Filling the Fun Bucket

I've been writing a monthly article for the Albuquerque Journal over 8 years, and many readers send me questions which I answer via email. I've expanded this Q&A and it's now a part of my weekly newsletter, Becoming Enriched.

Several years ago, I received a question from a client that's common among people who were raised in a frugal household, with strict rules about money.

Q: The money messages I learned as a child still dominate the way I interact with money. I was taught to be very frugal. In my family, money was for saving, not enjoying. I have enough money that I do not need to pinch pennies, yet spending money makes me anxious. I live with a woman who has a healthier attitude about money. She is very responsible and has saved wisely throughout her career. How can I adopt a healthier attitude about money so we can enjoy more experiences together?

A: You may think that as a financial advisor, I am constantly forced to advise people to quit spending too much. However, among my clients, your situation is very common. Many folks raised by parents who lived through the Great Depression were taught to save for a rainy day and are fearful of spending money for pleasure.

My advice is twofold: First, take time to prepare retirement projections to see if you are on track for retirement or – if you are already retired – if you have enough money to live comfortably for the rest of your life. Assuming your retirement is secure, the next step is to carve out an annual entertainment budget. If can be $500 or $5,000. The amount is irrelevant. This is what I call your “fun bucket.”

It can be used for a weekend getaway, a special trip, concert tickets, ballroom dance lessons, and more. Give yourself permission to spend it – but only for fun experiences. As you realize that spending money on fun will not impact your long-term financial security, you will start to feel less anxious each time you treat yourself to a fun event. And having a fun bucket is a reward you have earned for being so financially responsible.?

Update: The above excerpt is from my book?The Joy of Financial Security: The art and science of becoming happier, managing your money wisely, and creating a secure financial future?(available on Amazon and wherever books are sold). Because many of my former clients became friends, I kept in touch with them after I retired in late 2021. There is an update from the man who asked the question above.?

He recently retired, and he and his partner have an annual fun bucket. However, instead of having $500 or $5,000 (as mentioned above), it contains $50,000 per year! They are enjoying expensive cruises during retirement, so $50,000 is not too high. In fact, they expect to exceed their $50,000 fun bucket some years! They both saved and invested wisely over many years, and they are now rewarding themselves by traveling and exploring during the next ten years or so.

Think about how you can create a fun bucket of money, specifically for fun experiences. The money could come from a stock you invested in years ago that has appreciated nicely, from a tax refund, from an inheritance, or simply from carving out a portion of your annual budget for fun.