What should I be spending on?

The winners rated themselves about as happy as a group of people picked from the phone book in the same parts of the city. Then the researchers asked both groups how much they enjoyed seven ordinary things, including talking with a friend, eating breakfast, hearing a joke and buying clothes, and the winners enjoyed these activities less than the average Joe.

I’ve opened with lottery winners because today’s title sounds like advice, and I’m here to report rather than advise. What I can report is what that study found, what a spending category quietly does to our money, and what I chose inside my own system.

You’ve met my splurge account already, so I’ll go straight to what it does besides count 10 per cent of my take home pay. A spending category tells a person what they can spend with a clear conscience, and that’s why people move things between categories. A gym membership becomes self-improvement, and a weaving course becomes a skill. Once everything enjoyable counts as an investment in yourself, the splurge account sits untouched while the spending carries on from everyday money under a better name. The label changes and the spending stays.

The relabelling gives itself away in the name. A gym membership someone uses three times a week still makes sense called a gym membership, and it keeps its reason without a new title. A weaving course someone renames professional development before booking it is a pleasure looking for permission, and that pleasure is exactly what the splurge account is for.

The lottery winners show the same drift at speed. When income rises slowly it has a name, lifestyle creep, and it’s the raise that disappears into a slightly nicer version of the same life. A bigger rental, a bigger data plan, and Friday takeaways that used to be a treat and became a habit. Each choice makes sense on its own, and together they lift what counts as an ordinary week, the way the lottery did for the winners.

I've lived the slow version. At 25 I believed a pay rise would sort everything out, and on Day 20 I admitted that when the pay rises came, my spending kept pace. My windfall arrived in instalments rather than as a lottery cheque, and each instalment quietly became my new ordinary, the way the winners' millions became theirs.

The question in the title belongs to you, and the answer will look different in every household reading this. Mine goes through the splurge account, under its plain name.

The book that gave me the buckets, and how it travels

Best

Amanda

P.S. What’s your view on today’s newsletter? Did I miss something out that you’d like to share? Write to me, [email protected]. I may not get back to you, but I will try to read what you send in.

Wild Money is general information only, drawn from my own experience and research. It isn't financial advice, and nothing in it is a recommendation to buy, sell, hold or manage money in any particular way. What worked for me won't necessarily suit you. Please seek advice from a licensed financial adviser before making decisions about your own money.