Should We Spend More? – Millennial Revolution

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I had an interesting conversation with an ex-coworker the other day about lifestyle inflation.

Since most people increase their expenses when they get a promotion or raise, one of the strategies to get to FI faster is to stop inflating your lifestyle even when your salary goes up. This lets you save money passively towards early retirement.

But what if you’re already retired? What if you have enough to last the rest of your life? If your income/dividends/capital gains increase, but you never need to save another cent again?

Should you inflate your lifestyle?

Would you be stupid not to?

I had the same conversation with Pete (aka “Mr. Money Mustache”) at a Chautauqua a few years, back and they came to very different conclusions.

From my ex co-worker’s point of view, spending is relative. $100K/year might sound excessive if your portfolio is $1 Million, but what if your portfolio grew to $2.5 Million? Then it’s perfectly fine at a 4% safe withdraw rate. And later, what if your portfolio grew to $10 Million? Even $400,000/year spending would be reasonable.

Pete, on the other hand, felt that spending was absolute. Despite the incredible success of his blog, and its ability to make $400,000/year, Pete told me his family still lived on only $25,000/year. From his perspective, spending isn’t relative. It’s fixed. If that’s the amount that he needs to be happy, why spend more? In fact, he even did an experiment where he blew $1000 in a week, just for fun, and tracked his happiness level. The result? The Extra spending didn’t increase his happiness at all. $25,000 was his peak happiness level spending.

This made me think about our current spending situation. Now that our net worth has climbed to $1.8 million, we could be withdrawing $72,000/year using 4% rule and still have a 95% success rate. To get 100% success rate, we could withdraw $63,000/year (3.5%/year) and never run out of money.

And yet, last year our annual budget still came to just $34,000/year. This year, even with lockdowns in the rear-view mirror, we’re still projected to spend less than $40,000 for the 2 of us.

We are at least $23,000/year or $1917/month under budget. Why? Is this some sort of madness? Some type of sickness?

Some people might call it deprivation. Others, insanity.

I call it “winning”

Here are the reasons why I haven’t increased our spending and don’t feel the need to:

Optimizing is Fun for me

I know some people feel like optimizing their spending is a chore, but for me optimizing is like playing a chess game that I never lose. It lets me be creative, challenges my brain, and feels like winning every single time. In fact, I find it deeply satisfying to look at my spreadsheets and at marvel at the purchases that are optimized. I’ve never gotten that feeling from mindless spending (*cough Coach purses cough*). For me, optimizing is fun. Mindless consumerism is boring.


I hate cleaning and maintaining things with the force of a thousand waterfalls. Being a minimalist lets me value experiences and relationships over things. Especially since said things will inevitably end up in a landfill and destroy the environment. I prefer the European way of life: living in small spaces, spending time in cafes, exploring nature, and taking public transportation. This alleviates the stress of owning and maintaining expensive things, and gives me time for things I value, like experiences, friends, family, and passion projects.

To prove you can live happily on $40K travelling the world or living in an expensive city

When our story first came out on CBC, people said two people can’t possibly be happy living on $40K/year. Especially in an expensive city. But not only have we been happy living in Toronto for the past year on $40K, we were able to travel the world for 5 years on that amount.

Having grown up China where my whole family survived on 44 cents a day, the perspective I’ve gained from this is: wealth is relative. Someone in a neighbourhood where average salaries are $200K, will be unhappy making $100K, but someone in a $30K neighbourhood will be perfectly happy making $60K. A lot of expenses come from trying to impress other people.  Renting an apartment, cooking, occasionally eating out, going for walks, swimming, and taking public transportation aren’t expensive.

That’s why we continue to keep our original portfolio (A) separate from our post-FI-earnings (Portfolio B), to show you that, yes, we are still living off of 4% of the original portfolio. In fact, we should be increasing that amount to $45,000/year since the 4% rule accounts for inflation, but I just don’t feel the need. I’m perfectly happy living on $40,000/year. And even the occasional splurge doesn’t blow up that budget.

Since retiring, I no longer clip coupons or stress about saving $2 on shampoo. In fact, the other day, we splurged at our favourite French restaurant to celebrate our 10-year wedding anniversary.

The bill came to almost $500 after tax and tip, thanks to an oh-so-fancy meal including sturgeon black caviar. You read that right, people. Me and caviar, together at last.

Absolutely nothing about this spells “value”

Given that we’re $1900 under budget every month, we could eat that fancy pants meal once a week, every week for the rest of our lives and still barely touch our portfolio.

Will I do that though? Nope. I’m just as happy hunched over on a plastic stool in Chiang Mai, devouring a piping hot bowl of Khao Soi, as I am spooning black caviar onto delicately cut wholewheat blinis in an upscale French restaurant.

Ummmm. Tastes like home.

Does that make me weird? Probably. That’s just who I am, and I don’t give a shit what anyone thinks.

And as it turns out, I’m not alone. In fact, I’ve spoken to several Chautauquans who think the same way. In fact, one of them is even a doctor! It’s not surprising for an engineer to like optimizing but a doctor?

This unicorn has a portfolio of $2.8 million but lives on $60,000 with his wife and 3 kids and they travel around the US and Mexico in an RV. He also described the feeling of optimizing as “winning a game”. He wants his kids “to be able to enjoy life without comparing to others and feeling like they need a bunch of stuff to make them happy.” If we ever become parents, this is the kind of parent I aspire to be.

And it’s not just those in the FIRE space, Warren Buffet is like this too. The billionaire still lives in a house he bought for $285,000 and eats $3.89 Mcdonald’s bacon, egg, and cheese sandwich for breakfast. In fact, when markets are down, he downgrades to the $3.19 sausage, egg and cheese sandwich.

Buffet says he simply values experiences and relationship over expensive things, because “you can’t buy health and you can’t buy love.”

I agree.

Since I stopped working, I’ve been the healthiest in my life. I used to have to wear a wrist brace from carpal tunnel, take anti-anxiety and anti-depressants back when I was working. Since retiring, I’ve lost the wrist brace, stopped taking any pills. And because we bought back our time we can hike, swim, and eat healthy home-cooked organic food daily. In fact, after Wanderer’s checkup, his doctor diagnosed him as “obnoxiously healthy”.

And since I’ve had the time and headspace to work on my relationships, I’ve been able to forgive my mom, spend time with my dad, and make friends all over the world (aka my “Chautauquan family”). Buying my time back with FI so I can work on my health and relationships is the best money I’ve ever spent.

Instead of lifestyle inflation which doesn’t bring me extra happiness, I’d rather spend it on friends. This year, I’ve been spending portfolio B money inviting friends to dinners, spas, escape rooms, and commissioning art from them. This is money well spent and I couldn’t be happier. After all, what’s the point of money if you don’t spend it on friends?

What do you think? Should we increase our spending? If all your base expenses were covered, what would you spend extra money on?

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