A Shift in Money Mindset
A Case Study by Melissa Tosetti
Sometimes, retirement happens to you.
Last year, Ellen was released from her work at Macy’s – a job she thoroughly enjoyed and wasn’t mentally ready to retire from yet.
While she had money set aside for a comfortable retirement, she had to make sure her spending habits didn’t threaten that foundation. You see, Ellen loves to shop. She loves clothes. She loves to buy gifts for her friends. Going unchecked, those loves had the potential to threaten her financial foundation.
Concerned, her financial advisor introduced us to her and we got to work.
First, we needed to understand what it was about those shopping experiences she loved so much. This helped us figure out how she could still buy what she wanted to buy, but do it in a more purposeful manner. This process also allowed us to identify what wasn’t as important to her so we could focus on streamlining in those areas – freeing money for where she truly wanted to spend.
Next, we put together her Spending Plan, being sure to incorporate the shopping categories we identified in our first meeting that were so important to her.
At the start, like with many clients, she was worried about the idea of having to be “on a budget” in retirement. Soon, she began to see that what we were doing was helping her so she could, free of heart, spend money in the areas that she had defined to be most important to her.
We determined that in order to be successful, she would need to track her spending. However, instead of overwhelming her by having her track everything, we had her track only what she wanted to change. Keeping the process simple, she began to track those categories using a notebook, writing down her expenditures each day.
During a touch-base meeting two months after finalizing her Spending Plan, you could hear the excitement in her voice when we talked. She had a shift in mindset. She did not see tracking as punishment. Quite the contrary. She now sees it as the tool that allows her to purposefully spend on the things she truly wants. She also sees the added benefit that her new way of spending helps streamline what gets brought into her home.
There was one experience in particular she wanted to tell us about during our touch-base meeting. Clothes lover that she is, she saw a blouse in a shop that caught her eye. She decided to give it some thought before buying it, a new concept for her. That night she went into her closet to see if she really needed it and realized she already had almost the exact same blouse. No wonder it caught her eye! Previously, she would have just purchased the new blouse and may not have even realized she had a practical duplicate. With her new purposeful spending habits in place, she has a greater appreciation for what she decides to purchase, but also for what she already owns.
Melissa Tosetti is a cash flow planning expert, founder of The Savvy Life and author of the international bestseller Living The Savvy Life.
For the past eight years, she’s worked with over 625 individuals and families to create Spending Plans.
To learn about the Spending Plan process, visit The Savvy Life’s Home Page. If you’d like to learn about how The Savvy Life works with financial advisors and their clients visit: The Savvy Life Advisor’s Page.