I just hit $10 million in liquid assets — how do I avoid overspending now?

A Redditor in the fatFIRE community recently achieved their fatFIRE number of $10 million. Now, the Redditor is looking to switch from saving to spending while preserving wealth.

A recent post in the fatFIRE subreddit highlights the Redditor’s financials. The individual has $176,000 in cash plus approximately $500,000 after taxes from a $900,000 company buyout. The individual also has $10.8 million invested in stocks and treasures.

I’ll share some thoughts on how the Redditor can switch from spending to saving while preserving their portfolio. However, it’s optimal to speak with a financial advisor on these types of matters if you can.

Follow the 4% Rule

The 4% rule dictates that a retiree withdraws 4% of their portfolio each year and uses it to cover living expenses. Some people make this percentage lower to further preserve their portfolios, while others make it a bit higher to reflect the rising cost of living.

Using the 4% rule for the $10.8 million portfolio, the Redditor could withdraw $432,000 each year. The Redditor’s Treasuries and any dividend stocks will minimize how much they have to withdraw each year to end up with $432,000.

This figure comes to $36,000, which is much higher than the Redditor’s intended monthly spend. In the post, the individual mentions that they only plan to spend $15,000 per month. Essentially, they only need to withdraw less than 2% of their portfolio each year, and a high percentage of the $15,000 monthly withdrawals will come from dividends and interest.

Take It Slow During the First Year

When people hit their retirement number, it’s tempting to go on a spending spree and catch up on every vacation. While it’s good to spend some of the money that you have worked hard for, you don’t want to go over the top in the first year.

The Redditor is setting restrictions for the first three years. The individual wants to live entirely off dividends and interest instead of selling assets. This decision will help them preserve their nest egg. Their funds will likely grow during those three years, giving them more cash to work with in the future.

Just because you have money doesn’t mean you have to spend it. The Redditor is single, and higher expenses may come up if the Redditor decides to raise a family in the future. The Redditor has the right mentality and has already paid off their house and car.

Monitor Your Annual Spending

The best way to optimize your spending each year is to track it. The Redditor may benefit from creating a spreadsheet that details their annual expenses. You can record spending data from previous years or start with a clean slate in 2025 for your spreadsheet.

A detailed spreadsheet can help you track how much you spend on specific categories. You can then set goals, such as not boosting your travel expenses by more than 10% this year. Goals like these make budgeting more enjoyable since it becomes a challenge with clear goals. 

The Redditor seems like they’ll be fine. A high net worth and a good mentality are a great combination. These tips can help them preserve their nest egg and ensure that they never run out of cash.