Seth’s Blog on Finance

Dollar X Syndrome

Do you suffer from “Dollar X Syndrome”?

There are many people who suffer from Dollar X Syndrome which prevents them from effectively accumulating their savings. They will either consciously or unknowingly associate an arbitrary amount of savings in their bank as a comfortable figure of money to have. When their savings fall below $X, they start to become uneasy and save more to reach closer to their comfort zone. When they have more than $X, they feel comfortable to spend, usually unnecessarily, until they fall back down to X dollars.

This habit can go on for years until the person realises that he has not managed to save anything for retirement or to be financially free, other than a grossly insufficient $X.

To overcome Dollar X Syndrome, one must set aside a sum of money every month to be automatically transferred out of his usual spending account. This can be things like a monthly GIRO arrangement with another bank account (and throwing away the ATM card and statements if necessary) or an endowment policy. Due to the poor yield of both solutions, one can preferably dollar-cost-average into monthly investments. This way, Dollar X Syndrome can actually help a person. With some money from his monthly income directed to another source, he may find himself more likely to fall below his comfort zone and end up saving more to reach $X. $X can then be his emergency cash reserves for contingencies, while the money he directs elsewhere will be for his wealth accumulation goals.

When one has already set aside a meaningful amount towards a regular and automatic wealth accumulation plan and still find himself having more than $X, I think it’s only deserving for the person to then enjoy some frivolous spending without feeling guilty.