Changing my mindset around money

[Nix32]

Money represents security and safety to me. I've always lived within a budget and spend carefully, I am rarely a frivolous spender. I struggle with spending money on myself - no problem spending it on the kids!

I've inherited quite a large chunk of money and it's safely invested. My quandary is this - I am terrified to spend it. I feel like if I haven't earned it, I don't deserve to spend it. I know that's not logical and I know that the people the money came from would get pleasure from the idea that they have helped me.

So far I've spent a little - the interest it's earned over the last few years - the original amount is still there. There are things I'd like to use it for but I literally daren't.

I don't think this is a particularly healthy mindset - how do I change it?

I think it is healthy.

What are your long term goals?

Mortgage free?
Retire at a certain age?

I'd use the money to help meet these goals and if I was on track think about what you would like to do to enjoy a bit of fun with the money.

I think there has to be a balance in life.
Yes savings and having security is important but so is living life and enjoying yourself.
So save a chunk/put to your mortgage/pension pot etc but also ring fence some for fun and give yourself permission to enjoy it.
Life is very short and imo it's important to actually enjoy the time you have here whilst also being sensible about the future.

Depending on the size of the inheritance, which I assuming to be substantial since you talk of spending the interest, I would recommend speaking to an independent financial advisor about how to make the money help you achieve your goals.

A conversation about your short, medium and long-term hopes may help you accept that the money is there to facilitate your goals, and understand how to best use the money.

@Girlintheframe It's the giving myself permission that's so difficult. I don't know how to do that.

@HappyAsASandboy It's £100k. That feels substantial to me, it might not to others. I feel a huge responsibility towards it, and a pressure to make it last as long as possible.

The unknowns scare me and I'm torn between making the most of the present and protecting against the what-ifs. I suppose the answer is a mix of the two.

I struggle with spending too so know it's hard. In your situation I would try and remember that your family member would want you to enjoy it. There is absolutely no point in having money in the bank but denying yourself experiences.

Due to my job I've met many many people who saved for a rainy day/retirement but then their health took a turn and were no longer here to enjoy money.

Spending wildly or saving every penny are both wrong imo. Like most things in life there has to be a balance.

Enjoy some of it!

I'm in the same boat but I've decided it's going on the mortgage as that feels different to spending it and then when im mortgage free I'll have more of my own money to spend

Yes, as fedup078 suggests, would it feel better to use some for something practical like mortgage payment, or towards your pension?

I’m the same ! I’m always saving for a day that never comes and find it easy to spend money on gifts for others, but rarely spend much on myself.

If safety and security are your mantra, could you try breaking it down ? With Pensions they say you can take 4% a year and that won’t eat into the capital, so assuming you have your pot invested maybe take 2% ( to start with being very cautious) and break that down into chunks. Perhaps a lovely family day out or something for the home that your relative would have loved/taken pride in. Or start with £100, maybe with a practical edge - nice shoes, a haircut etc once you realise that the world carries on turning you may ease into things.

What sort of pension are you on track to achieve? If not sufficient, don't spend it, invest it. If you don't own a property, use it to help you buy. If you have a mortgage, pay it down or off. Do you have emergency savings. You have then done all the sensible stuff!

After that, use it to broaden your horizons and travel and learn things, get regular exercise, volunteer. You are then spending on worthwhile experience rather than stuff.

You need Denise Duffield-Thomas in your life!!

OP, might be useful to know-
What kind of things do you want to spend it on?
And how much money can you/are you saving every month?

Inheritance can be a weird experience emotionally. There are so many conflicting feelings bouncing around. I inherited a smaller sum from one of my parents about 6 years ago and haven’t been able to spend it yet. There are so many complicated issues tied up in my feelings about the money (and the parent) that it’s just been easier to leave it sitting there.
I’m now wondering whether I should spend the money on some therapy.
Realistically, I’ll probably use it to help put my children through university (which I feel would be quite appropriate as the parent in question paid not a penny towards that for me or my siblings).

You could try to change by understanding your core beliefs around money, and examining them to see if they are true/have value, looking at evidence for and against them.

More on core beliefs and how to get to them here: www.dummies.com/article/body-mind-spirit/emotional-health-psychology/psychology/cognitive-behavioral-therapy/core-beliefs-and-cognitive-behavioural-therapy-267188/

You can try more CBT techniques to test/challenge thoughts. If you are struggling to do this by yourself you could enlist the help of a therapist.

You could combine that process with the goal establishment process described above. I think being clear about this can really help. Why would you not spend it? Is it about giving someone else inheritance? What is the benefit of saving it?

Given what you said above about not earning the money, one countering thought could be along these lines:
Do you believe in a higher power/God/mother nature?
Then think about the birds. They don't "earn" anything. The higher power just provides. And I don't begrudge them anything. If they find, let them eat to fill their needs and wants.
People also may find their wealth (great or small) is not directly connected to their effort, there is no rule of proportionality. Some people just end up with a lot.
So maybe the universe just gave you a lot. You didn't need to earn it. So enjoy it, like the birds.

For what its worth, a lot of people struggle to shift into spending money at retirement, its a similar struggle. Pete Mathews at Meaningful Money has some advice around this. One idea that was interesting was giving yourself a "spending budget". With the idea that once you have allocated to your goals, then the rest is for spending, so you may as well get on and do that.

Also, if it makes you feel better, allocate yourself a charity budget. Giving to charity is a wonderful experience, researching causes you want to support.

£100k is a large amount of money, that really could be put to work to support the goals you identify.

An IFA (if they're any good!) would help you identify what you want the money to do for you, and how that might be possible

What interesting and insightful responses - thank you so much.

Our mortgage is only small - @£40k - and the investment is growing at a higher rate than the mortgage interest rate, so I'm not inclined to pay it off.

I would love to extend our kitchen but we don't actually need to and it would take the best part of £50k so I can't justify it. I am closer towards a new kitchen, which would be around £15k. I would like to go on a dream holiday with my husband and kids, which would be around £10k. I know logically that both of these things are fine but I'm struggling to give myself permission.

Even if I did spend that, I'd still be left with £75k, which would have been an amazing amount to receive in the first place. And it will continue to grow . . .

I don't want to use it to subsidise daily life - that would make me feel as if I were living a life I couldn't afford and that scares me. Somehow large one-off purchases are easier to imagine.

I feel a responsibility to keep some for my children, which is silly because I'm already saving for them and they will inherit at some point in the future.

All this thinking is coming at a strange time in my life and I have just started counselling, so it'll be interesting to see what comes out of that.

I spent a vast chunk of an inheritance going on the most wonderful holidays, I have no regrets at all. Life is for enjoying the moments.
give yourself permission to enjoy it, you sound fairly sensible money wise so it’s not going to leave you on the breadline

Actually, I think your attitude towards your inheritance is healthy. Someone worked over a lifetime to save that money. My first choice would be to save it for retirement. If you do spend it, I would only spend it on things that are investing in your future like housing and education.

I think there's more going on here. But FWIW I split mine into useful and fritter money. So I paid off a chunk of the mortgage. Then I took DH and friends out for a really lovely dinner for a big birthday. I also went on a 5 week super holiday.

I'll always be grateful for the security the inheritance gave me...and have fantastic memories of the holiday.

I disagree that it’s an unhealthy mindset. It may come in very useful in the future. Don’t try to spend it if you don’t really need to.

one day you might need it and be so glad you didn’t fritter it away.

What age are your children? Maybe put the max annual allowance into a pension for them this year and next (£2880 pa I think, so would equate to a cost of c10K of you inheritance over 2 years) and that is their chunk of it. If they are 10 years old that would grow to £40K+ into their pension pot each.

The rest split as a PP said. Useful 15K (kitchen), pleasure 10K (holiday) and then you would still have 65K to keep for rainy day/your pension.

If the extension would add value to the house it may be a good investment as well as giving you more pleasure in your home.

The pension idea for children is an interesting idea - it seems like a very small investment for a large reward. Will think about that.

It's not so much about how to spend it - I know what I'd like to do, and it would involve saving the majority - it's more about the feelings around it; the feeling that if I haven't earned it, I don't deserve it and then the feeling that if I'm spending outside of my budget then I'm cheating somehow, or living a life I couldn't maintain if something catastrophic happened. That's what I need to rationalise.

I inherited just over that 5 years ago when my parents died in their late 80’s. Because of divorce , 3 boys through university etc I still had 75000 on my mortgage. My dad worked so hard all of his life, had a great retirement etc and I knew he’d want me to be financially similar in retirement.
So I paid off my mortgage and gave my three boys 5000 each. I was still working so didn’t need what was left immediately. I went part time and used some of what was left to supplement until I get my state pension soon at 66.
There is absolutely no better feeling as far as I’m concerned in being mortgage free! I’ve been frugal all of my life and this phase is still a novelty for me.
I plan to give the adult children a bit more when my state pension kicks in.
My dad would be so happy that he has made my life so much easier