We are terrible at spending money. We really are.
Even those of us who are hyper-accumulators—maybe especially those of us who are hyper-accumulators—struggle with this miserably. We accumulated wealth because we were incredibly frugal. We earned, we invested, and it served us perfectly. But eventually, we hit a net worth where our earnings compound, giving us the ability to spend a heck of a lot more than we do... and yet, we still struggle to pull the trigger.
The Time vs. Money Trap
It all relates back to our changing relationship between time and money. When we are young (say, 20 years old) money is infinitely more precious than time.
Would you give up a year or two of your life to make a million bucks at 20? Absolutely! Would you work 60, 70, even 80 hours a week? Yes, you would. You have decades ahead of you. You are energetic, probably not married, no kids, and no mortgage. It is completely necessary and required that you trade your time, an resource you have in abundance, for money, an asset you desperately lack.
But as we get older, and as we develop wealth and skills, the entire equation flips. Suddenly, time becomes infinitely more precious than money.
Enter The Warren Buffett Spending Test
If you doubt that time is your most precious asset, I want you to perform what I call the Warren Buffett Spending Test. Ask yourself this: How much money would Warren Buffett—a guy in his 90s with unimaginable, astronomical wealth—spend to be you right now?
If we are talking about me, a guy who is 53 years old, how much of his wealth would he give up to be 53 again?
The answer is obvious: most likely all of it. He would give away every single penny of his billions.
Are You Failing the Test?
As we get older, money becomes less important, and time becomes absolutely everything. Yet, some fail this test every single day in their own lives.
The One More Year Syndrome: If you have enough money to retire and you hate your job, but you stick around for just “one more year” because you want a slightly higher net worth, you are failing the Warren Buffett Spending Test.
The DIY Trap: If you have the wealth to hire someone to clean your house, mow your lawn, or do the chores you absolutely loathe doing, but you refuse to pay for the luxury out of sheer stubbornness, you are failing the test.
Most people reading this Substack or listening to the Earn & Invest podcast are hyper-accumulators. For us, this isn’t a savings problem. It is a spending problem.
How are you going to spend your money to maximize your most precious asset, your time, which is going to pass no matter what you do? Perform the test. Realize that Warren Buffett would trade everything to have your time, and maybe, just maybe, you should spend a few hundred bucks to have someone else clean your house.
What is one task you absolutely hate doing that you could afford to outsource this week? Are you trapped in the “one more year” syndrome?
Did you catch this week’s episode of Earn & Invest (Click to listen)?
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