Fear of Spending Money: How to Overcome It

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The fear of spending money is everywhere. It’s a natural phenomenal for people who are saving money in order to get to a point of financial security. The most important reason for the fear is due to the chance of ending up with no money and nothing to show for it by the end of it all.

I experience and think the exact same things. I’m a little bit paranoid that a dollar that I spend today means the start of the end and that I will lose all of the hard work I built up. My net worth climbed up steadily to the $420,000 mark and I am terrified of losing the status that I worked so hard to achieve.

The way that I got to that figure at such a young age is not by spending as much money as I possibly could. I did it by saving and investing as much money as I could. There was no way I wanted to work in Corporate America for the long term because of how companies treat employees in the country.

So with that came the fear of spending money. It was acceptable in the beginning stages of my FIRE journey. However, these days I have to consciously make the effort in order to spend money because I already saved up and built up my life as such. It’s taken me conscious effort but I am loosening the wallet much more frequently.

In 2020, I took many out of town trips, went to an out of state wedding, bachelor party, rented vacation AirBnbs, and generally spent more money than usual. I am a proud owner of a $100 sparkling water maker that I never thought I would ever buy in my life! Spending money can feel good.

What is Fear of Spending Money?

The term is called chrometophobia. It is the fear of spending money and it’s a form of money anxiety disorder. Whether we like it or not, money is a integral part of our lives. Therefore, when we have too little of it, we start to feel and get anxious that our future is very uncertain.

Make no mistake about it. This is a mindset that needs to be fixed. The alternative is to be the richest person in the grave, which is not a good goal to strive towards. There’s a time where you need to save and invest as much money as you possibly can.

Then there’s a time to overcome the fear of spending money and actually spend the money you earned. There’s no point in working so hard for money if you’re not going to get anything in return for it. You worked hard for a reason. It’s time to enjoy the fruits of your labor.

8 Ways to Overcome the Fear of Spending Money

One way to overcome the fear of spending money is to SMASH that social share button and post to your favorite social media! Your friends could be going through a similar issue and may need the extra push.

So with that said, let’s go over how to stop being afraid to spend money.

1) Create a “No Feeling Bad” Budget

One of my friends bought a collectible car for $7,000 early on in his career. He was feeling guilty about the purchase because for 1. he was recently graduated and for 2. he didn’t need the car in his life. He had a perfectly fine and working vehicle that could easily take him from point A to point B.

Then I gave him the advice to keep a budget aside specifically for purchases such as these. That no matter what happens, he can spend the money and he’s not allowed to feel guilty. That’s when he changed his mindset. That it was completely OK to treat himself to the purchase for that year because he’s working hard already.

If you want to overcome your fear of spending money, add in this line item to your monthly budget. You’ll be amazed at how much better the quality of your life will be once you actually spend money on things that you enjoy. Without feeling any guilt, shame, or the need to check back and see if it fits within your budget.

2) Truly Find Out Your “Enough” Number

Fear of spending money can be solved with knowing your "enough" number.
Do you know your enough number?

Many people have an “enough” number in which they tell themselves that’s the number it’ll take for them to quit their jobs. However, be honest with yourself. There’s so many people who say “xyz” is their enough number yet when they reach that number, they say “just one more year”.

For me, $500,000 is my financial independence number. Is that enough to stop working? Absolutely not. However, that’s enough to the point where I will let loose much more and spend my money on things that bring me joy and happiness. I am very close to the goal and I will get there in 2022.

However, one thing that I will not do is still have a very limited budget even after I reach that number. I am very honest with myself to calculate what I will need in order to feel safe and overcome the fear of spending money. There are many things that I’ve been wanting to spend money on for a while.

3) Create a Cash Flow Stream to Combat the Fear of Spending Money

Once you have a steady and reliable cash flow stream coming in, that will erase your fear of spending money. You won’t feel bad about spending an extra $1,000 this month if you know your predictable and reliable cash flows will equal $10,000. This is on top of whatever your W-2 income is or will be.

The reason why it’s so hard to spend money even with with a million dollar net worth is because of cash flow issues. If the millionaire doesn’t have a reliable cash flow generating source, it’s difficult to spend money. They don’t know where their next dollar is going to come from.

That’s why creating a reliable and dependable cash flow stream is crucial to overcome the fear of spending money. Asset price increases are completely and totally outside of your control. Therefore, it doesn’t make sense to rely on asset price increases but rather on cash flow generating assets.

4) Make More Money

Sales cures all“. This phrase was popularized by Mark Cuban. It doesn’t just apply to businesses, it applies to individuals as well. When you just point blank and flat out make more money, then there’s no problem in spending more money. You don’t mind spending the additional $1 if you bring in $1,000 more in income.

The fear of spending money can be solved my just making more money. Yes, there are multi-millionaires who haggle over $5 purchases. That sounds like a disease more than anything. The 2 minutes they spend saving $5 is actually a loss because their time is worth way more than that.

There are many ways for you to make more money, the most popular one being switching employers and scoring a 10-15% raise as a result of the switch. You are more in control over your income than you think. Make 2022 the year where you devote yourself to making more income.

5) Divorce is More Expensive

Fear of spending money leads to divorce.
Divorce is no fun for anyone.

Too many people want to save as much money as they can even when their spouse fiercely detests it. This podcast of a $10M couple is one example where the husband refuses to spend money even in the threat of divorce. The couple thousands extra the husband has to spend is less than the millions he’ll lose in divorce.

Too many people don’t think they’ll get divorced and think that their spouse will just be OK with their frugal and cheap ways. It’s the frugality disease where the fear of spending money takes over the rational part of the brain that makes more economical and business sense.

Don’t try to save thousands of dollars a year only to lose millions of dollars in the end. Most of the money is going to go to lawyers anyway. You’re not the only person you have to think of when it comes to handling the finances. At some point, there has to be a line where spending money is comfortable.

6) Objectively Look at Your Standing Versus Others

There are people who are millionaires yet still feel poor. Are you in the top 1% of wealth for your age group and still can’t spend money? That’s silly. When you’re at the top 1%, you shouldn’t have the fear of spending money because you’re literally at the top! No slippery slope to go down from where you are.

Chances are, you’re already good at making money that you can easily make the money you spent back. In a reasonable amount of time. A good starting point to benchmark against your peers is by looking at the net worth percentile calculator. You can input the data points and see where you stand.

Don’t let emotions dictate where your standing is. Let facts dictate where your standing is. Sometimes you are already so far ahead of your peers that trying to get even further isn’t a viable strategy. I am currently in the top 1% of net worth compared to my peers and are starting to spend more money every year.

7) Remember How Good Generosity Feels

Fear of spending money is solved through generosity.
It feels good to be generous and give to others.

Do you remember when you had the breathing room and the leeway to tip? The other day, I went to a barbershop and tipped 5$, more than any other tip I paid someone else for a haircut. It was a $12 haircut bill. It felt good to tip that much and to know that I could tip that much in the first place.

After a generous bull run in 2021, a payout of my vacation days, and a nice salary increase due to me switching jobs, I am in a place where I can tip money generously. It feels great. Overcome the fear of spending money by reminding yourself just how good generosity feels. Not for the person receiving your generosity.

But for yourself as well. Sometimes, it just feels good to do the right thing and help others out when you can. As my wealth grows in 2022 and beyond, I have a feeling that I will be more generous towards others. I was stingy before but that was because I couldn’t afford to be generous.

8) Start Small and Raise the Baseline

You can’t overcome your fear of spending money by trying to buy the latest $1,000 iPhone at once. It’s going to take time and steps for you to detox from the mindset that’s been engraved in you for so long. Take baby steps. Spend $10 today and see how that feels. Then spend $10 next week again.

You’re not going to fix your mindset by buying the latest $20,000 car and thinking, ha! that fixed my mindset! Nope. If saving and investing is ingrained in your inner psyche, it’s going to take time to adjust your thinking. Someone doesn’t change from a spender to a saver overnight. it works both ways, too.

Start adding small things to your budget to spend money on and let loose. There’s always a way for you to spend money in which that’ll bring you happiness and joy. People will always be out there selling you goods and services that makes your life better.

Fear of Spending Money is Bad

Fear of spending money is a psyche thing. If you’re a part of the financial independence movement, then you know just how important saving money is. However, there comes a limit to that. When you’re saving and investing too much money. You have the power of choice.

You can choose to spend as little money as possible for the rest of your life. Or you can choose to decide when you have “enough” money for you to start enjoying it more. Save money on going out to dinners in the beginning so that it grows to something larger later after you invest it.

In the first years of my personal finance journey, I would cook every Sunday and Wednesday for the next 2 – 3 days for me to take to the office. These days, that takes up way too much of my time. I just go out and buy food because there are better things to do with my time.

However, I put in the work and the dues for the year or so. I actually ate some very healthy stuff with a keto diet cookbook that I bought. After a while, cooking became much harder than I realized and I stopped. Now instead of having a fear of spending money, I go out and spend money on food willy nilly.

Every week. I haven’t cooked in such a long time that I can’t even remember the last time that I cooked. 2022 will be the year that I spend a lot more money on “stuff” compared to the earlier years. Then in 2023, I will be looking into buying a house and becoming a homeowner! The next two years will be the most exciting.

How to Overcome the Fear of Spending Money Shortlist:

  • Create a “no feeling bad” budget
  • Truly find out your “enough” number
  • Create a cash flow stream to combat the fear of spending money
  • Make more money
  • Divorce is more expensive
  • Objectively look at your standing versus others
  • Remember how good generosity feels
  • Start small and raise the baseline

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