An interesting thing tends to happen to people who grow up without much money and find themselves earning lots of it later in life. They tend to experience feelings of guilt or anxiety when they spend their money, even when they can easily afford the things they’re splurging on.
Such is likely the case for this Reddit poster. They’re 34 years old with a liquid net worth of about $11 million. That’s more money than many people accumulate in a lifetime.
Their current annual spending amounts to $350,000, which includes luxuries like a personal trainer, a private chef, and high-end travel. And they’re wondering if that’s reasonable and how much money they need to truly be financially secure.
The reality is that because this poster isn’t stating that they plan to stop working, between their ongoing income and their high level of wealth, they should probably already be in a place where they feel like they can stop worrying about money. But in reality, it may not be so simple.
It’s a matter of mindset
For some people, spending $350,000 a year would be completely out of line and result in a world of debt. For others, it’s more than affordable.
It seems to me that our poster here is in the latter situation. Given their net worth, as long as their $350,000 in annual spending can be covered by their earnings, there’s no reason to worry about it.
But that doesn’t answer the “how much is enough?” question. And there’s no universal answer to that, as it depends on your personal goals. If this poster wants a $15 million nest egg, then clearly, at $11 million, they’re still a bit short.
What I can tell this poster, though, is that if they were to feel more confident in their long-term savings, they’d probably be able to stop worrying about their spending. So I think it’s important for them to come up with a number that gives them peace of mind. Once they reach it or see that they’re on a path toward it, they can feel better about their financial picture — even though they should be feeling pretty darn good already given where they are.
It helps to talk to a financial professional
The poster above has a situation that’s far from ordinary given their high net worth at such a young age. But you may be in a similar situation where you’re not sure your level of spending is reasonable, and you’re unable to stop worrying about money despite having a nice amount of savings.
What I’d tell this poster, and you, to do here is talk to a financial advisor. An advisor can help you set long-term goals based on what you want various stages of life to look like. And if you see that you’re on track in that regard, it should give you peace of mind and help you enjoy your earnings more.
It’s also important to make sure you’re covered for emergencies at all times. Financial experts often say to have a three- to six-month emergency fund. But honestly, I don’t think a 12-month emergency fund is unreasonable. And knowing you have enough money to pay your bills for a full year could help you sleep better at night.
Of course, even once you reach a point where you’re more content with your savings, it still pays to examine your spending and make sure you’re sinking money into things and experiences that are meaningful to you. If you’re spending $350,000 a year like the poster above and are enjoying life to the max, then go ahead and keep doing that if you can afford it. But if all of that spending isn’t bringing you the joy you’d expect it to, then you may want to rethink your expenses – and priorities.
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