Would You Change Your Spending Habits If You Made More?

[Singuy]

I know a lot of us on the board are savers and it's a habit drilled down into our soul. But what if you made more money than today? Are willing to buy items you once deemed wasteful and showy?

Lets say you make 50k post tax, and you save/invest 50% of this money.
What if you start making 500k post tax/year? Are you willing to spend 250k/year on lavish vacations, Aston Martins, bigger houses, and expensive dinners?

Or are you going to spend 25k/year like yesterday and invest 475k/year? I know age has a lot of do with this but lets just say you have a good 25 years of working age ahead of you.

Remember, you are still saving 250k(or still investing 250k/year)..so you can't really say you are living paycheck to paycheck with your money. 250k/year goes pretty far unless you start buying yachts and planes..lol. Investing 250k/year@5% return for 25 years will give you 12million before retirement, just putting things in perspective. Also note, if you have 12 million@5% return, you will gain 600k/year alone on your investment..so you can spend 600k/year without touching a dime from your nest.

[Like2Plan]

Interesting thought experiment.
I'm retired and DH is close to retirement (2-3 years he says). I have a couple of perspectives on this.
One is, I don't want to increase our spending to a level that is unsustainable in retirement. So, if we had a couple of years of 500K--then retire, well even saving half of it would not be enough to sustain the uptick in lifestyle in retirement.
On the other hand, I have heard this saying--either I spend my money, the tax man spends my money or my kid spends my money. So, I think I would like to enjoy a few luxuries if I could afford it--if it isn't necessary to sacrifice.
So, no to the fancy car (I have a 10 year old car I still like). No, to a bigger house--more overhead and upkeep (and cleaning!) No, the fancy meals--DH and I travel a lot now and we like to eat our own home cooking when we get back home. Now, travel--that is what would trip us up. We both have research projects that we do as a hobby. There are some places I would like to go in person to do research. But, that is discretionary spending--so, if we didn't have the same amount of $$ coming in at some point in the future--we just wouldn't travel as much.

[MonkeyMama]

Or are you going to spend 25k/year like yesterday and invest 475k/year? I know age has a lot of do with this but lets just say you have a good 25 years of working age ahead of you.

I am going to spend the $25k per year, and that is how we have lived our lives. At any point in my life that is what I would choose.

The interesting thing is though we have not increased our spending in the past 14 years (since becoming homeowners/early adulthood) we can afford a lot more luxury over the years. Maybe a lot of it is having a cash mindset and having more time to save up for nicer things over the years. Of course, I've not saved up for maternity leaves or a house down payment in well over a decade and so that frees up more money for luxuries. Less startup type expenses now? Buying nicer/newer things means they last longer and also frees up money over the long haul. We don't spend more but we have a significantly more luxurious lifestyle than before. We also seem to get more fiscally efficient with age.

It's important for us not to spend more, for the worst case scenario, and also keeps the bar extremely low for retirement (which just makes life easier overall).

I think a lot of it is relative. I come from a poor family, and never expected to have this much at this point in my life. I am more than content. We are also "priority" spenders in that we never put off anything important. So we have always spent our money on that which is most important to us, and doesn't leave us wanting for much. Prioritizing well certainly helps with contentment. I have absolutely no interest in a more expensive car or a bigger house to upkeep (but if I did I'd already have those things?). I'd have no idea how to spend $100ks of dollars. If I saved it and it was "too much" there is plenty of giving that can be done - that would be more our style.

[cypher1]

Lets say you make 50k post tax, and you save/invest 50% of this money.
What if you start making 500k post tax/year? Are you willing to spend 250k/year on lavish vacations, Aston Martins, bigger houses, and expensive dinners?

Or are you going to spend 25k/year like yesterday and invest 475k/year? I know age has a lot of do with this but lets just say you have a good 25 years of working age ahead of you.

While I understand this is all hypothetical, that’s a pretty extreme raise for basically 10x annual salary. Health is one thing, but what about job security? In my experience, nothing lasts forever. With that paranoia in mind, and making that much money, I'd probably increase spending/donating total to 50K and invest the remaining 450K. I'd more likely be spending increase on traveling/vacation and DIY projects to current house.

Being able to just double my existing spending habits would be more than enough to keep me happy or content with my current lifestyle.

I am going to spend the $25k per year, and that is how we have lived our lives. At any point in my life that is what I would choose.

The interesting thing is though we have not increased our spending in the past 14 years (since becoming homeowners/early adulthood) we can afford a lot more luxury over the years. Maybe a lot of it is having a cash mindset and having more time to save up for nicer things over the years.

It's important for us not to spend more, for the worst case scenario, and also keeps the bar extremely low for retirement (which just makes life easier overall).

I think a lot of it is relative. I come from a poor family, and never expected to have this much at this point in my life. I am more than content.

What MM states above reminds me of some of my habits. For example, just over 3 years ago when I changed employers, my salary increased another 20%. The only things I added to my monthly bills was joining LA Fitness ($32 per month) and eating out a couple times more each week. However, my savings amount also increased for retirement and short/mid term goals.

Even right now with current salary, if I got promoted or another raise I wouldn't change my spending habits besides increasing my savings (and maybe upgrade to Fiber for internet once available in area).

Going back to what's relative, I'm 34, single, no kids. While it's not a big priority right now, eventually I could be in a relationship/wanting a family, which could definitely impact/alter my existing spending habits. If that's the case, I would probably be increasing the spending and lower investing amounts.

[marvholly]

I am already retired and in fact very close to the required RMD distribution time.

If my income would radically increase I would certainly plan to spend at least most of it. NOTE: I already save 10% of my total income.

I would increase spending in the eat out & entertainment category, also for travel and family gifts/experiences activities.

[dawnwes]

I would spend it, but it would go to the kids. We are close to the kids in college stage and $25K extra per year would allow us a bit more freedom to cover more colleges on their lists.

$25K per year more isn't really all that much now that I have been looking at private schools for the younger two and colleges in the future.

Thankfully, we found a nice charter school that we are happy with, so we aren't spending $$ on tuition.

But college is coming.

[feh]

We've done an excellent job of "saving raises". Our household income is much greater today than it was 15-20 years ago, but our lifestyle has not really changed.

I'm a little more likely to spend on luxuries (ie. vacation, home remodeling), but in the end, we probably save 90% of "new money". And that's one of the reasons I'll be able to retire early.

[Fishindude77]

There are rare cases, but I think anyone that says they wouldn't increase spending if they had a significant income increase is probably kidding themselves.

[disneysteve]

This is a variation of the "winning the lottery" discussion. It's nice to dream, isn't it.

If my income went up tenfold, of course, we would spend more. I think anyone who says otherwise is fooling themselves.

Where would we spend more? Travel for sure. Money is the number one reason we don't travel more. Give me an extra few hundred thousand dollars a year and you can be darn sure that we will be taking a cruise once a year, spending more time in Disney World, and more. It would also change our choices of accommodations when we travel. We often stay on the outskirts of town rather than in the heart of the action in order to get a cheaper hotel. With 6 figures of extra income, I'd splurge on the pricier room. We also are very frugal with our dining when we travel and we'd have the ability to eat better then.

Another place where we'd spend more would be dining out in general. We enjoy fine dining. We can't stand chain restaurants which are more affordable but serve crap. So we'd be able to go out for a nice meal more often.

Of course, the bulk of the excess income would go to savings. I would love to be able to significantly advance my retirement date. If my income actually went up tenfold, after taxes and extra spending, that would mean an extra 400-500K or so going to savings and I could probably retire 4-5 years from now. Wouldn't that be nice?

[ua_guy]

My partner and I have discussed this at length. We think we'd have the discipline to secure our future first, but some of that money would absolutely go towards enjoyment thereafter. Our lifestyle wouldn't change too radically but it would give us the ability to enjoy our youth a lot more.

[FLA]

I'm pretty content with what I have. I would probably break my clothing rule that the item has to be under 20 bucks, lol but I've been frugal so long, I don't think I am mentally capable of paying retail. I'd keep my cheap car, I do not really care about cars. I like this house and do not want anything the slightest bit bigger. But if I had that money, I'd save some for my next downsizing, and get a nicer condo. I would eat out more, wouldn't hesitate so much on taking the crew to the movies. I would travel more and expose the kids to things I never thought I would get to see (the Hermitage is at the top of my list). I'd pay for the kids' college, make sure my family didn't need anything, and continue to save my butt off.

Getting sick and the utter horror to me that I could no longer add to my Roth or 403B, opened my eyes. If I had all that money, I would find an advisor to help me figure out what should you save if illness occurs. Then I would save that much for me, my kids, my folks.

my first stop would be the shelter and get one more dog

I would donate more. But overall, my life wouldn't change that much and all the traveling I want to do is physically impossible now so putting it on the list is probably stupid.

[LivingAlmostLarge]

We'd spend more for sure. We aren't frugal to begin with. Do we save? Yes. Could we save more? Yes. Could we do better? Yes. But I like to spend money and you can't take it with you. I'd fund the kids college fully, first house, wedding, and car. Yeah I don't have to but I want to give my kids more than I had. And I'd love to give them the same leg up I've seen from my friends.

As it stands I will still likely do college but more than that I can't promise. But if we made 10x more for sure we are going to help more.

What else? I don't know. Probably a super nice house since we are in the market for a super nice house.

[bjl584]

I'm sure I'd spend more. With that sort of money coming in I'd almost have to. I couldn't resist the temptation to up my lifestyle at least someplace. But, I am who I am, and I've always been a saver, so I'm sure that a lot of the money would end up saved and invested.

[disneysteve]

Another thing would be the ability to pay now for things that we've been doing over time. We'd have the money to pay cash for the rest of DD's college so no loans would be needed. We'd be able to pay off my wife's van. We've be able to pay off the mortgage.

[Like2Plan]

... I would travel more and expose the kids to things I never thought I would get to see (the Hermitage is at the top of my list)....

What a coincidence--DH, DS and I just visited the Hermitage over the Labor Day weekend. (The one that is in Nashville, though. )