A Penny Dollar
Last week, my five-year-old daughter approached me… “Daddy, look what I found!”
“A penny,” I replied.
“Yeah, I got a penny dollar,” she said. “Can we buy something with it?”
“Of course, honey. I’ll keep it safe for you.”
The “penny dollar” made me laugh, but it also made me think about how her curious little brain would put that penny to good use. I am quite confident that whatever purchase she makes will be incredibly thoughtful, because this coin is special to her.
A Dollar Here, a Dollar There
Picture a single day in your life and all the purchase decisions you make. You buy eggs and coffee for breakfast, fill up your car with gas, grab lunch at the office, order clothes on Amazon, pick up dry cleaning on the way home, and plan a vacation with your spouse. Meanwhile, auto‑payments quietly run in the background… your mortgage, Netflix, cable, gardener, HOA fees, car payment… you get the point.
A lot of ink in this industry has been spilled on budgeting techniques – how to monitor and reduce spending, how to hold yourself accountable, and which app to use. Budgeting largely boils down to implementation and technique. It tends to focus more on the micro than the macro.
Before we ever open a budgeting app or spreadsheet, we should ask a more fundamental question: “What kind of spending actually makes me happy?”
Happiness
Truth be told, I don’t love the word “happy” because it is often devoid of meaning. But asking the question allows us to go deeper:
- “Which spending choices actually align with my values?”
- “Where does my money support the life I want to live?”
- “What outcomes do I want my spending to create?”
- “Which expenses improve my life, not just in the short-term but the long-term?”
- “How can I optimize my spending to bring me more lasting joy and satisfaction in life?”
For how ingrained the act of spending money is to American consumers, it’s surprising how rarely we pause to ask these questions of ourselves. Spending money often happens on autopilot. We all face countless purchase choices each week, so our brains rely on mental shortcuts to decide when and where to spend.
The problem is, if we haven’t clarified what kinds of spending genuinely add value to our lives, those shortcuts lead to feelings of regret and disappointment.
A Moment for Gratitude
I recognize that even asking, “What kind of spending makes me happy?” is a privilege. Much of the world is focused solely on meeting basic needs, with no space for bigger questions. But if you’re reading this, chances are you have at least some discretionary spending in your budget. Since this portion can be used in many ways, why not figure out how to use it in the most meaningful way?
The Advisor’s Front Row Seat
As advisors, we have a front-row seat to the spending decisions our clients make. While it’s not my lane to tell a client whether they should buy a Snickers or a Reese’s, we accumulate stories from clients. There are stories of defeat – “I can’t believe I blew my money on that” – and stories of fulfillment: family vacations, education for loved ones, a new hobby, or meaningful charitable giving.
Beyond these stories and experiences, what does the research say about spending money and happiness?
The Research
Simply put, research suggests directing money towards the following tends to produce the greatest benefit…
- Giving (to charity or other individuals), and
- Experiences
Giving
Giving money away to others (whether individuals or charity) is often associated with an increase in happiness, and the emotional rewards of giving are the greatest when our generosity is connected to others.
Marcel Schwantes describes it like this…
“… if you spend money on yourself, your happiness doesn’t change. But if you spend the money on others, you actually become significantly happier. For example, donating to an unfamiliar charity doesn’t raise your happiness levels as much as contributing to a cancer-stricken friend’s GoFundMe campaign does.
Experiences
Beyond giving, most research suggests that spending money on experiences (as opposed to material goods) reaps the greatest benefits.
To put this to the test, I called my grandpa. Given he’s in his 90’s and has accumulated a wealth of experiences, I asked him what kind of spending in his life brought him the greatest joy.
He responded by talking about a few things, including trips he and my grandma used to take, giving to their church, and spending money on their beloved Labrador Retrievers. However, he singled out the purchase of a hunting cabin in Canada. As he went on to describe this, a few things were clear – at this hunting cabin, memories were made, and relationships were forged.
That Which Lasts
The hunting cabin struck me as a microcosm of the kind of spending that brings deep satisfaction, as it combines relationships with experiences.
It’s easy to say and much harder to live out, but aiming for “that which lasts” is a worthy goal. And of all the things in life that endure, relationships are at the top of the list.
Whether it’s investing in date nights with your spouse, a concert with a friend, or a vacation with your grandkids, spending money on relationships is very rarely regretted (I say this from the perspective of an advisor and a consumer).
What Kind of Spending Does NOT Make Us Happy?
So, if spending money on others (giving) and experiences leads to happiness, what kind of spending does not make us happy?
In the popular book The Psychology of Money, author Morgan Housel describes something he calls “The Man in the Car Paradox.” Housel saw someone driving a nice sports car and thought, “If I were driving in that car, people would admire me.”
The reality is, he wasn’t admiring the man in the car, but rather, he was imagining himself in the car.
It’s not that buying a nice sports car (or watch, or house, etc.) is inherently wrong. But when spending is primarily about impressing others or earning admiration, disappointment often follows.
We All Spend Money Differently
We each have different values, varying socio-economic statuses, life stages, and unique hobbies and interests. Because of this, each of us will spend money in very different ways. There is not one right or wrong way to spend money. However, like the Venn diagram below, does our spending align with our values?
*Source: Self-Illustrated, March 26, 2026
My encouragement would be the following:
- Think about your values. What is important to you and your family?
- Know what you spend money on (awareness)
- Consider if your bank account and your values are aligned
Our hearts are deceptive (Jeremiah 17:9), so we need to be honest about our purchases. Will this spending bring me lasting value? Will it enhance my life? Or is it to get a hit of dopamine or impress others?
We make hundreds of spending decisions every month, most of them without much thought. Rather than treating this as a source of guilt (like budgeting so often can feel like), it can be an invitation to pause, zoom out, and ask whether our money is truly supporting the life we want to live.
When our spending aligns with what we value most, it tends to feel more fulfilling. Money will always be a tool, not the destination, so let’s use that tool for its intended purpose.
“We buy things we don’t need with money we don’t have to impress people we don’t like.” – Will Rogers
Blaine Carver
Private Wealth Advisor
