Can you be too cautious about spending money?

Dear Liz: I think I have a phobia about spending money. I’m a young professional who has devoted a lot of time to building up my savings account. I also contribute sizable amounts to my 401(k) and IRA each month. I pay off my credit cards each month, and I am making larger-than-necessary payments on my small student loans. Still, I feel as if every time I spend money on something — clothing, travel, furniture, etc. — I am undoing my hard work. It makes me scrutinize every decision until I either give up or make an impulse purchase. Is this normal? How do I know when it is OK to actually spend the money I have worked to save?

Answer: Being cautious about spending money is fine. If making purchases causes you great anxiety, though, or you’re unnecessarily compromising your quality of life, then you may want to seek help.

People with irrational fears of spending money may put off necessary doctor visits, buy unhealthy food because it’s cheap (at least in the short run), refuse to make charitable contributions or forgo pleasurable experiences. Instead of using money as a tool to live a good life, they make saving an end in itself.

Since you’re by nature a saver and a planner, you should use those strengths to free yourself from unnecessary concerns about spending money. If you enjoy travel, for example, plan a few trips and set aside money in advance to pay for them. Do the same thing with clothing or furniture upgrades. Planning and knowing how much you have to spend can help you dispel some of your anxiety and minimize the chances of regret.

Talking to a therapist or a financial planner could give you some additional strategies for dealing with your worries.


  1. Jerome Barry says

    Liz, talking to a therapist or a financial planner costs money!

    I write in praise of frugality. A young professional who saves and properly invests money can achieve independent living, aka retirement, in the 30’s.

    • I’d say the minute you put off any needed medical attention, whether for a physical or emotional/mental problem, your obsession with saving has gone too far.

  2. John Piwaron says

    Maybe speaking to someone about this won’t cost anything. Perhaps the letter writer’s employer offers a psychological counseling benefit.

    If the financial goals are being met there would be no problem with a splurge now and then. Don’t become a slave to the money. The money is only a tool.

  3. I have the same problem. I’ve found that writing on apiece of paper where I should be realistically compared to others my age and then writing my balances next to it helps keep things in perspective. I also try to remember that 20k for my emergency fund should be more than enough to cover a hole in my roof, a new to me car, or a lay off for 6 months. Every other expense is probably a long term goal 5-10+ yrs off. So, yes I need to save for them realistically (10-15%) a year but not at the expense of all fun & adventures. Just like food money is everything in moderation.

  4. What helped me to overcome the same problem was to compare my monthly spending to the 50/30/20 budget recommended in All Your Worth: 50% of after-tax income for fixed monthly expenses (housing, transportation, insurance, basic groceries, minimum debt payments, etc.), 30% for day-to-day fun spending, and 20% for savings and extra debt payments. Maybe you’ll find (as I did) that you want to aim for a different balance than 50/30/20, because your savings goals are bigger than that. But the 50/30/20 breakdown was designed to be sustainable – neither stealing from tomorrow to pay for today nor stealing from today to save for tomorrow – and it’s important to choose your own balance with that in mind.

    It may also help to ask yourself what you’re saving the money for. Sure, your retirement accounts are for retirement – but when do you want to retire, and what kind of life do you want to live in retirement? What’s the money in your savings account for? What do you hope to do with the extra money you’ll have each month once your student loans are paid off? It’s OK if you can’t answer those questions exactly – it can be maddeningly difficult to try to predict what you want your life to be like in retirement 30 or more years from now. But until you have some idea of what you’re aiming for, it’s impossible to know whether you’re hitting your targets.

  5. So, Liz, you’re saying that the letter writer needs therapy…and that if he disagrees with you, he’s “putting off needed medical attention,” which is further proof that he needs therapy? That’s begging the question.

    • I’m not a doctor or a psychiatrist, so I couldn’t make a diagnosis. The letter writer said he thought he had a phobia. If someone thinks he has a problem and puts off seeking a diagnosis or treatment solely because he can’t force himself to spend the money…then yeah, I’d say that was pretty compelling evidence.