — but it's not really zero, because the experience you enjoyed by taking that trip and [going to those] concerts… you’re going to bask in the joy of that for years to come.”

Hopefully, Scott says, then I can use that as motivation to plan for my next trip or concert. When I get home, my savings may be depleted, but I can refocus and start planning for future events.

That brings me to the experts’ final point: When I’m getting cold feet, I should remember that I can always earn those savings back. Rogers says the 50-30-20 rule, where I put 50% of each paycheck towards needs, 30% towards wants and 20% towards savings, is a good place to start. Then I can tweak it to my individual situation.

No freaking out necessary.

“Most people should trust-fall into the fact that it's not going to be perfect. Don’t stress out over having to do everything right,” he says. “There isn't a person in the world who hasn't made some financial goof — that's unfortunately how you learn.”

If I have an overarching financial plan in place where I’m covered in case of emergency and preparing for retirement, it’s OK to empty that savings bucket.

“It's a volatile account — not in a bad way, but in a way that you build it up, then you're going to deplete it, and then build it up and deplete it, and build it up again,” Scott says. “This is going to happen for the rest of your life. Get ready for it.”

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