Moving to a spending mindset

sevenhills

bostonerimus said:

Why should you change a lifetime of spending habits just because you are retired? Being frugal got you to where you are now and I see no reason to spend just for the sake of it if you are happy with taking along some Jaffa Cakes rather than buying the expensive cafe cake.

Do you mean the McVitie's Jaffa Cakes at 50p a box, or the 27p Asda Jaffa cakes They are biscuits though, they are not a replacement for cake!

Farside71

Albermarle said:

Username03725 said:

Just to comment on the Bottle Of Wine issue…

I have no problem with paying £20+ for a bottle that you know full well is £7 in Morrison’s, whether that’s in a pub or a nice restaurant. You’re buying the experience and the ambience of being out, and for that you need to contribute to the establishment's costs - wine is a significant factor in their profit margin. If you want to share a bottle of red in front of Strictly on the telly of a Saturday evening that’s just fine, we all do it. But if you fancy being out in a nice eatery with nice lighting, nice service and a sense of being out, you should be happy to pay. £15 isn’t a lot to pay for them providing that experience really.

As I started the 'Bottle of Wine issue' I will comment.

In reality I would spend up to £25 ( maximum ) on a bottle of wine if I was on holiday ( preferably < £20 though  but I probably would not for a routine meal out locally and would stick to the beer.

I spent a lifetime eating out for work  in hotels, business entertainment etc and even then did not like paying high prices , even when I was not paying !. So it is nothing to do with affordability , or restricting spending, it is just a perception of what is value for money I suppose . 

 

It is a great example because it shows how the value of something changes depending on the scenario.

Like you I would not feel comfortable paying £25 in a hotel because the pricing is often geared to gouge company expenses and drinking in an often soulless hotel restaurant is not as nice as drinking a £25 bottle in a dedicated restaurant that is reliant upon good food and drink, not a captive market of bored business people.   Plus selling the occasional expensive bottle may be what keeps that restaurant profitable and the staff in a job.  I hate dropping money to soulless corporations but don't mind paying people for a job well done.

SMcGill

You spend many years saving up for an early retirement vision of halcyon days, then probably a few years of shall I / shan’t I because either you believe more money = more halcyon or you simply enjoy your work. 

Then adjusting to retirement comes along and it’s not just about frugal or frivolous spending, there’s a whole new way of life to figure out! I wonder how many people have just gently slid from working like into retirement life? 

MallyGirl

cfw1994 said:

bluenose1 said:

Crikey, am I the only one who doesn’t have any problem spending!!!!! 

Phew: I thought it was only me who has no end of possibilities to fritter money away 🤪
To those struggling….go to a festival! 

Just finished today at the Isle of Wight one, still buzzing (2am now 😜).  We stayed with a relative and walked in each day, but the food & drink* alone can eat up a decent wedge, & if that doesn’t do it, try glamping it up in a yurt or similar, easily £2k gone there 😎👍

Kit out your home with a cinema room, or a Sonos speaker system…..buy that Cube eBike you know you need….get an electric car & save the planet**…..have a weekend in London, see a show, a museum and dine at a fancy restaurant!

Also agree with it being reasonable to spend £20-30 on wine at restaurants: we very rarely would do that , but remember the service they are giving you, and indeed that the  wine might still be £10-15 to them.

More ideas available on request! 

* we did get a Barclaycard specifically for festivals - at Latitude and the IOW one, they offer 10% off drinks.  Well, I’m not completely frivolous!
** no planets were saved, but they are nice, rapid & silent…as well as make you feel like you are driving The Future™

Me too. I know spending won't be an issue - that is partly why we will work another 5 years rather than stopping sooner.
We did our first festival in the camper this summer and will definitely be doing that again. We have several gigs booked with the associated travel up to London. The 10% of drinks with a BCD does help when it is an O2 venue but it is a drop in the ocean of the overall evening We are off to RHS Chelsea tomorrow - rolled over twice from last year.
Next year will be new greenhouse year - they stopped making the one I want this year when they reduced the product variations into manufacturing. There will definitely be associated groundworks that we will not do ourselves.
Eventually we will be able to travel again and either Vancouver Island or New Zealand are in the top slots for a return visit.
An electric vehicle that meets our needs is a fair way off I think. 

enthusiasticsaver

ouraggie said:

Hi. Am 58 and just retired (yay!) and am going to be using savings till I'm 60, then got a decent DB pension. Another DB pension plus SP at 67. Also got a DC pension not yet accessed.
I am interested to hear how other frugal types have managed to move themselves over to a "spending mindset". I was out with a friend yesterday, who is also newly retired. We mozied around a NT gift shop, where she bought a scarf she spotted (£23). I had bought a similar scarf last winter for £6.99.
In another gift shop I was tempted by the display of bottled beers and jams. However, I just couldn't bring myself to pay £3.45 for a bottle of craft nettle beer, or £4.80 for some greengage chutney, although I wanted them . 
We then went to a cafe. She ordered a slice of cake, which was £4.50. I did too, though I wouldn't usually. I found it really difficult to spend that much on one slice of cake (usually I would just take a cereal bar, a few jaffa cakes or a banana with me if I go out for the day. I'd probably go in for the cuppa but I would rarely eat anything in a cafe. I guess this is down to my formative years, when we always took sandwiches etc out with us on a day out).
 My friend is not well off,in fact she has less than I do, though we both have nobody waiting for an inheritance. She said to me she plans to spend her disposable income on nice things now she's retired .Would be interested to hear if other people have had the same problem as me and how they have solved it. 

I am  not sure I would ever describe myself as frugal as even prior to retirement we were careful but still spent on things we enjoyed like nice meals out and holidays in luxury hotels.  We always preferred to do that every other year rather than go for the cheapest but we did look for ways of cutting the price wherever we could. On retirement initially I found it difficult to spend (not to the extent I would not buy a piece of cake) but large items involved a lot of debate, calculation and research.  We still do that to a certain extent but over time since retiring at 58 2 years later we now have the confidence we can comfortably live within our pensions and with the knowledge our state pensions pay out in 3 and 4 years time we are  now drawing on some of our investments.  Our IFA did a cashflow forecast showing we could withdraw 4 times the amount we were considering each year without jeopardising our lifestyle so that gave us a bit more confidence.  

I would  say that spending just for the sake of it is not worth it but do consider if the item you are considering buying will add to your life and whether you already have something that will do just as well.  From an environment point of view I do not like clutter or filling up landfill and have a rule of one thing in and one thing out so that often stops me buying things like scarves etc as I know I already have half a dozen.  I would not think twice about spending on a nice meal though as that usually comes with the experience of a day out somewhere.  I would be disappointed if I just took a banana  or cereal bar from home as eating in a cafe is part of the experience. 

As you are newly retired I would not worry too much about spending patterns but see after a year whether you are living within your set budget.  I assume you have a number in mind as most of us know roughly as that was a key aspect for us in deciding when to retire which was when we had enough to cover our predicted annual spends. 

jimi_man

I think there is a big difference between retiring and living off your savings and retiring with a DB pension or an annuity (if anyone still has those). With the former it's hard because few people want to spend their savings (that's why they are called savings!), whereas a DB type pension is just a continuation of a salary. 

Like many others on here I rarely buy stuff. I found that as one gets older, one wants less and less 'material' things. I virtually never buy clothes, gadgets or 'stuff' as I just don't want any more in the house. However when I do buy things, then I want value for money and try get the best that I can afford. Bitter experience has shown that buying cheap inevitably ends in disappointment. 

We like foreign travel, and that's where we spend. Looking for a break in Nov/Dec - maybe the Caribbean or the US as it's just opened up. I've booked some tickets to Thailand in March as well though it's still Red at present - hoping things will improve there. I just don't consider UK holidays as a 'real' holiday (especially with the weather we've had this year!) though I'm aware that lots of people do and that's fine. Everyone is different.

I don't have a problem paying £25 for a bottle of wine in a restaurant. Most people are aware that the cheapest wines (house for example or popular wine like Merlot or Pinot Grigio) have the highest markup, so far better value is obtained from going up a price point and that's often to around the £25 mark. It's similar to the supermarket conundrum. You don't buy £5 bottles of wine in the supermarket - unless your dog likes wine - because most of your £5 is taken up in tax, packaging and distribution costs. That works to a lesser extent in restaurants.

If people would rather have a beer instead of wine then that should be because they want to drink beer with their food rather than wine - not because of the markup (which is also pretty high for beer as it is for wine or indeed any alcohol they serve. Things like bottled water and soft drinks have even higher markups!). The business model for restaurants is to have little profit margin on food but a big markup on alcohol, since people tend to look at the price of entrees on a menu and compare prices mentally to see if they want to eat there, whereas no-one ever looks at the wine list pricing.

Flugelhorn

jimi_man said:

I think there is a big difference between retiring and living off your savings and retiring with a DB pension or an annuity (if anyone still has those). With the former it's hard because few people want to spend their savings (that's why they are called savings!), whereas a DB type pension is just a continuation of a salary. 

I think this is a very valid point - DBs are rather like continued salary, there is no pot anywhere diminishing, I like savings going yup not down!!

 we have DB pensions and DH deferred his for 15 years so not have earned anything for quite some time, his seems like a bit of a bonus. I am also realising just how much going to work actually cost professional subs, indemnity, 4x4 (guzzled gas), work clothes (not like my retirement get up of jeans and woolies) - all takes some getting used to. 

Albermarle

 I am also realising just how much going to work actually cost professional subs, indemnity, 4x4 (guzzled gas), work clothes (not like my retirement get up of jeans and woolies) - all takes some getting used to. 

I am the exact opposite as I had a company car, mobile, laptop- internet and mobile bills paid etc so my costs have gone significantly up . 

You don't buy £5 bottles of wine in the supermarket - unless your dog likes wine 

Yes I have recently moved up to paying £6 

Flugelhorn

Albermarle said:

 I am also realising just how much going to work actually cost professional subs, indemnity, 4x4 (guzzled gas), work clothes (not like my retirement get up of jeans and woolies) - all takes some getting used to. 

I am the exact opposite as I had a company car, mobile, laptop- internet and mobile bills paid etc so my costs have gone significantly up . 

You don't buy £5 bottles of wine in the supermarket - unless your dog likes wine 

Yes I have recently moved up to paying £6 

   I am going to have to do something about the wine, we only creep above £5 when they are on offer - 25% off for 6 bottles 

unclaimable subs / indemnity were about 5-6K so nice not to have that anymore - I miss the old 4x4 but really don't need it now 

nobody999

Really helpful thread, thanks

I am due to retire at 58 at the end of next year and while I have been very cautious in my planning and have a healthy DB pension as a belt and braces I think I will be nervous about dipping into the never to be replaced cash that it's taken me so long to accumulate.

In addition there are the variables of how long do I need the money to last before I die and what if the economy disolves along with my savings.

I will budget just as I have always done, my savings are at about 120% of what I estimate I need so I have some extra for increased travel and treats, but I now understand how my Dad and Father in Law who appeared so well off on paper were still very cautious in retirement.

The counter to that is my FiL who put off treating himself to a new car (nothing particularly flash, a 325 BMW) when he retired when he could easily have afforded it. He bought it 5 years after retiring and I drove it back from his holiday destination 3 weeks later when he had a heart attack, it had 500 miles on it and he wasn't able to drive it again before he died.

It's all a balance , one that's probably quite hard to know whether you've got it right, either too much or too little until it's to late.

So I'd say if you can afford it buy the new car now, you can always sell it if your calculations are a bit off!