What is the right level of spending when you’ve met your goals and still have some leftover?

Putting away $36K into DC1’s 529 account (and lowering our emergency fund to less than half of what we need in there before I stop getting paid for the summer) has had the intended effect of making me feel artificially less wealthy.  I’m no longer mentally thinking about things to buy (ex. expensive electronics) other than things we’d be buying anyway on a smaller income (ex.  summer camps that aren’t Interlochen or Concordia).  I’m still doing just-got-paid and making-me-feel-better charitable contributions, but they’re (combined) more in the hundreds/month than the low thousands unlike my first paycheck of the year donating.

I don’t think this money move has got us donating less, but I do suspect it’s got me spending less because I’m back to the default of “if we don’t need it, don’t buy it” rather than an underlying “looking for places to send money to”.  When I see an amount in my savings account that I can’t really comprehend and I don’t know where to put it… it makes sense that when all else fails I might want to spend it.  To be honest– I feel a lot less guilty when I see a reasonable amount in savings that I can understand.  Or when I do have excess money in cash, it is earmarked for something like an upcoming sabbatical.

Sidenote:  If you’re in the 24% tax bracket and ever want to feel artificially low income, just read the case studies in Bogleheads.  So many people with inherited wealth spitting out enormous dividends or salaries above $500K/year.  Even though that’s such a tiny proportion of the population.  If you’re in the 24% tax bracket, you’re still pretty high income.

But what is the right thing to do?  For other people, I war between “If you are meeting your financial needs/goals, do what you will with the excess” and “Nobody needs that much excess.”  I’m fine with Ariana Grande’s panegyric on spending, but not ok with people buying politicians.  And I feel sick (and like getting out pitchforks) when I see the price tags of some of the things that rich people buy and don’t even use.  There’s also the environmental waste of disposable purchases.  And yet, it isn’t my money, so “an it hurts no one, do what you will.”  And yet, I am so strongly in favor of inheritance taxes and higher marginal tax rates.

And maybe what other people should do isn’t as important as what keeps me feeling safe and not squicky.  We probably should replace broken appliances before they start giving me rashes, but there’s something to be said for repairing instead of replacing.  I don’t want stuff we don’t need.  But I don’t regret the iPad Pro purchase which has been great for editing and reviewing other people’s papers, or even the Remarkable purchase though I’ve ended up not really using it.  And I love our Honda Insight with the second level trim.  When I want it, should I got it?  Or should I exercise some self-control and put off the purchase until it’s something we really want?

The best way to curb these spending impulses is to just not have money burning a hole in my bank account.  But should we do that and continue to stockpile money for a rainy day even though we don’t think we want to retire early (still, it would be nice to retire anywhere in the country we want to, not just our current LCOL location).  There’s also the very real fact that the owner of the company where DH works is going to die one of these years (he’s in his 80s) and while we almost spend less than my take-home pay, it would be nice to not have to make any sacrifices while DH decides what to do next.  But this has become much less of a concern since my last raise– we no longer need to have, for example, a full salary’s worth of dividends spitting out each year to cover the gap.  I’m high income on my own even if we’re in a lower tax bracket without DH’s income– we move back to upper-middle-class, which isn’t really a hardship if we don’t get used to higher levels of spending.

When we’re not artificially cash-poor, these are questions we have:

  • Will we keep our ancient fridge until it completely dies?
  • When should we replace our functional computers with faster versions?
  • Should we send our kids to expensive national camps that require plane trips when there’s less-acclaimed versions we can drive to (probably not)?  What if there aren’t substitutes we can drive to (maybe?)?
  • Should we try to pay someone to take care of anything?  But what?
  • Should we eat out more?  Try a meal service?  Eat at the fancy restaurants in town when they’re not paid by my department?  Even though they’re not as good as the fancy restaurants in the city but cost about the same?
  • Should we take more real vacations that aren’t connected to conferences?  But what about the time costs?

And the big one:  Should I hide money from myself?  Or should I be fine with the additional spending that comes with having cash on hand?

If you don’t need to exercise self-control, should you?  When your needs and strongest wants are being met, how do you decide what to spend on?  How do you decide how much to spend on your wants?  How do you prioritize your wants?  What happens to your spending when you get a big income shock?  Do you hide money from yourself?