A physician known for her intentional generosity once said that she lived by a simple rule: work like a doctor, live like a nurse. It represented a deliberate choice to keep lifestyle well below what income could support. The result was a margin to rest, give, serve, and choose.
After decades of working with financially independent families, I've come to believe that margin is one of the most underrated assets in financial planning. Spending isn’t wrong, but the margin you protect during your peak earning years funds something that money spent can’t buy later: options.
To that end, here are five questions that I think are helpful to understanding what you are actually “buying” when making spending decisions.
1. What percentage of my ongoing spending is truly fixed vs. discretionary?
Property taxes, insurance, maintenance, and other ongoing costs of ownership follow you into retirement, whether you want them to or not. The higher this number, the less flexibility your retirement plan actually has. It's always good to know your baseline costs if you need to adjust the income you pull from your portfolio.
2. Am I making one-time purchases or acquiring ongoing costs?
A one-time expense is less likely to disrupt a good plan. Ongoing commitments are different. They become the new baseline. That distinction matters more in retirement than almost anywhere else. It's one thing to afford the down payment. It's another thing to afford the payments if things don’t go as well as planned.
3. Is my lifestyle calibrated to my income, or to what I actually need to feel satisfied?
It's amazing how easy it is to say yes when the question is, "Can we afford it?" I find that families often default to spending based on what they can afford, rather than focusing on what brings them true joy and contentment.
4. Are my significant financial decisions adding to my flexibility over time or reducing it?
This is the question that ties the others together. It doesn't make any individual decision wrong. It just makes sure you're asking the right thing before you move forward. Know what you are trading in the area of margin when making a significant financial decision.
5. Do I know what I’d change if markets dropped 30%? Or what I would do differently if my portfolio is up 20% for the year?
I find people tend to focus on one scenario or the other, but both questions matter. A plan that only works when markets cooperate isn't really a plan. Similarly, a windfall without intention can quietly raise your baseline in ways that are hard to unwind.
The Goal of Wealth
In a few decades of this work, I've seen both sides clearly. Families who spent freely but without intention often found themselves locked in, needing to keep spending just to maintain the life they'd built. Families who protected margin didn't live smaller. They lived with more room to choose. That's the real return on intentional spending, not a number, but a life you can actually direct.
I would also suggest that while it's financially prudent to prioritize margin, the practice of being deliberately measured with our financial “yes” is one of the most important parts of creating a life that is prioritized and fulfilling. While these may not be traditional financial planning questions and discussions, I want you to know that I always invite them. They are among my favorite and most rewarding conversations we have with clients.