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Creating Freedom Through Financial Independence


How to Spend More Money and Still Become Richer

January 7, 2023

I’m well known for pushing a message around saving.

Many times, improving one’s finances starts with learning to better manage the money they already have.

By optimising expenses, questioning consumerism, and spending less on optional extras.

But sometimes people assume that means your spending must remain stagnant or only go down.  That you aren’t allowed to indulge in luxuries or guilty habits, or happily engage in lifestyle inflation.

Wouldn’t that ruin all your hard work?  Won’t you be vilified by the financial community and automatically barred from the FIRE club?


And before you assume I must’ve taken a nasty knock on the head over the holidays, let’s explore a few truths about rich people through the perspective of wealth and spending.


How the rich stay rich

It’s easy to look at those who are incredibly wealthy and be puzzled by their purchases.

Stately mansions with acres of beautiful gardens.  Luxurious round-the-world trips, private jets, high-end brands of everything, and a fine rotation of automobiles that even I raise an eyebrow at.   (Give me a Rolls Royce Phantom over a Lambo any day!)

But the amazing part is not a rich person’s spending, but how they’re able to stay rich despite their spending.

So, what’s the deal?  The answer is quite simple.  Boring even.

The way a rich person stays rich is by keeping their luxury spending to a modest percentage of their overall wealth.

If someone buys a $600,000 car, yet they’re worth $20 million, the purchase represents only 3% of their net worth.

That’s just like a humble millionaire buying a car for $30,000.  Or someone with $100,000 of wealth spending $3,000.

There are a couple of things to note here:

—  It’s easy for a rich person to buy mind-blowingly expensive things without it affecting their wealth or freedom.
— As long as you keep everything in a healthy proportion, you can increase your spending over time while still becoming much richer.

But we can use this little point to our benefit even more.


Spend like the super-rich

Now, you might rightly point out that the rich own assets which are making money for them.

That’s true, of course.  But wherever their money comes from, the reason they’re able to spend a gigantic number of dollars because those dollars are a small part of their wealth.  This is what makes it all work.

Let’s consider this in the context of regular people though.  People with low levels of wealth are often spending massive amounts of their wealth on relatively stupid stuff considering their position.

A $70,000 car when they have $5,000 in the bank.  Annual holidays of $10,000 when they own no home or investments.  Mostly paid for with debt – additional money they don’t even have because it’s already been spent.

How, then, will they ever become wealthy?  They won’t!  Unless they learn to make better financial decisions.

So, it’s not our actual expenses that matter.  It’s how large those expenses are relative to our income and wealth.  Basically, all spending needs to be put in perspective to see if it’s reckless or reasonable.

How can we use this concept?

We can take the same approach as the super-rich.  By keeping our optional spending to a modest proportion of our wealth, we can blow money here and there and it won’t ruin our trajectory to long term wealth.

Whether it’s housing, cars, entertainment, travel, it almost doesn’t matter what you buy.   The principle of saving and investing a good chunk of your money will ensure the outcome is still a solid one.

But this is easier said than done.  Just as some people have trouble saving, others have trouble spending.  Or, more accurately, spending on what could be considered frivolous extras, despite being wealthy.

This is obviously far more more common among the financially motivated folks that read blogs such as this one than the general population.  And it’s something I’ve only heard about from others in the last year or two, but it can be a challenge nonetheless.


The mental struggle to spend more

For someone who has become wealthy through controlled spending and dedicated investing, it can be difficult to let ourselves spend more.  Let’s call this relentless saver syndrome.

Even on little things like eating out more, a nice piece of clothing or shoes we don’t really need.  Our ingrained habits become so strong that it becomes hard to do anything else.

We think about the increased costs from a purchase, the foregone investment returns, or the 25x multiplier effect of lifestyle ‘upgrades’ where an extra $1,000 a year of spending requires $25,000 of investments to pay for it forever.

We worry about the dreaded lifestyle inflation that we’ve fought so successfully against over the years – it’s typically this skill that helped build whatever success or wealth we’d built.

This sounds understandable, and it is.  But when we’re relatively wealthy, have already bought our freedom (or close to it), and there’s still cushy surplus, then  fretting over small stuff is unhealthy.

It’s coming from a position of worry, and a mental position of scarcity.  In this case, you’re still operating like the average person.  But if your finances are in fantastic shape, then you should be operating from abundance.  

You have enough.  You know how to manage and grow money.  And, importantly, you can always make more of it!

Let’s be clear: there is never a reason to be fearful around money.  Not when you’ve built a solid foundation of good habits, knowledge, skills, and income producing assets.

You can begin to operate like a rich person, mentally speaking.


How to enjoy yourself and not worry about money

One useful tactic is, as always, to put things in perspective.

If you’re struggling with relentless saver syndrome, remind yourself this extra takeaway meal or shirt or whatever is so tiny in relation to your overall wealth that it’s basically irrelevant.

A luxurious $500 purchase represents 0.1% of an individual’s $500,000 net worth.  About 10 times smaller than a good day on the sharemarket.

Now, some of you might say I’m going against my own message of ‘small amounts matter’.  But remember the context here: someone who is experienced with their finances, already wealthy, has an ongoing surplus, and finds it mentally difficult to spend money.

Whereas most people who spray money all over the place and haven’t got their financial shit together.  They absolutely need to look at every single expense, question it, scrutinise it, and optimise it.  My view on that has not changed!

Now, for the slightly wealthier folks, I’m not suggesting you create arbitrary percentages for what your car should cost, or your house, or whatever, like the super-rich examples mentioned earlier.  These are silly made-up numbers, which often turn into consumer goals rather than sensible guidelines.

Instead, it’s a mindset shift.  If you find yourself with expanding wealth and things are going well, don’t live in fear around increasing your spending.  The whole point of all this is freedom… including the freedom to relax and spend more if it’s something you deem worthy of your dollars.  Just like you should be open to spending less if things aren’t going as well as you hoped.

I apologise if all this seems like boring common sense to some of you.  But I feel the need to flesh it out as it’s often misunderstood.


The dark side of frugality

Relentless saver syndrome is one of the reasons the Anti-Frugality Brigade comes out to suggest that a focus on saving is bad.  Like it’s a disease or something, and you must only improve your situation by making more money.

The reality, though, is that strong habits can be tricky to break.  Same with spending, or eating, or social media.

But being a relentless saver is not the problem.  It’s an underlying mindset of scarcity and restriction, if that’s what it’s built upon.  Just like if a hardcore dieter’s discipline comes from the pure fear of gaining any fat, rather than the goal of optimum health.

So, in addition to keeping things in perspective which I just mentioned, cut yourself some slack.  If there’s something you’d like to do or buy, and you’ve already thought carefully about it, then do it.

Operate from freedom, not restriction.   From abundance not scarcity.  From strength, not fear.

But equally, if you feel compelled to spend more just because you have it, then stop.  That’s not freedom.  You’re then trying to follow what’s expected of you and considered ‘normal’ for someone with greater means, rather than what truly matters to you.


Healthy ways to spend more money

So what are some justifiable examples of spending more money for those who are wealthy with a growing surplus?  Here’s a few things…

Spending money on convenience to save time.  Getting groceries (and other things) delivered.  Outsourcing certain tasks so you can spend time elsewhere.

Spending money for greater quality.  Clothes that last longer.  Appliances that are more efficient.  A home of a higher standard.

Spending money on travel and experiences.  Visit family more often.  Explore those places you’ve always wanted to go.

Spending money on being generous.  Donating to charities, causes or groups you care about.  Gifting to children or family.

It’s important to balance these things with your own personal ethics around wastefulness, the purpose of money, and remembering certain choices have environmental costs.

Sending more can be a slippery slope towards a consumerism free-for-all.  And that will not increase our quality of life.  In fact, it’s more likely to reduce the meaning in our lives.


How to spend more while getting richer in practice

If you like this idea, there are countless ways you could apply it to your personal finances.   Here’s a few.

1– Become wealthy and keep working.  Use your surplus income to spend more while your wealth keeps expanding.  Ideally, you enjoy your job with this one.

2– Reach FI and leave full-time work.  After this, any additional income earned through part-time work activities can be used for greater spending.

3– On the road to FI, aim to level up your income and use some of this to spend more.  Invest the rest.  If you grow your income faster than your spending, you’ll still be better off.

In all cases, you manage your finances in such a way that there is always a surplus and your wealth continues to expand.

The idea that you can’t spend on certain things, or your lifestyle is always fixed, is absolute nonsense.  Nothing could be further from the truth.  The people who criticise frugality with this framing are being deliberately ignorant or simply lack imagination.

If you spend less first, you can spend a lot more later.  But if you spend a lot first, your future options are greatly limited.  Why?  Frugality helps you to rapidly build wealth and investments.  High spending does not.


A few reminders

Let’s remember that improving your quality of life doesn’t necessarily mean spending more.

In fact, improving your life often means applying personal effort to important areas.  Our health.  Relationships.  Meaningful pursuits and projects.  Helping people.  Learning and bettering yourself.

You can easily live a drastically better life while spending less money.  It’s your focus that matters.

For the people running around thinking that quality of life means the quality of things in your life… these folks have swallowed the consumerism Kool-Aid.

Advertising is one of the most powerful forces in the world in making us think and believe certain things.  It’s actually scary how many things can infect our mind on a week-to-week basis.  Our job is to detect when our thoughts are genuinely our own, and when we’ve just succumb to the manipulative magic of marketing.

Make no mistake, developing a bullshit detector is more valuable than ever before.


Final thoughts

See, I haven’t gone crazy 😁

You can spend more money and still become fabulously wealthy over time.  It’s all about keeping things in proportion and maintaining a healthy dose of perspective.

While this article might seem out of character, I want to make it clear that spending more money doesn’t banish you from the FIRE club.

In fact, if you do it right, you may even become more motivated to increase your earnings, helping you reach your goals faster.

Don’t get me wrong.  I still think freedom is the most important thing we can buy.  After that, we can essentially do whatever the hell we like.

Having massive optionality and control over one’s life is far more valuable than the bullshit consumer highs we typically waste all our time chasing.

But ultimately, spending more on totally optional stuff as your income and wealth expands is completely normal as you become a rich individual.

At the end of the day, the sensible management of wealth is what ensures its permanence in your life.


20 Replies to “How to Spend More Money and Still Become Richer”

  1. Enjoyed this article a lot, thank you. I know it is a hypothetical question and subjective but what percentage of your overall net wealth do you think it is reasonable to spend on a PPOR? If you were worth 20 million net and decided to spend 10 million on a PPOR – is this acceptable? Many people begin adulthood with a large mortgage, meaning that their PPOR is over 100 percent of their net worth but gradually transition over to PPOR plus some income generating assets. What is the sweet spot?

    1. It’s a good question. Its’ all personal preference of course so there’s no right answer. But here’s my personal view…

      At $20m net worth, I think $10m for a home is extremely over the top – half a high net person’s wealth doesn’t strike me as very smart. I think at that level $5m is a bit more reasonable, even though it’s still wildly luxurious. There’s really little to be gained by doubling spending at that point.

      As stated, I don’t really like the idea of a % because it’s arbitrary and ends up getting silly. I think a smart goal is to actually reduce the percentage of personal assets which make up our net worth over time. Meaning investments start dwarfing personal assets, even though you become richer and can increase lifestyle spending alongside (including house) if desired.

  2. Hello Dave ,

    Happy New Year to you and your loved ones and readers 🎉

    Another great read 👍

    The legend , Peter Thornhill who as mossy of your readers would know , has over $400k in dividends . So let’s say his number is over the $10 Mill .

    Interestingly though he drives a 20 year Toyota Carrolla , he rents many of his experiences , domestically and overseas . A Rolls Royce in England , a French Chalet , an Italian home in Tuscany . He doesn’t skimp nor overthinks his purchase experiences for his family and friends ( which he highly values ) , yet he keeps his mindset in a perspective, simple and meaningful existence. His sense of humour and wit is admirable.

    Life is too short to chase a more bigger number when your enough and what one’s time restraints ( everyone has them) allows us to live a meaningful and contentious (contentment) life .

    Happy investing ( and spending ) 2023 😎

    1. Cheers Jimmy, you too mate!

      That’s a good example actually. PT has obviously ramped up his spending as his wealth and dividend income has increased, but he also remains dedicated to growing his investments at the same time. There’s a good balance in there it seems. I think as humans a lot of us are prone to go to one extreme or the other, chasing maximum spending or maximum wealth.

      Great comment man!

  3. Reminds me of the famous US investor Anne Scheiber who amassed $22 million by investing in high-quality growth stocks. Despite that she lived in an old rent-controlled apartment with paint peeling off the walls and would take food home from shareholders’ meetings. Some people just lose perspective, never knowing when they have enough.

    1. Ah yes there’s a few stories like that. I guess it depends tho. We don’t know if that individual was happy or not. She may have been perfectly content with her life, and always hated waste so much that she simply wanted to live her life according to that value. Some of those people end up donating all their money to charities. Could be argued that’s a better outcome than a new house + holidays, which she may not have even been interested in. So I think we should keep the context in mind.

  4. Great read as always Dave.

    As someone who likes wine/Whisky/Rum and someone who absolutely hates consumerism, I do find myself in a dilemma every now and then when making such purchases. But l always remind myself as per your point above, that spending reasonably on things I enjoy will not change the greater outcome of saving and building long term wealth.

    I also believe in enjoying the present,hence why I do spend a bit of money on things i like but when i find myself going overboard,again as per your point above, i pull back and remind myself of my long term goals.

    I also try to add a positive spin on not spending the money when i find myself wanting to spend more. For example, I remind myself that drinking too much is not good for my fitness(a very important aspect in my life) or that Uber eats is certainly convenient but going for a walk to pick up a meal has some health benefits…

    Finally, lol , i do self pacts(concept from the book Indistractable). If i want to buy that bottle of Rum for example, I promise myself to at least cut back on something else or earn more money to cover it. And from a fitness perspective, I make sure i do extra training to burn every calorie of alcohol I drink. That generally keeps my spending in check.

    Cheers and hope you have a great and productive year ahead.

    1. Thanks Paul 🙂

      Maintaining perspective and healthy proportions seems like the right method. Looking at things from multiple angles also works wonders (for lots of things, not just this). Sounds like you’re really on top of it!

  5. Thanks Dave, I really enjoyed reading this article, given that it is on a topic I have been reflecting on for years.

    I think the “spending focus” will be different for each individual, and will depend on their values, their proximity to (or achievement of) financial freedom, how well developed their financial machine is etc.

    For example, I have no debt at all, work just part time, drive a 10 year old Nissan, and loosely follow the following principle – 40:40:10:10, where I save/invest 40% of income, live of 40% income, 10% on health and sport, and 10% expenditure on the occasional big ticket treat – which may be an overseas trip every 2 years. The health and sport expenditure reflects my conviction that health is probably the highest form of wealth; without it, life is miserable. The 10% big ticket treat gives me something to look forward to, and is a reward for being disciplined and making good financial decisions.

    This framework works well for me, and hopefully may be helpful to you and your readers!

    Keep up your good work Dave, Cheers

    1. Thanks Rex, glad you enjoyed it mate.

      You’re spot on, the decision-making will depend on the individual and what’s important to them at the time. Appreciate you sharing your approach, sounds good to me, and working part-time to top it off!

  6. Hi Dave,

    Thanks for the fantastic article. It was great for me to read your article, as many points you made are very timely in my life now. You have definitely broaden my thinking on this topic.
    Wishing you all the best for 2023!!!

    Thanks again,

  7. Great article Dave. I’m a big fan of the Ramit Sethi philosophy of spending a lot on the things you care about, and minimising your spending on the things you don’t, which ties into this really well. Although I aim to have a high income in retirement I don’t plan on spending it on expensive cars or eating out at fancy restaurants, because those things aren’t important to me. But I do plan on spending it on things like travel and great experiences for my kids, because those things are very important to me!

    And yes, I’m very hopeful that my wealth will continue to grow over time as we’re only spending a small fraction of our actual wealth each year.

    1. Cheers mate! Your approach makes sense to me, and arguably comes with much greater benefits than eating out and vehicles lol 🙂

      I’m sure it will work out wonderfully and you’ll have a fantastic retirement. When do you expect to pull the pin?

      I like some of Ramit’s messaging, but definitely not all of it. As you prob know I’m more in line with MMM in terms of questioning everything (especially consumer-type behaviour) and being a bit more hardcore with optimisation. Which makes sense, given our focus is early retirement rather than general wealth building.

      1. At this stage I’m hoping it’s about 5-6 years until retirement, although obviously that depends very much on what markets do between now and then! Ideally it’d be earlier than that, but who knows how things will play out.

        I’m also not on board with all of Ramit Sethi’s stuff, but I do think his message of being able to spend money appeals to a lot of people (including myself) rather than the uber frugal messaging some people push. Likewise I enjoy a lot of MMM on a fair amount of his philosophy, but he takes the independence and DIY stuff a lot further than I personally would be comfortable with. So I try and take the good parts from each of them and other writers and incorporate that into my own philosophy!

        1. Nice mate!

          It’s definitely an appealing message that’s for sure. Love the approach of taking bits of philosophies from everyone, that’s the smartest way I think. Like you, I’m not on the DIY train either, which I plan to write about soon actually. All of us are essentially on the same ‘team’, we just differ slightly in implementation 🙂

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