The Frum Community Has a Spending Problem (And It’s Not What You Think)

The frum community talks a lot about money. We bemoan our high expenses, like kosher food, yeshiva tuition, and mortgage payments. We call out the luxuries-turned-social-norms that drive far too many to spend beyond their means. We also allot plenty of airtime to saving and investing for our financial future. What’s often lost in the conversation is the importance of discretionary spending. This is money spent on "wants" rather than "needs,” non-essential goods and services, like dining out, entertainment, vacations, and other experiences that are not necessary but may enhance your life.

Not every family is fortunate to have extra dollars to spend on non-essential items. Many individuals in our community are just getting by. There are other families, though, who I frequently come across, who do have more than enough. The problem is they hear all the warnings and are afraid to spend. They hoard their extra money, saving as much as they can to pass along to their kids or to feel more financially secure by having way more in the bank than they actually need.

I try to remind my clients: Money is a tool and not a scorecard. You don’t win an award for being the richest person in the graveyard. Plus, leaving too much money to your kids will likely cause them more harm than good. Despite these realities, it's still a psychological hurdle for many folks to be able to spend their hard-earned money to enhance their lives.

Below are a few suggestions that may help if you struggle to spend your discretionary money in a guilt-free way:

Spend with the end in mind. A good first step to help folks overcome their reluctance to spend is to assure them that they are on track to achieve their financial goals. Meeting with your financial advisor to clearly define your lifestyle goals and running the numbers to determine if you are on track to meet them can help ease stress around splurging on fun items or experiences from time to time. Once a family understands that they can send their kids to yeshiva, afford kosher food, pay for various simchas, and save for retirement, they may be more inclined to spend their discretionary funds more freely.

For retirees, provide a monthly portfolio “paycheck.” A key component of ensuring that a retiree won’t run out of money, and can also leave a legacy if desired, is to establish a safe withdrawal rate. That is the amount of money a person can spend annually without risking running out of funds in retirement.

A common rule of thumb suggests that withdrawing 4% of a portfolio’s balance annually will prevent families from depleting their assets. Although this is a reasonable starting point, an individual’s true safe withdrawal rate will depend on a variety of factors, including age, health, level of assets, and expected investment returns.

Once a realistic percentage is determined, an individual’s account can be set up to automatically withdraw that amount monthly, essentially providing a “paycheck.” The consistency and certainty of receiving a regular income, similar to when he or she was working, brings peace of mind and helps mitigate the spending anxiety. If the safe withdrawal rate is calculated prudently, the probability of outliving one’s funds should be very low, and the family can spend some of that monthly “paycheck” on more enjoyable activities, beyond just expenses.

Setting dates on bucket-list items: A bucket list is an itemized agenda of experiences or achievements that a person would like to accomplish during his or her life. A wish list of items with no set dates for achieving them, however, likely will remain just a wish.

I encourage my clients to include dates by which they would like to accomplish their goals. This helps motivate families to reach these specific milestones. Furthermore, if the clients are amenable, jotting down a more specific action plan for how and when they will accomplish each item on their list may offer further encouragement. For example, if clients dream of driving an RV across the U.S., they should indicate when they plan to purchase the RV and put together an itinerary with the dates they will stay in each location. This will help ensure the clients are prepared to achieve these objectives. Goals with no timeline are easier to put off and can lead to the hoarding of more assets instead of enjoying them.

Remember, no one knows what the future holds: Everybody reading this article knows that life throws the occasional curve ball. This may include an unexpected illness, premature death, familial turbulence, or financial disruptions. Not every unexpected life twist is negative. Even positive developments, like a big job promotion, can usher in a new phase of additional responsibility or a more chaotic life. The point is that nobody has any guarantee of how their life will play out. This is why I encourage people to do things, and spend money, while they can. If you want to go on that exotic trip and can afford it, then you should go! If you want to dedicate a new Torah to your shul, then do it! If you want to take your entire family away to a Pesach program this year, then go for it!

I embraced the “do things while you can” lesson years ago. A year after I got married, I dreamed up a grand trip with stops in Paris, Beijing, and Thailand. At the time, we had no children, ample vacation days, and not many financial obligations other than renting a small apartment in the Bronx and saving for retirement. When some friends heard about this trip, they wondered why I was planning such an exotic getaway at that stage of life. They said this was really a trip to save for retirement. My wife and I ended up going on the trip and it was truly a once in a lifetime experience. It was unique not only because of what we saw and what we did, but it was at a point in life that gave us the flexibility (financially and otherwise) to embrace the adventure.

The thought of doing a trip like that today is laughable. Between work and family obligations, a trip like that could never happen. I could have taken my friends’ advice and waited to go on this trip during retirement, but I don’t know what host of other obligations or challenges I may face that could prevent such an opportunity. Seize the opportunity to spend money to do things while you can. No one knows what the future holds.

Final thought: A prevailing mindset among many investors is that they should continue indefinitely down the same financial path that allows them to build their wealth. This includes saving and Not every family is fortunate to have extra dollars to spend on non-essential items. Many individuals in our community are just getting by.investing every extra penny that isn’t needed for expenses. I’d challenge this approach. Making the most of one’s money requires balancing spending on your current needs, saving for your future, and using any excess funds to elevate the quality of your life through creating meaningful experiences for you and your family.

My beracha to all Jewish Press readers is that they should be zoche to have some extra funds every year after expenses, and wisely use them to spark joy in their lives and the lives of their loved ones.