Last week I listened to this episode of Paula Pant’s Afford Anything podcast. She was interviewing Emma Pattee, who became a self-made millionaire by age 26. Emma and Paula have both built real estate portfolios that provide enough cash flow to sustain their living expenses (the elusive “FI” of financial independence).
In this conversation Paula and Emma started talking about the psychological aspects of money. They each shared stories on their path to FI where they had decided to not spend money on something and later regretted the emotional loss that went along with making that decision.
Listen to this truth bomb from Paula (slightly paraphrased):
“Both of us were motivated by the same thing…and for both of us, that was largely anxiety – we did it not because we wanted a big house with a fancy car, we did it because we were just anxious people who wanted the psychological security of a safety net in order to relieve some of that anxiety we felt. That was our motivation…It’s funny, because being in a very emotionally unhealthy place led to a behavior that had a lot of positive reinforcement…There’s been a lot of external validation to just being a basket case.”
Does this conversation point strike a chord with others the way it does with me? Perhaps it hit me so hard because I see myself in what Paula says. My obsession with saving comes from a mindset of anxiety and fear of the unknown future, not from one of abundance and confidence.
Just as it is unhealthy to spend beyond your means, it can ALSO be emotionally unhealthy to become obsessed with squirreling money away! And this is not something I often see addressed in the FI community.
Spending Regret and Satisfaction
I have definitely had times in the past where I regretted not spending money on something. One example is that I did not study abroad during my graduate program like a couple of my friends did. At the time I didn’t feel comfortable spending the money and instead took a well-paying internship. This was fifteen years ago and any amount of money I would have spent on the education and travel would have long since been paid off by now. The regret of not spending a few weeks in Italy, unencumbered by work or family obligations, still lingers.
There have also been times where I was stressed about spending money at the time but in retrospect have fond memories associated with that monetary outflow. The first one that springs to mind is a big trip I took with my best friend five years ago. We bought expensive handmade Turkish rugs in Istanbul and a split a case of wine in Tuscany. My only regret is that I didn’t buy more wine!
Can you think of any instances where you wish you would have spent money instead of squirreling it away? What is your motivation for saving for the future?