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Budgeting for Happiness 

Tom Dickson hosted Matt Goren (PhD, CFP; Chief Strategy Officer at Danko Education) for a Financial Experts Network webinar on how to “budget for happiness” by spending more intentionally—not simply spending less. 

1) Reframing the question: not “does money buy happiness?” but “are you buying happiness?”

Matt argued the useful question isn’t whether money can buy happiness, but whether people are directing spending toward the categories that research consistently associates with higher well-being (especially experiences and social/prosocial spending). 

2) Income and happiness: what’s supported (and what’s more nuanced than the classic “$75k” line)

Matt referenced the long-circulating “income–happiness curve” idea and noted the original inflection point was often cited around $75,000, with later work suggesting a higher threshold (he mentioned ~$100k after inflation and potentially ~$150k in some replications). He also said wealth shows a similar “rising then plateau” pattern, with a rough wealth inflection point he put at $1–$3 million depending on context. 

Fact-check / nuance:

• The widely cited ~$75k figure traces to work by Daniel Kahneman and Angus Deaton (2010), which found emotional well-being rose with income but showed a flattening around ~$75k (in their dataset/time).
• More recent work challenges a hard plateau: Matthew Killingsworth (2021) found experienced well-being continued to rise with income, on average, well beyond $75k—though individual differences and measurement choices matter.

So, “$75k (or $100k/$150k) and then flat” is best presented as one influential finding among competing results, not a universal cutoff.

3) The big behavior problem: as income rises, spending tends to shift toward “things,” not “happiness drivers”

Using a Bureau of Labor Statistics consumer spending comparison, Matt emphasized that as households move up the income distribution, they tend to increase spending a lot on housing and cars, while spending increases on “fun/experience” categories are smaller—often not rising much as a share of income. In the transcript’s example, he highlighted the second vs. fourth income quintiles with approximate figures for housing and transportation, and he called out how car spending especially jumps. 

Fact-check note: the BLS Consumer Expenditure Survey is a real source for this kind of breakdown (income groups, housing, transportation, etc.).
(Exact category totals can vary depending on which CES table/year definition is being used; the webinar’s figures are presented as an illustrative read of BLS survey results rather than a claim about a single canonical table.)

4) Why “things” disappoint: hedonic adaptation + ongoing maintenance costs

Matt explained the hedonic treadmill: people quickly adapt to improvements (and setbacks), returning toward a baseline. That makes durable “things” tricky: the happiness boost fades, but the payments and upkeep can keep dragging. 

He added a concrete example of homeownership “maintenance drag” (his “roof silvering” bill) to illustrate how ongoing obligations can reduce well-being rather than increase it. 

5) Experiences and people: where research is strongest

Matt emphasized two categories that tend to be more reliably linked to well-being than accumulating material goods:

• Spending on experiences (trips, events, shared activities), which people can relive and integrate into identity and relationships.
• Spending on people / prosocial spending (gifts, time with others, and charitable giving).

External fact checks:

• Experiences vs. material purchases: Thomas Gilovich’s research program is commonly cited here; one early paper is Van Boven & Gilovich (2003). https://doi.org/10.1002/ejsp.160
• Prosocial spending and happiness: Dunn, Aknin & Norton (2008). https://www.pnas.org/doi/10.1073/pnas.0801457105

6) Cars, commutes, and well-being: “don’t buy yourself a longer commute”

Matt stated that long commutes are consistently bad for well-being and used that as part of the argument against over-spending on vehicles—unless the vehicle is primarily enabling more meaningful experiences (e.g., travel). 

External fact check: commuting and subjective well-being is well-studied; a frequently cited paper is Stutzer & Frey (2008) on the “commuting paradox.” https://www.aeaweb.org/articles?id=10.1257/jep.22.2.89

7) A practical budgeting framework: fixed needs, fixed wants, variable needs, variable wants

Matt suggested categorizing spending into four buckets:

• Fixed needs (must-haves like basic housing/transport/connectivity)
• Variable needs (irregular but essential shocks; addressed via insurance/savings)
• Fixed wants (recurring subscriptions and lifestyle inflation)
• Variable wants (occasional fun—travel, nights out, spontaneous activities)

His punchline: keep fixed needs reasonable, insure/save for variable needs, and minimize fixed wants so you can intentionally spend more on variable wants that actually add meaning. 

8) Examples of “fixed want” cuts and reallocation (with fact-check links where possible)

Matt gave examples like canceling cable and switching cell providers, plus small HVAC adjustments, to free cash flow for experiences:

• Cable: he used ~$1,200/year as an illustration.
• Cell service: he referenced low-cost “unlimited” plans and mentioned Mint Mobile as an example (~$15/month).
  • External check (plan/pricing can change): Mint Mobile plan details: https://www.mintmobile.com/plans/
• HVAC: he cited a rough rule-of-thumb savings per degree adjustment. 

(That HVAC “$ per degree” is a rule of thumb and will vary widely by climate, insulation, energy prices, and system efficiency.)

He also gave a higher-income example: if a household keeps lifestyle inflation in check (especially housing and cars), the freed cash can be substantial (he cited ~$17,400/year as an illustration from the BLS-based comparison). 

9) Stress, income, and biology: money reduces stress most powerfully at lower incomes

In Q&A, Matt agreed that for lower earners, higher income often reduces chronic stressors (food/housing instability), and he framed the “income curve” as often reflecting stress reduction as much as “pure happiness.” 

He also addressed neurotransmitter/hormone framing (cortisol and dopamine were discussed) and cautioned that he didn’t have specific data on a slide at that moment, while noting there is research linking financial strain to stress and functioning. 

10) Purpose and giving: meaning matters, and variety can beat “set-and-forget”

Matt said happiness tends to be higher when behavior aligns with a sense of purpose/mission (religious, political, charitable engagement). 

He also suggested that varying charitable giving (rather than purely repetitive giving) may help avoid hedonic adaptation—while still emphasizing that giving has value beyond personal happiness.

Sources

External fact-check URLs 

• Kahneman, D. & Deaton, A. (2010), High income improves evaluation of life but not emotional well-being (PNAS): https://www.pnas.org/doi/10.1073/pnas.1011492107

• Killingsworth, M. A. (2021), Experienced well-being rises with income, even above $75,000 (PNAS): https://www.pnas.org/doi/10.1073/pnas.2016976118
• Bureau of Labor Statistics, Consumer Expenditure Survey (tables and reports): https://www.bls.gov/cex/
• Stutzer, A. & Frey, B. S. (2008) discussion of commuting and well-being (“commuting paradox” appears in this literature; accessible overview format): https://www.aeaweb.org/articles?id=10.1257/jep.22.2.89
• Van Boven, L. & Gilovich, T. (2003), experiences vs. material purchases: https://doi.org/10.1002/ejsp.160
• Dunn, E. W., Aknin, L. B., & Norton, M. I. (2008), prosocial spending and happiness (PNAS): https://www.pnas.org/doi/10.1073/pnas.0801457105
• Mint Mobile current plan/pricing page (used only to verify the “~$15/month” type example): https://www.mintmobile.com/plans/