The Happiness Fund

The Happiness Fund

Picture this: you’re trying to pay down your debt, or you’re trying to save money for Financial Independence, or you just don’t want to spend any money because of so and so. You’ve been doing so good the past couple of days and then bam!

A trigger point: a bad day at work, you fought with your significant other, you feel like you lost the will to live, you’re bored of your routine – and what do you immediately do? You look for something to make you feel happy – you seek comfort, nostalgia, or just something that makes you feel better about your life.

More often than not we end up spending money just trying to feel ‘better’. And so, we introduce:

The Happiness Fund

They say that money does not buy happiness – but what if it does, if only for a little while? What if you’re at your wit’s end and you just want something to take you out of your small spiral of sadness? A little bit of comfort, a little bit of sanity? Does it justify spending money?

By all means, do so. Apparently when you buy something or pay for services you normally don’t pay for (cleaning service for your house, a meal out, a babysitter to help you take a ‘break’), there’s a small part of your brain that makes you feel happy after every purchase. Kind of like a trigger that says, yes! I got what I wanted, this makes me feel good! And so, you get out of your small sad spiral even for a bit (or maybe lift yourself up completely).

However, we turned that into a habit. One small snag in your daily life becomes a routine. “Oh, I’m sad.” Why? “Because work turned out to be so boring. Let me just go out for a drink or a meal.” And we do it again and again and again. “Oh, I had a small fight with my significant other. Let me buy him or her something so we can make up.” And pretty soon our little comfort treats don’t end up being treats anymore – it just becomes normal: a part of your spending pattern, and we end up overspending beyond our means, which is bad.

Why? Because it actually feels good to spend money. In fact, it is actually so much easier to spend your money than it is trying to save or invest it. It’s like a drug within your brain that lights up every time you spend your hard earned money: Yay! A new toy/happy meal! Yay! A new diamond ring, Yay! Another meal out!

Then the happiness and the novelty of spending that hard earned money gets old, and you don’t feel as happy anymore, and you go on to newer and better things.

My point is – money is there to be enjoyed, with moderation. Sure, if you’re having such a bad day, you can treat yourself and buy that thing you’ve always wanted (with moderation). You want to eat out? Sure, do so, but… always set limits.

Ruby with big bear at Line Store in New York City

Set your limits for your happiness fund

Because it is so easy to spend money trying to perk us up, it is better if you have a discretional allowance in your budget that can allow for spending on stuff or services you don’t normally pay for.

For example, I was feeling a bit stressed at work and didn’t go out until 8:15pm one night. My friends were having dinner at a dim sum place near my house. I normally don’t go out for dinner, but I just said yes and went out with them. I ended up paying $15 for me and a takeaway for Peter and didn’t think twice about it.

The day after, Peter wanted to eat in a fast casual joint called Bento, and we did. It cost us $29 for our meal. The day after, we just stayed at home and cooked our food. However, the week after, I had another sad day, and what did I do? I ended up going to the mall to browse for a few things, and ended up buying something from Amazon online to perk me up (toys from my childhood) which cost $15.

See a small pattern there? None of our small pleasures as a perk-me-up cost more than $20 per person. If you put in a maximum amount for your happiness/sanity budget, then you end up not overspending on little perks.

Sure it may cost an additional $100 in your bottom line budget, which is $1,200 per year, which could have been invested earning an average of 5% per year, and you end up with roughly $60 more in your bank account a year, which translates to $5 a month.

Seriously? Would your mental health, happiness and deprivation factor be worth an extra $105 a month? But wait, you could set your happiness fund even lower – say $10 or $15 a week! Would you feel the ‘pain’ of spending your happiness fund then?

You don’t even have to spend the whole amount every week! If you don’t need a happiness day/time out, then you just don’t spend the money and just save it and invest it, or add it to a week where you might need that little perk me up. It just takes a little time for you to get to know yourself when your trigger points are. For me, my trigger points come and go, but I can normally quell them at least once every few weeks and sometimes it just does not come at all, which leads to even more savings.

Peter enjoying his beers at the Budweiser facility in St Louis

No more guilt!

You know when you buy something you shouldn’t have or spent on something you really didn’t intend to then you end up feeling guilty after? If you have a dedicated happiness fund, then you won’t feel guilty at all for spending that money because it’s already been budgeted for! It’s part of your happiness fund!

Money is so easy to spend – and some people who are trying to become financially independent sometimes just go crazy and refuse to spend any money. And then what?

They become so deprived and miserly sometimes they become grouchy and just want to stay up holed inside their homes eating rice, beans, and potatoes which becomes the poster child of ‘cheap’ or ‘frugal’. These type of people give the term ‘frugal’ a bad name. Yes, we can all be frugal, while still enjoying the comforts of life because of conscious spending!

Advocating the Happiness Fund

And so, my friends in the personal finance world: do not be afraid of the happiness fund. You may call it a different thing like discretionary spending, or a sanity fund, or whatnot. You can even call it the shit happens fund, where you just go meh when you spend that extra few dollars buying a stuffed animal because you want something to cuddle.

But wait, you don’t even have to spend on yourself! You can even treat somebody who you feel needs to have a little perk me up. A $20 treat for somebody who really needs it can perk you and that person up, which can spread even more happiness all around! See? The world can be a happier, optimistic place after all!

If you have the means to do it, then enjoy the happiness fund! You don’t have to go in debt just trying to make yourself (or other people) happy. After all, life is meant to be enjoyed, so why not just spend that extra few dollars trying to buy *gasp* happiness!

Who says money can’t buy you happiness? Obviously it can!


Have you had any experience with the happiness fund? Did it make your life better for the day or the week? Care to comment on your experiences below so we can help make other people know that yes, money can buy happiness, and it’s called the happiness fund!

You may also like:


  1. Jason@WinningPersonalFinance

    This is so obvious yet it’s sometimes easy to forget. This whole life thing is all about trying to maximize happiness. If spending money is going to give you more happiness than saving it in the long run, then go ahead and spend it. If you need to have a fund to convince you to spend it go ahead. Maximize that happiness!

    1. Post
      Ruby Escalona

      Completely agree, hence our post! 🙂 It’s like what Paula Pant just posted on Facebook – if going to Walgreens means paying an extra $1 for Halloween candy vs driving to the nearest grocery store and wasting 30 minutes of your life doing it, then by all means, pay the extra $1

      Speaking of Halloween…. I ended up going to Walgreen’s at lunch to pick up discounted Halloween candy (50%) – comes in handy when I go back home to the Philippines!

  2. Mr Groovy

    Hey Ruby. Nice post. When I got into personal finance many moons ago (circa 2003), Mrs Groovy and I always allotted $50 a month for “fun” money, and it proved to be a very valuable budget item. We lived in New York, which was stressful enough, but Mrs Groovy also had the joy of commuting to Manhattan from LI via the LIRR. Talk about turning the stress knob up to 11! Knowing we had money for an occasional pizza or bottle of wine was a godsend. The Happiness Fund should be an integral part of any FIRE enthusiast’s tool kit. Thanks for reminding people of this.

    1. Post
      Ruby Escalona

      Yes, I went out for lunch today because I didn’t have time to cook, and you know what? I feel perfectly fine spending $4.28 on a meal at Wendy’s versus stressing out if I’ll have time to cook AND clean our guest room for our AirBnB guest.

      That $4.28 saved us 30 minutes of cooking time which I spent cleaning and running more errands.

  3. Lyn

    I think I put a bit more on my happiness fund (omakase :p) but yes, I love happiness fund while saving at the same time. Can’t say I am absolutely right, but there’s no guaranteed that I can spend the savings in the future if I miserably get by saving now.

    1. Post
      Ruby Escalona

      Exactly! What’s the point of living if you can’t have little pleasures every now and then? You don’t want to deprive yourself for a month only to die the next day
      Life is so unpredictable so might as well live it!

  4. NZ Muse

    Money absolutely can buy happiness 🙂 For me it’s pastries or sushi or hand pulled noodles, and more recently a lion costume for my dog for Halloween (quite possibly THE most frivolous $13 I’ve ever spent)

    1. Post
      Ruby Escalona

      Oh I’ve seen that lion costume – it was on the Amazon ad! Kyle from the Pennyhoarder also made his dog wear it when he was doing his keynote speech in Fincon17 this year! It was super cute.

      Mmmm pastries. Which reminds me, I’ve got to get Peter to Aldi so we can pick up the cheesecake platter yum yum 😀

  5. Steven Goodwin

    This is great and we do something similar! We used to fight about discretionary expenses because we didn’t deem them necessary for each other. We finally decided to start giving each of us “blow” money each month. That way when those little things come up, we don’t have to worry about it, we can spend the money however we want and the other person can’t say anything about it.

    Last week, we went on a date, and I was able to cover the bill with my “blow” money so we didn’t have to kill our grocery budget. This week, my wife wants to make a 2 hour phone call while I’m gone with a friend, so she’s paying a babysitter to come play with the kids during the call!

    It has really helped us out quite a bit.

    1. Post
      Ruby Escalona

      Definitely! At Camp Mustache last year, I met a guy named Leon, who does this with his wife. His wife is definitely not an FI person.

      So what does he do so they won’t fight? They have a his and her discretionary fund – anything you buy from it is no questions or judgements asked.

      Lots of happy marriages thanks to the happiness fund lol. If one partner is miserable then what good is money, right?

Leave a Reply

Your email address will not be published. Required fields are marked *