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In the financial planning profession, considerable attention is devoted to helping clients grow their wealth. Far less attention is given to an equally important challenge: helping them spend that wealth in ways that improve their lives.
One of the themes we discuss frequently within The Behavioral Finance Network is that financial success is not just about accumulating assets. Eventually, the challenge shifts from building wealth to helping clients enjoy the wealth they have spent decades creating.
Clients spend many years doing exactly what they are supposed to do. They save consistently, avoid unnecessary spending, and delay gratification. They make sacrifices today so they can enjoy greater financial security tomorrow.
The problem is that these habits often become part of their identity.
After 20 or 30 years of reinforcing the same message—save more, spend less, be responsible—it can become surprisingly difficult to reverse course. Even when clients retire and their financial plan shows they have more then enough, they have a hard time enjoying their savings. In many cases, this reluctance persists despite their advisor encouraging them to spend their money.
I was reminded of this recently during a conversation with a client.
He had just received an unexpected inheritance. It wasn’t life-changing money, but it was a meaningful amount. More importantly, it would not materially alter his financial situation because his retirement was already secure.
His immediate reaction was to invest all of it. But I realized that doing so wouldn’t meaningfully change his future. Using this “free money” in other ways, however, could add significant value to his life
I was about to leverage a common behavioral bias for his good. A bias known as mental accounting.
What Is Mental Accounting?
Mental accounting is our tendency to categorize money into different mental buckets and make decisions based on those categories rather than the actual value of the money itself.
From a purely financial perspective, a dollar is a dollar.
But psychologically, that is not how most people experience money.
Money earned through years of work often feels different than money received through a windfall such as an inheritance, year-end bonus, lottery winnings or even tax refund.
Even though the dollars are identical, the stories attached to them are not.
Those stories influence spending decisions in powerful ways.
A person may never consider spending $10,000 from a retirement account on a luxury vacation. That would seem irresponsible. Yet if the same $10,000 is perceived as “free money,” they may have little hesitation spending it on that exact same vacation.
The difference is not financial, it is psychological.
Why Many Retirees Struggle to Enjoy Their Wealth
For many successful retirees, the challenge in retirement is not accumulating more assets. It is learning how to spend it.
They have spent decades telling themselves that responsible people save money, they avoid unnecessary spending, and prepare wisely for their future.
Over time, those beliefs and habits become deeply ingrained.
The result is that many clients reach retirement with more than enough assets but continue operating under the same mental framework that helped them accumulate wealth in the first place.
That thinking helped them during their accumulation years. Now it can become an obstacle to really enjoying life.
For my client that recently received an unexpected inheritance, the key wasn’t convincing him to spend money. It was helping him see the money differently.
Turning a Behavioral Bias Into a Client Win
When the inheritance arrived, my client did what many disciplined savers do. He viewed the money as something that should be preserved.
After all, that mindset had served him well throughout his life. Save first and spend later is the responsible course of action.
The challenge was that “later” had just arrived.
His retirement plan was strong. His future spending needs were covered. The inheritance represented additional wealth that would not change his financial security.
Yet emotionally, it was still difficult for him to spend.
As we talked, I reminded him of the trips he and his wife had discussed over the years—places they wanted to visit and experiences they hoped to have someday.
The problem with “someday” is that it always seems to stay in the future. At some point, however, someday needs to become today.
That’s when I reframed the conversation.
I suggested that he view the inheritance differently than the money he had spent decades accumulating.
I focused on the fact that this was unexpected money. It was a financial gift that had arrived outside of the normal savings process. Something that could reasonably be used to create experiences rather than simply increasing an already sufficient account balance.
Importantly, I did not suggest spending all of it. Part of the inheritance could be invested, but part could be used to enhance his life today.
That balance mattered.
I wasn’t asking him to abandon the values that had helped him build wealth. I was simply helping him recognize that those values no longer required him to save every dollar that came his way.
After having a discussion with his wife, he booked the trips.
Someday had become today.
Helping Clients See Money Differently
One of the biggest lessons behavioral finance teaches us is that decisions are often driven more by perception than by reality.
Advisors often respond to spending resistance by providing additional analysis: more projections and numbers—more evidence to support their advice.
But often the issue isn’t a lack of information. It’s a mindset.
Sometimes they need help viewing the money differently.
Windfalls, inheritances, bonuses, tax refunds, and proceeds from the sale of a business or property often create opportunities for these conversations because clients already perceive those dollars differently than regular savings.
The advisor’s role is not to manipulate that perception, but to guide them to choose wisely.
We want clients to use their wealth in ways that are aligned with their values, goals, and financial reality. After all, the value of financial planning is not simply helping clients accumulate assets. It is helping them use those assets to create a meaningful life.
The Real Value of the Conversation
What struck me most about this experience was not the behavioral finance lesson.
It was what happened afterward.
The conversation strengthened our relationship.
Perhaps he assumed I would recommend investing the entire inheritance, allowing me to manage more assets and earn additional fees. Instead, I encouraged him to use part of that money to pursue experiences he and his wife had been talking about for years.
He knew I was thinking about more than his portfolio. I was thinking about his life and the things that mattered most to him.
Advisors spend years helping clients achieve financial independence. But eventually, the nature of our value changes.
The focus is no longer solely on accumulation and growth. It becomes helping clients use their wealth in ways that are aligned with their values and bring greater meaning, fulfillment, and enjoyment to their lives.
After all, the financial advisor’s value is not simply to help clients build wealth. It’s to help them use that wealth to live a richer, more meaningful life.