Stuck in poverty mindset

[ForeverInPoverty]

I’ve recently come into some money (couple of hundred thousand) having always been careful with money and I don’t know how to deal with it.

I see people going on posh holidays or drive fancy cars which I could now afford, but I balk at the “waste” of money.

Just because i’ve now got more, doesn’t mean the value of it has changed! Yet it seems madness not to treat myself to things i’ve gone without for years.

I know I can give to charity, friends etc, and have done. My question is more, if you’ve lived in poverty, do you ever lose that mindset?

I think the question for you here is ‘do I spend this now, or do I set myself up for a secure future’.

And spending it on holidays or cars, while nice, may v mean you end up in the same position with no money in eg 10 years.

Do you work? Have you got a pension? Do you have a mortgage? Etc etc

Have you heard ' A fool and his money are soon parted.' It is good to be careful. Depending on how old you are, sensible and thoughtful behaviour, that money can benefit you for a lifetime. Rash purchases and fast cars- it might last you five years. Carry on being sensible but do treat yourself. Make memories that last a lifetime. They don't have to be extravagant, just carefully chosen.

i completely agree with @MidnightPatrol Unless you are mortgage free with a great pension and decent savings pot, it would be crazy to blow this on fancy holidays. By all means spend a little on some treats but look at how the the majority can ensure you don’t ever end up in poverty again.

If you are a frugal person then that is part of you and doesn't leave you.

It's only madness not to treat myself to things I've gone without for years if you want those things. I'm more comfortable financially now than I've ever been but I still drive my old banger (I'd only treat a new car like an allotment van any way and don't want all the modern gadgets and whistles).

The new, fancy things people spend money on often aren't all they're cracked up and contentment doesn't come in material form.
Treat yourself if you want or just enjoy the feeling of security.

Firstly, have you taken advice from an IFA, they will be able to help you with how best to invest it for your curcumstances? With that amount of money you dont just want it sitting in a normal savings account.
Why not allocate a percentage of the total say 5 or 10% as your frivolous fun money. That may be easier to get your head round if you have say 20k allocated for treats such as a holiday, a new to you car etc

Can you tell us about yourself op? What are the things you wanted but went without?

We are very frugal despite not ever having lived in poverty, it's actually a great character trait. As a result we have watch friends and family on bigger incomes then us, get deeper into dept, spend hundreds of thousands on rent, holidays, expensive clothes etc rather then save for a deposit that gets less affordable every year (and put it off because it's too expensive right now).
We are planning to pay off our mortgage next year. Obviously this is their choice but they do worry about the future.

This doesn't mean we don't do lovely things. We go abroad every other year, trips to the beach most years, day trips to London etc. we are just careful with where we choose to go. Lots of self catering, stay with family, using a travel agent to get good deals etc. our children are getting to the age now where may start to be more adventurous but we are now in an excellent position to afford it.

The other thing to consider is what would make you most content. Do you WANT those glam holidays and expensive cars or do you just see others doing it?

Don't forget it isn't an all or nothing decision. You could allocate a big chunk of the money to house, pension, investments etc, some into an emergency savings and STILL keep a few k for a couple of amazing holidays/new wardrobe etc.

Alternatively do some research. Interest rates are still relatively high. If you put all the money into savings, you could allocate then entirety of the interest (roughly 7-8k per year) into the fun fund without the worry of depleting the capital.

Just looked. My savings account is currently 3.65%. with 200k you would make just over £600 per month. What could you do with that money?

To answer your actual question, if you've lived in poverty do you ever lose that mindset, no I don't think one does completely and that is actually a good thing. There's nothing wrong with being sensible, conservative or even frugal: waste not want not as the saying goes. If not spending money makes you happy, don't spend but don't make yourself miserable either. If you want an extra biscuit or to turn up the heating a little, go for it. As PPs have said, do look into how to manage your money so that it grows and helps you have a secure life.

There are plenty of threads on here with people who have very comfortable finances and enjoy NOT spending. You don't have to go on holiday, have a shiny new car, a giant house or anything else people choose to buy.

A quote from long ago that sticks with me is, 'No one ever went broke saving money' - That was a university friend's father's advice. Obvs, you can be saving like mad and still be overwhelmed by unavoidable costs of living but as a generalisation it's good advice.

As PP have mentioned you don’t lose the mindset. It’s ok to consider thoughtfully what brings you enjoyment and what brings you a sense of financial comfort and how your money could enable this.

People splashing cash all over usually don’t have as much as you think. Seeking validation from other people that you are ok through spending money doesn’t always work out well.

It can be hard to get your head around having a bunch of cash in the bank vs prior situation and what to do with it. Listen out also for what you tell yourself about money and certain purchases - what feelings does it trigger. I’m less convinced it’s an IFA thing more of where you want your lifestyle to level set / how you want it to contribute to your longer run finances.

Lifestyle creep will eventually set in with money like that in the bank. But you have to plan long term now looking at mortgage and pension as well as a holiday right now…. Plan for a holiday every year, including throughout retirement.

it’s important I think (having been through similar) to assess what your priorities are and where you’re comfortable spending money…. Because there’s no point it sat in the bank with no plan and losing ‘memories’ and experiences by being to scared to dip into it. You absolutely should benefit from it enriching your life. Being frugal in the past will stand you in good stead for it to improve your whole life and not fritter it away in 3 years and be back where you started.

but also frittering away is valid and can give certain personalities a lot of enjoyment and be ‘worth it’ to them. But it wouldn’t be my preference.

Yes you can lose a poverty mindset. Look up Brad Yates tapping videos on money, he’s great at bringing to light and shifting beliefs that keep you stuck.

Do you actually want those holidays and cars, OP? I think it is easy to imagine that you ought to behave in a certain way just because that's the stereotype but you really don't.

My advice would be not to do anything quickly. Maybe part of your mindset is thinking you have to do something right now- buy a car, give it to charity, or whatever- whereas you really don't. There's no rush. Spend some time thinking about your financial situation generally- you could use an IFA for this but in your situation there is plenty of good advice available for free and no need to spend money on fees unless you want to. What's your housing situation, pension, other investments, savings? With a couple of hundred thousand you could set yourself up for a much more secure future and still have enough for some treats in teh short term if you wish.

It's not clear whether you already own a home /have a pension etc?
That would surely affect what you do with the money?

There a happy medium somewhere as well,.between spending it all and never touching a penny

Thankyou all this is really helpful. I think i’ve felt a lot of pressure to spend but this has made me realise to just do what works for me.

I treated myself to berries from M&S! It was £4 and I’m smiling just remembering it. Being able to do that feels good, and i’ll stop worrying about the rest day to day, and also consider long term security.

I've just come into a similar amount and I'm definitely still in the poverty mindset until I've bought a house with it!

lol to berries. I def still have a mindset of fruit and ‘treat’ fruit and berries are def the latter. I could probably spend £20 a week on berries and me and the kids would still want more. But I can’t justify that despite being well out of poverty for at least 2 decades.

Hold on to this.

I’ve said on other threads finding what makes you contented. If it’s berries from M & S that is great.

As pp said you need to make the money work for you.

Enjoy some of it, like the berries life is short

I have in excess of a million which isn't much these days, but no, in my experience you don't lose that frugalness that helped you get where you are, and helped you to invest and spend wisely.

I'm exactly like you OP. Although we're not 'bad' off I've always had a mindset of being careful with money. I got this from my parents. I would set myself up for the future. Flashy cars and holidays don't impress me to be honest. And once it's gone, it's gone.

I'm pretty comfortably off (would buy berries in M&S! 60k in savings) But if I came into more money, I would never spend money on a fancy car, or a really expensive holiday. If I came into more money, I'd use it for housing and pension to ensure future security. Maybe a new bathroom as mine's knackered. Might do a bit of a holiday, but no 5* and cruises. Don't feel pressure to spend it.

Oh, you sound like my kind of person! Enjoy your posh berries 💕 would love to know more about your situation - I hope you can use the money to secure a longer term financial security and still ‘enjoy’ it with some bigger treats, a holiday, etc etc

Buy yourself time with the money, not things. Reduce working hours

Depends on your circumstances. If single with a mortgage then pay it off and invest that saving in ISA or in your pension. Use that for fun money. I know my kids will do just that when they inherit

Put it into a tax efficient savings account, and the slowly think it through. No rush to spend anything.