“Spend money like drunken sailors” (or “spend money like a drunken sailor”) means to have few fiscal constraints,  or to spend money freely. In the 1700s and 1800s, sailors were at sea for weeks and months at a time. When they came to shore and received their paychecks, their first inclination was often to treat themselves.
 
In the second, half of the 1800s, the phrase began to appear from the sailing custom. The September 1887 issue of St. Nicholas magazine spelled it out: “You have heard the phrase, ‘He spends his money like a sailor.’”
 
The spendthrift sailors of the popular phrase were neither specifically “drunk” nor “sober.” By the 1890s, “drunken sailors” began to be used with frequency. An 1898 newspaper declared: “Such familiar phrases as ‘Like a drunken sailor’ and ‘Spending money like a sailor’ no longer apply.”
 
The sailing profession has changed considerably with modern technology and transportation alternatives (such as airplanes), but the phrase “spend like drunken sailors” is as familiar as ever. The phrase is often used in modern times to refer to government bodies such as Congress and state legislatures, and their often free-spending ways with the taxpaying public’s money.
 
 
Google Books
Ben Brace:
The Last of Nelson’s Agamemnons
By Captain Chamier (Frederick Chamier—ed.)
London: George Routledge & Sons
1867
Pg. 313:
...but with you, who have so often danced at my old place at Plymouth, and spent your prize-money like a sailor, why, I sha’n't be hard with you;...
 
Google Books
The Cotton States in the Spring and Summer of 1875
By Charles Nordhoff
New York, NY: D. Appleton & Company
1876
Pg. 21:
Of course he lives poorly; but he thrives on corn-meal and bacon, and has few doctor’s bills to pay. Unfortunately, as yet, he commonly spends his money like a sailor or a miner, or any other improvident white man.
 
Google Books
September 1887, St, Nicholas magazine, pg. 852, cols. 1-2:
In this coonection, it may be well to say something about the pecuniary habits of seafaring men. You have heard the phrase, “He spends his money like a sailor.” That saying represents the extravagant habits of some sailors in their dealings with money. They do not earn much, but they are away so long from land, where money is constantly used as a medium of exchange, and their life is so hard, that when once they get on shore, their first thought is of having “a good time” with the wages they have just received. But the example of this class of men tends to strengthen the purpose of the youth who has determined to work his way up on the nautical ladder to win an official position.
 
30 March 1893, Grand Forks (ND) Herald, “Panic in Wheat,” pg. 1:
Enthusiastic “tailers” of course knew nothing about this and continued to buy like drunken sailors.
(“Tailer” is a kind of wheat—ed.)
 
Chronicling America
24 February 1894, Brownsville (TX) Daily Herald, pg. 3, col. 3:
He had a host of friends, spent money like a sailor ashore, dressed in the height of fashion and was always even tempered, optimistic and entertaining.
 
4 December 1895, Logansport (IN) Pharos, pg. 3, col. 5:
He made frequent trips to Logansport and upon each occasion spent money like a drunken sailor.
 
3 June 1897, Fort Worth (TX) Morning Register, pg. 4:
They stopped in a place where jollification is sold in bottles, and laid in a goodly supply of the oil of joy. One of the office-holders who is rather “near,” on this occasion spent his money like a drunken sailor.
 
19 December 1897, Sioux City (Iowa) Journal, pg. 4:
TWO WILD-EYED FINLANDERS
Spent Their Money Like Drunken Sailors
and Came to Grief.
 
Chronicling America
27 February 1898, San Francisco (CA) Call, pg. 18, col. 2:
There is no doubt about where the native Cuban aristocracy stands in this war. They were never frugal people. On the contrary, the men spent money like drunken sailors.
   
1 July 1898, New Oxford (PA) Item, pg. 7, col. 2:
Such familiar phrases as “Like a drunken sailor” and “Spending money like a sailor” no longer apply, for Jack is today steadier, more self-respecting and better behaved than the average man in his own walk of life on shore.
 
1 July 1899, New Haven (CT) Register, “Extortion at New London,” pg. 7:
New London, July 1.—New London is a deeply disappointed town. Individually and collectively every man here who had anything to sell had “rooted” for Harvard. Their idea was that a victory for Harvard meant that the Harvard undergraduates, alumni, and sympathizers would spend their winnings here “like drunken sailors.” About the habits of such sailors the people of this old whaling town know a good deal.
 
Harvard’s crews all won and Harvard’s partisans were naturally anxious to celebrate in student fashion. They were very liberally inclined. When, however, they found that the people of the town had doubled prices on everything to eat, on rooms to sleep in, and all else that a man must have in order to exist as well as rejoice, Harvard’s partisans buttoned up their pockets and got out of town as soon as they could.
 
29 March 1900, Hamilton (OH) Telegraph, pg. 7, col. 1 ad:
It was not so long ago, since we had to turn and twist every dollar, several times before we spent it. Let us not then be carried away by the present prosperity, and spend our money like drunken sailors.
(Strauss & Co. clothiers—ed.)
 
6 July 1901, Portsmouth (OH) Times, pg. 4, col. 6:
Young and old spent nickels like drunken sailors, but when they got inside each was handed a molasses kiss, and in a few minutes another sign went up.
   
23 June 1903, St. Albans (VT) Daily Messenger, pg. 5:
The citizens of Rutland have paid little or no attention to their important public affairs and incompetent, or designing, or spendthrift boards of aldermen have spent their funds like drunken sailors.
(From Rutland News—ed.)
 
4 July 1905, Duluth (MN) News-Tribune, pg. 4:
“Of course, we (railroad men—ed.) thought it good policy to spend every cent we made. We were out of a job for more than a month during a dull time and squandered our hard earned money like drunken sailors.”
 
12 August 1917, Grand Forks (ND) Herald, pg. 7:
“SPENDS HIS MONEY
LIKE A SAILOR” NOT
TRUE OF JACK TODAY
Great Lakes, Ill., Aug. 11.—The phrase, “spends his money like a sailor,” is fast becoming obsolete, for the modern bluejacket generally comes out of the service with a rounder bank account than his civilian brother. WIth the recent increase of pay in the navy, savings in the ships’ banks have increased enormously. The gospel of saving is preached continuously in the navy, and with effect.
   
OCLC WorldCat record
It’s high time we put legal limits on politicians who spend like drunken sailors
by Garth Turner
Type:  Article; English
Publisher: Toronto : CB Media, 1977-
Publication: Canadian business. 69, no. 6, (1996): 99
 
OCLC WorldCat record
Like Drunken Sailors, Part MMCCXVIII - Congress, and the president, just can’t—Won’t—Stop spending.
by Stephen Moore
Type:  Article; English
Publisher: [New York, etc., National Review, etc.]
Publication: National review. 55, no. 17, (2003): 25
Database: ArticleFirst
 
The Big Picture 
Quote of the Day: Spending like Drunken Sailors
Wednesday, March 26, 2008 | 03:00 PM
From the London Review of Books, comes this brilliant slice of analysis:
 
“My friend Tony, however, is sanguine. ‘Sorting out who’s in the shit is going to be a nightmare, but when it all shakes out, all it’ll mean is that credit is a little bit more expensive. That’s a good thing. It had got crazy. It was cheaper for companies to borrow money from other companies than it was for governments. That’s nuts. These things are cyclical, it had all just gone too far and we needed a correction.’
 
‘So we’ll have to stop running around spending money like drunken sailors,’ I said.
 
‘Well, drunk sailors tend to be spending their own money,’ Tony said. ‘By contemporary standards they’re quite prudent.’
 
- John Lanchester, writing about the sub-prime mortgage crisis in the London Review of Books.
 
I guess I owe an apology to drunken sailors, a metaphor I have used repeatedly.
 
This take on that phrase may very well become the classic line that sums up the era from 2003 - 2008: Drunken sailors: By contemporary standards, they’re quite prudent.
 
Classic.