Frugal Fatigue Is Real: How to Stop Saving Burnout and Start Spending on Purpose

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12:21Sean Pyles:It strikes me that there are two sides to this conversation to work through these issues. There's the sort of emotional, mental, psychological part of understanding why you have these narratives. But then there's also a really tactical aspect of just figuring out where your money is going and allocating it in a really intentional way. So, Kim, how do you think Michael can create a budget that balances saving and enjoying his life?

12:44Kim Palmer:Well, I think it really goes back to one of our all-time favorite tools at NerdWallet that we talk about a lot, the 50-30-20 budget, where basically you have 50 % of your take-home pay going to needs, 30 % to wants, and 20 % to savings and debt payments. And of course, those percentages are adjustable. And for some people, it makes sense to do more of a 60-20-20 split or a 60-30-10 split. You have to choose what works for you. But I just like the idea of having a ballpark for where your wants, needs and savings are going. And that way you do have a allotted amount that's for wants. And that is where the fun items come from.

13:23Kim Palmer:And so you don't have to feel guilty about it because it's built into your budget. And at the same time, I think it helps just to think through some of your priorities or goals. So maybe you want to pay off some high interest credit card debt or build up an emergency fund. And just listing that out gives you a framework for what you're focusing on. You feel like you have an action plan. And then I think it's a little easier to let go of the guilt because you are making progress and you can feel good about those decisions.

13:50Sean Pyles:Yeah, it sounds like Michael needs to try to lean into the fun part of their budget and maybe do some value-based spending to help minimize their shame. Like really intentionally go out of their way to say, hey, I'm spending this money on a fun thing for me, whether it's going out to eat or a new video game or a book or whatever is fun to Michael. We don't know what is fun to them. But Kim, I'd like to hear some ways to maybe alleviate the guilt of spending and still saving money. So what are your thoughts around striking that balance?

14:17Kim Palmer:I think it really goes back to having that ballpark budget, then digging into those wants. So you have your allotted amount for wants. And then if you want to do something fun, like go on a trip or plan a vacation, you can pull from that section of your budget that's for those optional items like wants. And because it's in that framework, I think it takes away from the guilt. You definitely want to make sure you have some fun built into your budget, because if If you are constantly saying no to yourself and not letting yourself have any splurges at all, then it's easy just to want to let go of your budget altogether.

14:51Kim Palmer:So even if you're building in some small things right now, like getting coffee with a friend or going to the movies, it doesn't have to be extravagant. But you want to make sure you have something in there that's making you feel good. So you want to stick with it.

15:03Elizabeth Ayoola:I love that you kind of listed out, Kim, the different types of 50-30-20 or 60-20-20 frameworks, because I know I used to feel a lot of shame around spending because I'm like, well, you can afford to save more. So even though you can save more than 30 percent, maybe 40 or 50. So it's important to remember that you can save more if that's going to make you more comfortable spending. Something else that comes to mind, it may be helpful if Michael keeps fun money in a separate account. Sean is going to love this suggestion. Yes.

15:32Sean Pyles:Are you talking about sinking funds, Elizabeth? Fine, I'm talking about sinking funds. Yes, I am. One of my favorite things.

15:38Elizabeth Ayoola:Yes. So I think this could be especially helpful for Michael because it can create like a sort of mental and visible separation between their fund money and then that responsible money. Kim, how can people decide the right amount of fund money that doesn't trigger guilt and helps them achieve financial goals? Maybe that 30 percent for wants may seem too robust for Michael. It can.

16:00Kim Palmer:I think this is where some advanced planning really comes into play. And I also love the idea of sinking funds. So say Michael has a fun expense that's coming up that they want to plan for. Like, let's just say it's a vacation, for an example. Then you want to start setting aside money the months ahead of that vacation. So you are slowly building up that account. You're keeping it separate from your other money. So you don't have to feel guilty because there it is, you've planned for it, you're allowed to spend it. And that way, by setting money aside each month in advance of the big expense, you know you're ready for it.

16:35Kim Palmer:And I think that can go a long way, that kind of advanced planning, sinking funds can go a long way towards just making sure you're actually enjoying that expenditure and not feeling guilty.

16:46Sean Pyles:Another thought that comes to mind is that around sinking funds, Michael could have one around their emergency fund if they don't have one set aside. I think having an emergency fund of three to six months of savings knowing that you have that money tucked away for whenever something does pop up can help you then enjoy what you are allocating for your fund money without being so concerned about having all of your bases covered too. So let's shift to another part of Michael's question around obsessing over savings. And this is something we hear from listeners pretty regularly. They're really hyper-focused on savings, sometimes in Michael's case as well, at the expense of enjoying their life and enjoying their money.

17:22Sean Pyles:So when it comes to obsessing over savings, Kim, where do you think this can come from in people?

17:29Kim Palmer:Well, first, I feel like I should say I'm not a financial therapist. I have interviewed many financial therapists. And the message that I've gotten is that that feeling of not having enough or being obsessed with savings, it often comes back to just having grown up with a sense of scarcity or not having enough. And so it could be something worth exploring with a friend, with a therapist, just to see where that's coming from.

17:51Sean Pyles:Just knowing your numbers can be really helpful here. So understand your budget, maybe with that 50-30-20 or 60-20-20 framework, whatever you want to play with, and just know, hey, I actually do have all of my needs met by the money that I have coming in. And if you find that that's not the case, then we can talk about that in more detail then. But if you actually have all your bases covered, that can give you a moment to have a sigh of relief and think, OK, how can I move forward beyond this because I'm understanding that my scarcity mindset isn't actually tied to the facts of my finances.

18:24Elizabeth Ayoola:That's right. And looking at the progress of your goals, when I would shame myself about not saving enough, too, I remember looking back five years where I had literally, yeah, six years ago, I had zero dollars in retirement savings. And when I look at how much I have now, I'm like, girl, you saved a lot of money. Like, good job to you. And that really did help alleviate some of that shame around spending. All right. What are some risks that come with being overly tight on spending? One that comes to mind for me is the equivalent of crash dieting and then binge eating. Ask me how I know.

18:52Kim Palmer:Exactly. We want to have a system that is sustainable, that we can continue over long periods. And if we are just constantly saying no to ourselves and denying ourselves, it's hard or impossible to really stick with that budget and make it last. So that's why we want to just try to take a more balanced and sustainable approach. We're building in some of that fun. And that way your budget plan can continue without getting interrupted, where you suddenly just want to, you know, drop it all aside and spend on something wild.

19:23Sean Pyles:Kim, I'd love to hear how you've navigated savings goals in the past. Have you ever struggled with feelings of guilt or maybe obsessive saving in the past?

19:31Kim Palmer:I sure have. And I think it goes back to what I mentioned before about just growing up with those constant messages of frugality. What resonates for me is something Elizabeth said about just making sure you have the fundamental structure that makes you feel secure in place. So if I know I have my emergency fund set, I'm saving for specific goals, then that helps me feel not so guilty if I do want to splurge on something or plan a vacation that isn't absolutely necessary. So for me, it's all about planning. I'm a huge planner and that takes away some of the guilt and just makes me feel positive about the money decisions that I'm making.

20:08Sean Pyles:It really echoes what we were talking about around knowing your budget, like you emphasized, too. And I think when you have these fundamentals and the numbers in front of you, it can help demystify some of these nebulous feelings of guilt because it can be really easy to spiral around your feelings of money shame and it can be detached from reality. And so just to bring yourself back down to earth, understand where your money is going can go a long way in terms of alleviating some of these negative thought patterns that people might have.

20:36Elizabeth Ayoola:As we're talking, I'm also remembering a conversation I had with a financial advisor maybe two years ago when I was having a cash flow issue, aka overspending. And I send my budget to him and he goes, you know, you have a really good savings rate. And my issue is I wasn't having a realistic savings rate. So I was trying to deprive myself so much by saving too much compared to the lifestyle I was trying to live. And I ended up overspending every month. So, you know, he said something to me which helped shift my mindset a bit, which is like, you're saving a lot. You're doing a good job. Maybe allocate more to yourself basically for your wants.

21:12Elizabeth Ayoola:And it was such a small thing, but it really, really helped to improve my cash flow because back to that deserving to spend money. You deserve to have a little bit more fun money and you can afford to. You're doing all the right things. You're saving for retirement. You have your emergency funds. So let yourself enjoy your money.

21:27Sean Pyles:Well, Michael, I hope this conversation has helped you understand how you can carve out some fun money in your budget without feeling guilty about it. This is going to be a gradual process, too. So I would recommend maybe trying setting aside$100 in one month and having that be just your fun money and seeing how that feels. And then if you're comfortable doing it, maybe expand it out a little more and just understand where your finances are going and how you can really enjoy your money because life is meant to be lived. Your money is meant to be spent and enjoyed. So take advantage of it.

21:55Elizabeth Ayoola:And please, if you're listening to this episode and you have some shifts, tell us what you end up spending on. Tell us where your fun money is going. And also, if you take any of the tips in this episode and apply them.

22:07Sean Pyles:OK, Kim, well, thank you so much for coming on and talking with us about this and getting honestly really vulnerable with us. It's been illuminating for me to hear your story. So I just I really appreciate that.

22:17Kim Palmer:Thank you. Thank you for having me.

22:19Sean Pyles:And that's all we have for this episode. So, Kim, can you please read us out?

22:22Kim Palmer:To have the nerds answer your money questions, call or text us your questions on the nerd hotline at 901-730-6373. That's 901-730-N-E-R-D. You can also email us at podcast at nerdwallet.com.

22:39Elizabeth Ayoola:Join us next time to hear about values-based investing for retirement funds. We want you to follow Smart Money on your favorite podcast app. That's Spotify, Apple Podcasts, iHeartRadio to automatically download new episodes.

22:51Sean Pyles:And here's our brief disclaimer. We are not your financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.

23:02Elizabeth Ayoola:This episode was produced by Tess Vigland, Hilary Georgie, help with editing, Nick Kersamee and Eve Krogman, Helmar Audio and Video Production. Huge thank you to NerdWallet's editors for their help.

23:14Sean Pyles:And with that said, until next time, turn to the nerds.

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