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Overcoming spending guilt

Key takeaways

  • Emotions about money can be deep seated, often at a very early age.
  • Stress testing your financial plan and getting a second opinion from a financial professional can help mitigate fears of exhausting your nest egg.
  • If you are confident in the security of your own financial plan, how much you spend for the rest of your life is up to you—including how much you spend on yourself.

"If you don't fly first class… your kids most definitely will…"

That's the quote displayed in the California home office of Fidelity Financial Consultant and Vice President Tiffany Myers.

"For many affluent people, spending money on themselves or treating themselves to a first class vacation is not something that comes naturally—even when they know they can certainly afford it," says Myers.

In many cases, spending guilt is holding them back.

No doubt there are dozens of societal, psychological, and spiritual factors that impact how we think about savings and investing. If you're financially secure and your financial plan has been stress tested, it makes sense to take a step back and reconsider what's holding you back from feeling good enough to spend more money on yourself – on things that you value and things that matter to you.

The good news: This is something that financial advisors often can help people like you do. Using behavioral economics as a backdrop, let's take a look at some of the factors that influence how affluent Americans make personal spending decisions, especially as they grow in age and wealth.

Early childhood memories may be shaping current spending patterns and attitudes

Our money emotions can be deep seated, often at a very early age. According to Andy Reed, PhD, vice president of behavioral economics at Fidelity, there's plenty of evidence that people's experiences with scarcity early in life—including the so-called "depression mentality"—can shape their financial perceptions and behavior throughout the life-span.

"We've seen in our own research that Fidelity clients with "rags to riches" financial trajectories tend to feel better about their finances compared to those who had relatively stable financial circumstances across their lifetimes," says Reed. "However, we've all heard stories of people who lived through the Depression and still scrimp and save despite being more than comfortable financially in their later years—and many of us have close family members fitting this to a T."

Why? Once you've experienced scarcity and relied on spending as little as possible just to get by, it's hard to shake the mindset—especially if your mental model about finance is shaped during critical developmental periods in childhood. This mentality often is attributed to the behavioral finance concept of "loss aversion ." "People may not be willing to dip into capital to finance their lifestyle because the pain of losing money and seeing a steadily declining balance may be too great," explains Reed.

Feeling guilty about spending money on yourself in retirement

According to Jodi Coochise, PhD, psychologist and consulting partner, Fidelity Center for Family Engagement, guilt responses to spending are tied to the emotional associations we have to money. These can come from messages we received in our families, our community, or the broader society. Examples include:

  • "You should only spend money on ‘important' things"
  • "Money is a way to show and demonstrate love and support"
  • "You earn money to take care of your family"
  • "Money is power"
  • "It's important not to spend money on frivolous things"

"Our emotional associations are often unexplored and can be very rigid or specific to certain contexts," says Coochise. If we change contexts and don't update the associations, our emotional reactions will remain tied to the "outdated stories" we hold.

"When our actions create a discrepancy with our stories, it can trigger the emotion of guilt, which many people interpret as an indicator of wrongdoing. This can prompt them to simply ‘not do it‘ in the future to avoid experiencing this uncomfortable feeling" she adds.

Common examples of questions discussed by affluent couples

Travel and transportation

  • Can we afford $17,000 to take a once-in-a-lifetime trip?
  • Can we afford to fly first class to Europe?
  • Can we afford to take all of the extended family on a cruise?
  • What if we spent $50,000 on travel the first 10 years of retirement and then slightly decreased it?
  • Can we spend $50,000 on a new car every 6 to 8 years?
  • Can we afford to give our car to our favorite granddaughter and buy a nice one?

Real estate
  • Can we afford to buy the lot of land that's next to our beach house? (in hopes of keeping the family bonds alive…)
  • Can we come up with the money to design and build our dream house, even though we are now both retired?
  • Can we meet the expense of a vacation home? If so, how should we structure the financing?
  • How much house can we afford if we want to upgrade?
  • What if we want to put $50K/$100K/$500K into our current home?

Family and charitable giving
  • Should we have a "family conversation" to focus on increasing our family giving?
  • For our RMDs next year, can we afford to do qualified charitable distributions (QCD)?
  • Can we afford to give our kids/grandkids the max annual gifts? ($15,000 to each from each spouse/partner)
  • Can we help our kids or grandkids with a down payment on their house? Wedding expenses? Grad school?
  • How should we set aside money for our grandkids' education?

Tip: Read Viewpoints on How to give financial gifts to loved ones

Why some affluent investors feel "obligated" to provide a better life for their heirs

In the US, we have cultural messaging that each generation is "supposed to do better than their parents." If you are a parent of means, and you align with this cultural value, you will feel it is your "duty" as a "good parent" to set your children up for that better life. This "obligation" is associated with "being a good parent" or "being a caring, supportive parent." These money beliefs and messages are, at their core, emotional, especially if you have adult children who are not supporting themselves financially.

According to Reed, the systematic drop in spending when people retire is what economists call the "retirement consumption puzzle". This is partly out of necessity because people's incomes generally drop by 1/3 at retirement, and partly because people spend less on work-related expenses and save money by cooking lunch at home instead of eating out, for instance.

"But for the wealthiest Americans, those in the top 25%, we see an increase in spending in retirement," says Reed. "This is especially true for those with short time horizons (focused on the here-and-now more than the distant future) and who see retirement as a new start and spend freely on experiential purchases like bucket list travel or hobbies."

Getting professional help to make tough family and money decisions

Sometimes, people seek help to bring clarity to complex decisions, especially when it comes to money and family.

"Working with clients, I've observed savings and spending habits over the years—where they splurge, where they scrimp, where they've made mistakes," says Myers. "I enjoy helping people figure out tough money decisions like what their 'sleep at night' number is—the amount that they decide to keep in cash as an emergency fund, coupled with how much risk they feel comfortable taking on at a particular life stage."

"Of course, when you add in factors like family and emotions, money choices can be perplexing at times, but through honest dialogue and robust financial modeling, we can help people make decisions that are right for their families as well as for their portfolios," adds Myers.

Smart spending strategies

"Sometimes, people feel more open to spending down assets when they believe they are employing tax savvy strategies for RMDs, charitable giving, and distributing other assets," says Myers.

"For example, I often help clients with partial Roth conversions. Working with their tax advisor, they can see how much of a conversion will ‘fill the marginal tax bracket' and convert IRA assets into a tax-free growth bucket in a Roth IRA. This might reduce RMDs and can help build a bucket of assets, free of income tax, to pass to the next generation. It's a long-term look at tax-efficiency."

Another smart spending strategy may be to help people reframe their thinking about money in retirement. According to Reed, there's some indication from the world of behavioral economics that reframing retirement savings in terms of an income stream rather than a lump sum can help increase willingness to spend.

"It can be easier to justify spending a pre-allocated cash flow versus drawing down a nest egg," says Reed. By the same token, annuities (a guaranteed income source)* might increase willingness to spend by reducing concerns about exhausting one's assets in addition to actual longevity risk.


You may have become highly successful at saving and investing over the years because of your ability to delay gratification and hold out for larger future rewards. Congrats. However, "turning off" this aspect of your personality may not come easily. "The same traits that led you to become affluent may now be holding you back from enjoying the fruits of your patience," says Reed.

There are a variety of options for well-to-do retirees to consider as they plan out their legacy—whether it's a family business, family values, donor advised fund, or assets that will be passed onto future generations via trusts. Take time to have a quality family money meeting with an eye to bringing clarity to how you plan to use your wealth to support the dreams and values of your family and loved ones.

Tip: Read Viewpoints on Mapping your money to your family and wishes

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1. Results from GreenLine Forum survey of 1142 Fidelity clients conducted October 29-November 5, 2020. Clients were asked to report their current and childhood socioeconomic status as well as how often they feel a range of positive and negative emotions about their finances. 2. Corporate Finance Institute

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Fidelity does not provide legal or tax advice. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact investment results. Fidelity cannot guarantee that the information herein is accurate, complete, or timely. Fidelity makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Consult an attorney or tax professional regarding your specific situation.

Views expressed are as of the date indicated, based on the information available at that time, and may change based on market or other conditions. Unless otherwise noted, the opinions provided are those of the speaker or author and not necessarily those of Fidelity Investments or its affiliates. Fidelity does not assume any duty to update any of the information.

Services from the Fidelity Center for Family Engagement are currently available on a limited basis.

The Fidelity Center for Family Engagement is an affiliated business unit of FMR, LLC and operates externally from Fidelity Brokerage Services LLC.

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