The following is a guest post from my friend Stephanie who shares my same passion for the enriching book; Your Money or Your Life. She runs her own successful PF Blog, the Empowered Dollar.
Your Fulfillment Curve – When it’s Not Worth Having More
I’ll admit it – shoes for me are pretty fulfilling. I love the moment I go shopping – I love browsing the sale racks, I enjoy the moment I swipe my credit card (I usually go for the cheapest pair, so it’s never too much damage) and there’s a great chance that I’ll enjoy when I wear them out the first time.
But after that point, most of my shoes lose their charm. They start rubbing my ankles the wrong way and those snake skin heels don’t bring me the joy they once used to. Aside from a few of my absolute favorite pairs of shoes, I usually give away or re-sell most pairs within a year, and I feel guilty for having bought them in the first place.
Once I realize that a few of my shoes aren’t fulfilling my needs, I repeat the cycle – go out shopping, find a shiny new pair that catches my eye, spend more money and bring them home. Lather, rinse, repeat.
This is a classic example of the fulfillment curve – the ratio of money spent to fulfillment. It’s a concept outlined in Your Money or Your Life that could have major consequences on your ability to save money and live a happy, frugal life.
What is the Fulfillment Curve?
The fulfillment curve is a simple concept: as money you spend increases, your fulfillment increases… but only up to a certain point. And once you pass that point, you could actually experience diminishing returns, meaning that the more money you spend, the less fulfilled you feel.
Essentially, once you reach a certain level of luxury in your life, anything else spent beyond that will fail to bring you the same returns of happiness you may have experienced when you spent less money. Let’s say you bought a $700,000 house instead of a $350,000 house – would it bring you twice as much joy in life? The fulfillment curve would argue that it would not.
Applying the Fulfillment Curve to Life
The tipping point on the fulfillment curve – when it’s not worth buying more stuff or spending more money – is a critical concept to living an enriching, frugal life. But understanding the concept of a fulfillment curve is one thing. Putting it into practice during your daily spending is a whole other challenge.
How can you apply the concept of diminishing returns to the decisions you make every day? You could begin by examining your more excessive spending habits (like my shoe shopping). I should probably stop buying multiple cheap pairs of shoes. The maximum point on my “shoe” fulfillment curve would happen if I bought one high-quality pair of shoes that I wore every week for a year. That might mean that I spend more money upfront on a really nice pair that I love and will last me a long time.
You could also examine your fulfillment curve by brainstorming all of the free things in your life that bring you joy. Do you enjoy taking walks with your significant other? Does a morning yoga session in your living room bring you joy? These are great examples of high-fulfillment opportunities because they are low (or no) cost. I personally love the library, and reading a good novel always lifts my spirits. I get 1-2 books a week for free, so my fulfillment-to-money ratio is pretty darn good.
Just remember, money can be a vehicle to buy things that make you happy – but only to a certain point! If you need financial inspiration like Stephanie and I, feel free to order yourself a copy of Your Money or Your Life!