Many people develop frugal habits that help them build financial security as they journey through life. These habits serve them well, allowing them to save for retirement, weather unexpected storms, and achieve their long-term goals.
However, as we age and become more financially stable, we must balance saving for the future and enjoying the present. After all, the adage is true: “You can’t take it with you.”
This doesn’t mean abandoning all financial prudence but rather adopting a more balanced approach to spending and saving.
Let’s explore five less frugal money habits you might consider embracing as you age. These habits can help you optimize your hard-earned wealth while maintaining financial security.
1. Travel More While You Can
As we age, our ability to travel and explore the world may become limited by health issues or decreased mobility. That’s why it’s crucial to prioritize travel while you can still thoroughly enjoy it. Don’t postpone your travel dreams until it’s too late.
According to a recent AARP survey, about 60% of Americans aged 50 and older anticipated traveling in 2023. The primary motivation for travel among this demographic was to spend time with family and friends. This trend highlights the importance that older adults place on travel experiences.
While travel can be expensive, the benefits often outweigh the costs. Experiencing new cultures, cuisines, and landscapes can broaden your perspectives and create lasting memories. Moreover, travel has been linked to numerous health benefits, including reduced stress and improved cognitive function.
To make travel more accessible, consider off-season trips or explore options like home exchanges. These alternatives can help you stretch your travel budget further. Additionally, many travel companies offer senior discounts, so inquire about these when booking your trips.
Few people have ever regretted spending money on travel as the memories and experiences they’ve gained are priceless.
2. Splurge on Meaningful Experiences
While it’s tempting to accumulate material possessions, research consistently shows that experiences bring more lasting happiness than things. As you age, consider shifting your spending towards meaningful experiences that enrich your life and create cherished memories.
A study published in the Journal of Positive Psychology found a connection between experiential purchases, gratitude, and happiness. Specifically, research by Walker et al. (2016) showed that people tend to feel more gratitude for experiential purchases compared to material ones.
Meaningful experiences could include attending concerts of your favorite artists, enjoying spa days with friends, or dining at high-end restaurants you’ve always wanted to try.
These experiences don’t always have to be extravagant. Sometimes, the most meaningful moments come from simple pleasures like taking a cooking class, learning a new skill, or attending local cultural events. The key is to focus on experiences that align with your interests and values.
Dr. Thomas Gilovich, a psychology professor at Cornell University, explains, “We are the total of our experiences. We are not the total of our possessions.” By investing in experiences, you invest in yourself and your personal growth.
When considering these splurges, it’s essential to maintain a balance with your overall financial health. Set aside a specific “fun fund” in your budget for these experiences. This way, you can enjoy them guilt-free, knowing you’ve planned for them within your larger financial picture.
3. Give Back to Charity
As your wealth grows, you have a unique opportunity to impact the world positively through charitable giving. Philanthropy benefits the causes you care about and can also enhance your own well-being and life satisfaction.
A report by Merrill Lynch and Age Wave found that retirees who give back to their communities, either through monetary donations or volunteering, report a stronger sense of purpose and higher self-esteem than those who don’t.
For those over 70½, making qualified charitable distributions (QCDs) from your IRA can be a particularly tax-efficient way to support causes you care about. These distributions satisfy your required minimum distribution (RMD) without increasing your taxable income.
When choosing charities, consider organizations that align closely with your values and passions. Whether you support education, fight hunger, or protect the environment, your contributions can make a real difference. Websites like CharityNavigator.org can help you evaluate charities to ensure your donations are used effectively.
“The more you give, the more you receive” sentiment encapsulates the reciprocal nature of charitable giving, where giving often brings as much joy to the giver as it does to the recipient.
4. Consider Gifting an Early Inheritance
If you have financially responsible adult children or grandchildren, you might consider gifting money during your lifetime rather than leaving it all as an inheritance. This approach, sometimes called “giving while living,” allows you to witness the positive impact of your generosity firsthand.
As of 2024, you can gift up to $18,000 per person annually without incurring gift taxes. This can be a significant amount when compounded over several years. These gifts could help your loved ones with essential life expenses such as childcare costs, college savings, or a down payment on a house.
Early inheritance gifting can also have tax advantages. By reducing the size of your estate, you may be able to minimize estate taxes for your heirs. However, consulting with a financial advisor or tax professional is crucial to fully understanding the implications.
When considering this option, it’s essential to have open and honest conversations with family members about money. Set clear expectations and ensure that your own financial security isn’t compromised.
The key is to find a balance between helping family members now and maintaining your financial independence for the long run.
5. Contribute to Future Education Costs
Education is one of the most valuable gifts you can give to younger generations. By contributing to education costs for children or grandchildren, you’re investing in their future and creating a lasting legacy.
The cost of higher education continues to rise. The average in-state cost of tuition and fees to attend a ranked public college is nearly 75% less than the average sticker price at a private college, at $10,662 for the 2023-2024 year compared with $42,162, respectively, US News data shows. By helping to offset these costs, you can significantly reduce the financial burden on your family members.
One effective way to contribute is through 529 college savings plans. These plans offer tax advantages and can be used for various education expenses. According to EducationData.org, 30% of families use a college savings fund (such as a tax-deductible 529 plan) to save an average of $7,806 each.
When contributing to education funds, balancing this with your other financial priorities is essential. Consider setting up automatic monthly contributions that fit within your budget. Even small, regular contributions can add up significantly over time.
As education evolves, these funds may be used for traditional college expenses, vocational training, or lifelong learning opportunities. By contributing to education costs, you’re not just paying for tuition – you’re opening doors to opportunities and helping to shape the future of your family and community.
Conclusion
Adopting these less-frugal money habits as you age doesn’t mean abandoning financial responsibility. Instead, it’s about balancing saving for the future and enjoying the present.
By traveling more, investing in meaningful experiences, giving to charity, considering early inheritance gifting, and contributing to education costs, you can make the most of your hard-earned wealth while creating lasting positive impacts.
These habits allow you to enjoy the fruits of your labor, create cherished memories, and leave a meaningful legacy. As you consider implementing these practices, ensure they align with your overall financial plan and personal values.
Consult with financial advisors when necessary, and most importantly, savor the joy that comes from using your resources to bring fulfillment to yourself and others.
After all, true wealth isn’t just about the numbers in your bank account – it’s about the lives you touch, the experiences you gather, and the legacy you leave behind.
By adopting these habits, you’re not just spending money but investing in happiness, personal growth, and the well-being of future generations.