For years and years, I’ve been writing about saving money. Save money, invest money, say hello to financial freedom.
I still believe in all of that. The math checks out. People have done it.
When you put aside money and math, there’s this thing called life. As a personal finance blogger, I focus on writing about the money and math towards financial freedom.
Since you are reading this, I’m going to presume you focus on financial freedom too.
What if we took a break from the money and math? What if we focused on a different M-word… “moderation”?
Yesterday, Joe from Retire by 40 wrote about his expensive artwork. As I was reading it, I felt almost like he was being apologetic for his splurge years ago. It also felt like he was trying to justify it.
Maybe I read it wrong. Maybe I superimposed some of my own thoughts into the article.
Whatever the reason, it made me think, “Let’s look at the big picture here.”
If you are meeting most of your financial goals, perhaps it’s worth setting aside some money each year to create a “happiness fund.”
My “happiness fund” would be about no-questions-asked spending. The more frivolous the better (as long as it stays in the budget.)
Why not put a ball pit in your house?
Well, we did it. We put a ball pit in our house. pic.twitter.com/8wztWkDt8M
— Rachel Bloom (@Racheldoesstuff) December 17, 2017
My “happiness fund” this year went to buying a ridiculously expensive television. I’m not sure it was “ball pit happiness” but I do enjoy it. I’m certainly “happy” that I didn’t pay the $7,000 – $10,000 that it cost in the past.
“How much should I put in my happiness fund?”
I tried to come up with some kind of formula of what would be responsible. I couldn’t come up with a good guideline. At first, I thought it should be a percentage of your net worth, but then I figured it very small or even negative for some people. Then I thought it could be a percentage of your annual income. This is more promising, but it doesn’t edge cases like Joe who could make nothing this year and still be fine financially overall.
Finally, I realized that like most things in personal finance… a happiness fund is personal.
It doesn’t make sense for me to tell you how much to put in it any more than it does to tell you what to spend it on.
Instead, let’s flip this question around. Leave me a comment below about how much you put in your happiness fund and what you are spending it on. You might want to leave a good email address, because I plan on surprising at least one commenter with $25 towards that happiness fund.
For us it is about 4% for happiness fund stuff. I’m basing that on the fact that when we got a large inheritance we spent $35k of it on toys, about 4%. Plus with my side gig retirement income
and passive income we are spending about that much on trips. And please exclude me from the $25, I’d much rather it go to someone still on the journey to FI!
Ooh, did you start a new blog there Steveark?
I was tempted to suggest that people use 4-7% of their annual income. I think we’d fall in that range. I don’t know if that’s right for everyone though.
my happiness fund is about 5% of my gross income [pre-tax] the break down:
2% goes to a variety of charities, not including my synagogue [which gets its own percentage]. 2% of my gross income goes to my writing classes, poetry workshops, books on writing, and membership in art museums.
and the final 1% goes to music. concerts, music festivals, buying CDs and music sheets, fundraisers at my daughter’s music school {Florida Symphonic Youth Orchestra, she is 2nd chair violin]
my husband’s happiness fund is about 10% of his income:
2% craft beer and alcohols [okay i enjoy that too]
8% photography equipment and gardening ‘stuff’ he enjoys video-taping events and making promotional videos for groups we are involved with, mostly cycling events. he has an extensive organic aquaponics garden and grows stuff.
we enjoy seeing each other happy. and since i’m a budget driven, counting every penny, balancing the checkbook person, making a conscious decision to NOT monitor the happiness funds has an added benefit to me: i really DON’T want to know how much he spends on things i don’t understand at all.
Thanks for the mention. I need to sit down with the missus and figure out our happiness fund. We don’t have a cap right now, but we don’t spend that much either. She spends more. She like going to the theater and buying nice work clothes. I like not spending. :)
I gathered that (about your spending) by reading your site over the years. I like not spending myself. Not spending has almost become ingrained in me.
I decided to give that a “F IT” this year… well as much as can… which isn’t much.
I like that name. Happiness Fund. I’m a PF blogger too and I just try to help people make good choices when it comes to their money.
Thanks,
GBM
I love this concept! It’s like fun money, but on a bigger scale. I put money away for my trip back to France in business class!
This is a tough one. We buy whatever we want, but the caveat is that we have to REALLY want it. We max out our at-work retirement accounts & Roth IRAs, put some more funds in after-tax accounts, and live on what’s left. Our house & cars are paid, and we have at least one year of living expenses in cash. Put simply, the wolves are no where near our door. :-)
I guess you could say our happiness fund is 5% of gross annual income, and we spend it on travel, but travel hacking makes that $ go really far-in the past 12 months we’ve been to Amsterdam, the Galapagos Islands, & Greece.
Congrats go to ROBYN, who won the $25. She told me that she intends to donate it to her favorite medical-related charity.
While it wasn’t what I was originally intending in the article, I think I can applaud the use of money in that way even more.