I’m Scared to Spend Money, But I Make Six Figures

by Sophia Bera on February 27, 2019

I’ve spoken to so many successful millennials who earn a comfortable salary and save and invest a healthy amount. Yet they still hoard cash like their luck is about to run out, or are racked with fear whenever faced with a chance to spend on something that isn’t essential to survival. They’re so afraid to spend money!

While the media is talking about millennials spending all their money on avocado toast, I work with a lot of millennials who are financially conservative. Like our Depression-era great-grandparents, we stick to safe bets, like savings accounts instead of higher-risk investing. Why do we behave this way, when we stand to benefit the most from investing because of a longer time horizon than older generations have? It’s because our money fears are deeply rooted in our personal histories.

When I begin working with new clients, one of my favorite questions is: What was money was like growing up for you?

This gives me insight into how they manage their money today. What lessons did your family teach you? Did your parents’ money behaviors match their advice? When it came to money, was there abundance, scarcity, shame, greed, obsession? My goal is to help you cut through the noise of your family history to forge your own path to happiness.

Here are some common reasons financially successful people are afraid to spend money, and what you can do about it so you can fearlessly use your money to match your values and live a great life!

You Worry About Your Job Security or Another Recession

Many of us dealt with the difficulties of starting our careers during the Great Recession 10 years ago, and it’s common to carry that trauma to the jobs you have later on. So many millennials have been laid off and switching jobs every 2-3 years is becoming part of our new normal. Many of us are full-time freelancers with variable income.

It’s absolutely normal to worry about your job security, but there are things you can do to feel more in control of your career:

  • Keep your skills fresh. Take on new, unfamiliar tasks at work. Attend industry conferences and classes (especially if your employer will help pay for them!). Attain certifications that will help advance your career.
  • Update your resume and LinkedIn frequently. Not only will you always be prepared when a job opportunity strikes, but it helps boost your confidence to see your amazing career progress in writing. LinkedIn is where recruiters hang out so while you’re busy working, other people might be helping you find your next great role.
  • Network. You can make valuable career connections through friends, family, former coworkers, and neighbors. Have a 30-second description of what you do in your mind in case someone at a party asks what you do. At industry conferences, make special effort to get to know a few new people and connect with others. You never know who is looking for a new hire and you might be a great fit.
  • Create an emergency fund. Work your way toward having cash to cover three months of living expenses if you lose your job. Deposit it into a high-yield online savings account so it’s easy to access, but not so easy that you’ll spend it on non-emergencies. If you have kids, a non-working spouse, or income that varies, try to save up six months worth. But don’t keep 100% of your money in cash — once you reach your emergency savings goals, apply other money to other goals like retirement or saving to buy a home.

You Hold Onto Dysfunctional Behaviors

Growing up with financially irresponsible parents may make you doubt every financial decision you make. Dealing with these issues isn’t simple, but the outcome is worth the work.

  • Go to therapy. You owe it to yourself to examine your behavioral patterns with the help of a trained professional, and to break those patterns that aren’t serving you.
  • Realize that your parents’ reality isn’t the same as yours. They grew up in a different time, with different money products and services. You don’t have to take their advice if it’s outdated — find a financial planner who understands current product choices like robo-advisors and ETFs.
  • Share less about your financial situation with your family. You’re an adult, and adults don’t have to tell everyone everything. Find money accountability buddies with whom you can set goals and celebrate your successes. You might be an active member of the FIRE movement, for example, and your family might think that’s crazy, but there are others who get you — find them.

You Think Money is Evil

It’s common to fear your money because you’ve been taught that money equals greed. But money doesn’t have a personality — it’s simply a tool. It allows you to buy the things you need to survive, but also lets you afford the things you enjoy and be generous with others.

  • Be charitable. Begin to see your money as a means to bring good into the world, and use some of it to support causes that are important to you. Make a plan for your charitable giving.
  • Spend money on meaningful experiences. Travel the world, buy a friend dinner, attend concerts and practice being generous. Use your money to create memories. One of my favorite things to do is use my travel rewards on my friends or family and fly them to Austin to visit me!
  • Think of the ways money has enhanced your life. Appreciate the household items that make your day easier, or your comfortable home. Practice gratitude for these physical things and wonderful experience that you’re able to afford. One of my favorite money mantras is: “I love money because I love living an awesome life!”

You Feel Guilty When You Spend Money

It’s one thing to be living paycheck-to-paycheck on six figures (this article isn’t for that guy), but it’s another thing to be making smart financial decisions AND continue to beat yourself up every time you spend money. When I first begin working with a client, the first thing I evaluate is if they’ve created a solid financial foundation.

Here are the three building blocks of basic financial security:

  • Eliminate high-interest rate debt. Get out and stay out of credit card debt. Figure out a plan for your student loans. I use 5% as a rule of thumb for whether or not to focus on paying down debt or increasing retirement savings. Aggressively pay off debt with an interest rate above 5% and anything under that, pay the minimum and re-route the extra money towards your retirement accounts.
  • Have three months of net pay saved for emergencies. Make sure that you have adequate emergency savings so that you can withstand a job loss, major home repair, or medical emergency.
  • Actively save for retirement with every paycheck. Make sure you’re contributing at least enough to your 401(k) or other employer-sponsored retirement plan to get your employer match, and then max out a Roth IRA if you qualify. As a rule of thumb, aim to contribute about 15% of your income towards retirement. Make sure you have an asset allocation on your retirement accounts that matches your age, time horizon, and risk tolerance.

If you’ve checked the boxes on these three things, it’s time to let go of the guilt. You’re doing a good job and it’s getting you 80% of the way there. Yes, there are certainly other things you can do to improve your situation, but that’s where working with a financial planner can be helpful, especially as life events complicate your situation (getting married, starting a family, buying a home, starting a business, etc.).

You Can Conquer Your Money Fears

There’s so much freedom in taking back control of your life! If the thought of spending or managing your money gives you anxiety, seek help from a licensed therapist. If you’ve already created basic financial security, it might be a great time to hire a financial planner to help you reach other money goals and let go of the fear of spending money.

As you start to align your spending with your values there will be less of a disconnect between your money and what’s important to you, and you can start to experience a balance between living a life you love and creating a plan for your future self.