I recently read an interesting article on globeinvestor.com that talks about how the value of a dollar changes depending on what life stage you are in. For example, as a child, you would have cherished one dollar as if it was an entire fortune, but at different times in your life, you will likely value it differently. The main point of the article is to set up a strategy so that you are making the best use of your money throughout your life.
For people who struggle all their lives to make ends meet, the value of the dollar will likely be fairly consistent through all life stages, however, for those who have enough money to cover all the bills without a lot of stress, it appears that the value of a dollar becomes less meaningful especially when one is older. According to the article, “… it often becomes clear that the precious dollar of today is better spent than saved for the future, when it will be of much less personal value”.
An important thing to note is that there is no blanket “right way” for folks in different life stages to spend their money. There are always going to be various factors to take into account and each person will have individual needs and situations that will impact important financial decisions.
The best thing to do is to be honest with yourself about how important money is to you now and how important you think it might be to you in the future. If you have always been comfortable financially and you don’t expect your income to decrease very much even after retirement, then you may want to consider spending more of your money now, when you are likely to value it more. To learn more about the “lifetime value of a dollar theory”, check out Grownup or child: Who values a dollar more?
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