By: John Napolitano | Founder and Chairman
We have many clients who are starting to sell their businesses or retiring from companies and corporations. Many large changes occur, but the biggest are often in their routines.
If you own a business or have a particularly high-performance job, you work your butt off Monday through Friday. You’re also not a stranger to evenings or weekends on occasion. The bottom line is that we get very accustomed to spending large portions of our time making money.
And I relate to it. I’ve driven myself so hard that I didn’t have time Monday through Friday. Now that I’m starting to view life through the lens of some of our clients with more free time, I spend more when I’m not working and those days feel just like a Saturday. And when every day is Saturday, you spend even more.
That’s why this question is one of the most common we get from clients in this season of life: “What should my spending look like now that every day is Saturday?”
What “Every Day Is Saturday” Means For You
Even very wealthy families (or especially wealthy families) are often surprised by just how much their spending changes. It’s not that people can’t spend the money. It’s that they don’t understand the gradual ramifications. It’s about balancing your lifestyle with your new cash flow.
We hear all kinds of questions from clients. You want to buy a new boat? Wonderful. You want to spend it on a beach house? Fantastic. You want to spend money on a plane? Great.
Most people are looking for an accurate answer to the question, “How much is too much, and why?”
The critical component of these conversations is having a fully integrated financial plan. With a complete picture, you know the cause and effect of your spending. You know your bounds and can spend with confidence.
Here are a few examples of what I mean.
The Accumulation Factor
Spending tends to spike after an exit because you may be looking at the largest liquid net worth you’ve ever personally seen. This is particularly true for business owners who just sold their business.
It’s not uncommon for us to talk with clients who just saw several million show up in their accounts. Pair that with starting a new chapter in life, and it’s common to see clients suddenly become inoculated to sticker shock.
The most common time for clients to ask about substantially larger purchases is right before or after an exit.
The Longevity Factor
Another conversation we frequently have has to do with clients who are fortunate enough to be financially independent earlier in life. “Every day is Saturday” means something different to someone who stopped working at 52 instead of 65.
Reaching financial independence is one task, but remaining financially independent is another. It’s a matter of accumulation and lifestyle spending. Are we pushing our clients to be unnecessarily frugal? No, but we are helping them understand how their spending determines their ability to remain financially independent.
The Maintenance Factor
One last dynamic I’ll mention is the difference between acquisition and maintenance costs. It’s fairly common for someone in this season of life to set their sights on a large purchase and underestimate the cost of maintaining the asset. From vacation homes to investment properties to boats and private aircraft, most regrets come from the ongoing cost.
With a fully integrated financial plan, you have a better view of how much ongoing expense you’re able to shoulder. Better yet, you can determine how much margin of error protects your peace of mind, even on days when it costs more than you planned.
A Healthy, Integrated View of Wealth
The point is not to paint a dire picture of “Every day is Saturday.” It’s entirely the opposite. The difference is having an accurate, integrated view of your financial life. You may be able to have a lifestyle budget that’s more than generous–assuming it aligns with an accurate view of your capital.
We want our clients to experience well-deserved peace of mind. Spend on things you love without wondering if your current lifestyle is sustainable.
If you have recently exited a career or are about to exit, prioritize your peace of mind and establish an integrated view of your wealth.
