How to know when it's OK to spend

Some people are much better savers than spenders. That can become a problem.

Certified financial planner DeDe Jones recalls clients, retired schoolteachers, who loved to travel but kept putting off the trip to China and Southeast Asia they'd always wanted to take.

"The husband started having health issues, and they missed the opportunity," says Jones, managing director of Innovative Financial in Lakewood, Colo. "The widow is doing fine financially, but is feeling regret."

The ability to delay gratification is important for building wealth. But gratification delayed too long can leave us unhappy with the results.

Many of us experience this on a minor level when we put off using gift cards, drinking that special wine or booking a trip with our frequent flier miles. We wait for the "perfect" time to indulge, and sometimes miss out entirely — the store goes out of business, the wine turns to vinegar, the miles expire.

Recent research published in the Journal of Marketing Behavior found that once we label something as "special," we can wait too long to enjoy it.

Researchers Suzanne Shu of UCLA and Marissa A. Sharif of the University of Pennsylvania used a variety of experiments, including having participants imagine they had a free pass to a concert venue, to track people's willingness to indulge and their self-reported satisfaction with the results. Participants could see the list of 20 musical acts that could potentially play the venue over the 15-week season, but each band was announced only the week it would be appearing. People given a "VIP access" pass waited longer to use it, hoping for a more popular act, than the people given less exclusive passes. Those who delayed often wound up settling for an act they had rated as mediocre to use the pass before it expired and expressed more regret about their choice than those who exercised the pass sooner.

One technique is called "pre-commitment." We make hard decisions in advance, such as agreeing to future automatic increases in our 401(k) contributions or paying for a dozen personal training sessions at the gym. For those who have trouble spending, pre-commitment could mean buying the airline tickets for that special trip or setting a deadline for making a purchase.

Having a financial plan can also help. Knowing you're on track saving toward retirement and other goals can give you permission to enjoy your spending, says Charlie Bolognino, president of Side-by-Side Financial Planning in Plymouth.

"In a sense, our spending then becomes something we're expected to do," Bolognino says.

Switching from saving to spending can be hard for some people when they reach retirement age. These reluctant spenders won't be able to change overnight.

"It's a transition, and transitions often are rougher than anticipated and take longer than anticipated," says neuropsychologist Moira Somers in Winnipeg, Manitoba, author of "Advice That Sticks. "

"For some, it is so severe that we refer to them as financial anorexics," says John Gugle, chief investment officer of Alpha Financial Advisors in Charlotte, N.C. "They literally are convinced that they will run out of money despite our efforts to show them that it is virtually impossible."

Others are able to start spending once they focus on what's most important to them, planners say.

"One specific thing we suggest people do is to invest in memories, meaning do things like take your kids and grandkids on vacations that will be meaningful for you and they will remember all their lives," says CFP John M. Scherer, founder of Trinity Financial Planning in Middleton, Wis.

CFP Dana Anspach, founder and CEO of Sensible Money in Scottsdale, Ariz., has encouraged clients to take trips, hire house cleaners, and buy special-occasion jewelry after she could demonstrate the purchases wouldn't endanger their financial plans. She also discusses the value of helping others while you're alive to see the results of your generosity.

"In most cases, this feels far more rewarding than having family wait for you to pass and leaving them a pile of money," Anspach says.