What to Spend Your Money on: How to be Happy!

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what to spend your money on

Finally!  Less talking about saving and investing in this post.  More talking about what to spend your money on!  Life shouldn’t all be delayed gratification, there are, after all no guarantees. 

So how will you choose to spend your money?  We all have a limited amount, so you probably want to get the most bang for your buck! 

“Money doesn’t give you happiness” sure… but food, shelter and the ability to pay your bills give you a good night’s sleep.  That’s a pretty good start.  As you gain control over your finances, spending less than you need for all these basics, a world of opportunity opens up. 

Research has tried to find a mathematical answer to the question, how much money do you need to be “Happy”.

Around $159,000 is the optimal income for a single person for life satisfaction.  Interestingly, this is around double the Australian median income.  I suspect it’s highly variable, as we all have different aspirations.  To be happy, we probably need enough income to pay the bills, and fund most of our discretionary desires.      

A big secret to happiness is to desire less than you can afford. 

what to spend your money on

What to Spend your Money on When You’re Rich

You, presumably, don’t consider yourself “Rich” yet given that you’re reading this post.  That’s ok, this is an imaginary exercise.  Imagine you have endless financial resources.  You won the lottery jackpot, or you’re a Kardashian.   What would you change? 

My vision of this post-lotto win life involves a beautiful house, overlooking the beach, chilling in the pool with my family. 

I work a few shifts as a doctor (not enough to suffer burn out!) and still run the blog.  We would cook less and get a driver to take the kids to school most mornings (and avoid the traffic). 

Our family will take at least 6 weeks holiday every year, visiting far flung family and exploring new places. 

I exercise daily (and have a personal trainer to get the most out of my sessions).

House cleaning, blog editing and marketing are outsourced to someone excellent. 

We have friends and family to the house regularly for drinks and dinners.  I still read a lot, but now from my hammock overlooking the beach. 

The main differences from my current life are more of an abundance of time and freedom, as well as a beach view from my home! 

I have recently read an Australian finance book, “Money School*”, which talks about a “Shit to gold” ratio. 

The author Lacey has really put a name to what we all tend to do with these fantasies. 

If you had endless financial resources, are there “shit” times you would be able to outsource or avoid? 

Hopefully there is a bit of “Gold” in your life you would keep or increase. 

We can often improve our shit to gold ratio without a large financial windfall. 

But the lotto fantasy exercise is a great way to work out what your ideal life even looks like.  

what to spend your money on

What to Spend Your Money on: The Essentials

If you lost your job, what is the absolute bare minimum you would need to survive on?

A Home

What is the cheapest safe accommodation you could buy or rent? 

This will likely involve a change in suburb, and possibly a longer commute. 

My family could rent a 3-bedroom townhouse for under $18,000 per year, which is actually similar to our mortgage repayments (12 yrs after purchase). 


What is your essential food spending?  Your grocery bills without convenience items, treats, soft drinks, cigarettes and alcohol.

I estimate ours to be around $9000 per year (family of four).


What are your essential insurance costs? 

I consider home and car insurances, income protection and life insurance to be essential. Read more on which insurance policies you need, and when to cancel.  

I don’t get a lot of benefit from private health insurance, so this could be cancelled. 

Insurance costs as a sole (high) income earner with small children are pretty shocking. 

Our costs for these policies come to around $11,000 per year.


At a push we could run on 1 car for the family and using public transport. 

Our cars are old, so no downgrading required. 

Estimated costs $2,000 per year


If we strip our bills back to basics they include electricity, water, gas, landline and 2nd hand phones on pay as you go contracts. 

Estimated costs $3000 per year

Professional Expenses

Doctors have high professional expenses. 

In order to legally work as a doctor I pay around $4,000 in fees and legally required professional insurance per year.


Basic, cheap clothing for the year?  Maybe $1000 per year for our family.

Interesting.  This brings our family of fours essential spending for a year at around $48,000.  We spend around $135-140K! 

Plenty of discretionary spending going on in the Aussie Doc Household – but aligned well with our priorities. 

It’s surprised me realising how low we could drop our spending in an emergency. 

Can I really call myself a financial blogger with all this spending?!

I guess this is how bloggers like Strong Money Australia live on under $50,000, by cutting out almost all the discretionary spend, who knew! 

What to Spend Your Money on: Discretionary

Higher income earners can enjoy plenty of discretionary spending. 

They can choose to upgrade to “luxury” in some, but importantly not all categories. 

Everyone makes a trade-off.  You (+/- partner) are 100% responsible for how you choose to allocate your finances if you earn more than the average income ($80,000). 

So, choose carefully and remember to be grateful for the opportunity. 

If your neighbour has made different choices, coveting their jet ski, or part time work schedule is a complete waste of energy!


The difference between the absolute bare bones essential safe shelter for you and your family is discretionary. 

Even in expensive cities, there are relatively cheaper accommodation options.

Remember upgrading is a conscious choice. 

This category has such huge potential for swallowing up all your discretionary spending, you need to consider the sacrifices you will make as a result. 

Think through all the categories and make sure you have your spending priorities aligned with your values.

A home with ocean views is in my post lotto fantasy. 

I love the idea, and it’s not completely out of reach given that I do live and work in an inexpensive town. 

But the sacrifices required in the other categories (mostly time and holidays) make this a luxury I’m willing to do without. 

It’s probably better for me to get a bit more exercise and walk to the beach anyway!


Again, the difference between the bare bones basics of essential transportation cost and your vehicle of choice could be significant. 

This is another huge consumer of discretionary spending. 

Remember new cars are only new until they’re driven. 

Unlike housing, vehicles really can’t be considered an investment in 99% of cases. 

Vehicles burn cash like fuel.  Consider all the other categories you are sacrificing before making your final choice.

Private School Fees

These can be extremely expensive!  There are plenty of good public-school options.  If you choose private school for your kids (we did) make sure it is worth the sacrifices for you family.   

what to spend your money on


Holidays, of course, are entirely discretionary.  In my opinion life wouldn’t be much fun without them though! 

They can certainly be done on a budget, as camping is a lot of fun with young kids (who tend to appreciate the simpler things).   

Australia is a big country, and much of it can only be seen using a sturdy vehicle and tent. 

Overseas travel may or may not be a priority for yourself.  Work out an average annual holidaying budget based on your priorities.

Eating Out

Are you a foodie?  Do you enjoy eating out regularly, or is it often done for convenience? 

If you have a habit of grabbing food when you’re out because you didn’t get round to organising your own food, I bet the take out is not too good?    

If eating out brings you joy, budget it, but try not to waste money or crap junk food you don’t even enjoy. 


Are you a fashionista?  Do you like to buy the latest trends to dump them in landfill the next year? 

Spending less often neatly aligns with being more environmentally friendly. 

Consider better quality classic clothing that you won’t need to replace for many years. 

If you are into designer handbags, watches, shoes or other items, consider the value they bring to you and weigh up against the other categories.   If it’s a priority to you, enjoy.


Alcohol, we all know is a bit of a waste of money and health. 

Again, think about what you really value.  If you really enjoy a decent bottle of wine at the weekend, or drinks out with mates on a Friday, accommodate this by cutting your spending elsewhere. 

Of course, will power and self-control tend to disappear after a few drinks, so if you like to go into town for drinks with mates, you may need other strategies to ensure your not drinking all your discretionary income.

Subscriptions and Memberships

It’s worth reviewing these regularly and cancelling those that are not providing you sufficient value. 

Do you need multiple streaming services?

Do actually use the gym?


Time, the most precious resource and we’re all running out!  Remember, when choosing to upgrade your discretionary spending you are sacrificing time.  Go back to your lotto fantasy, what is your work schedule like? 

I love to work part time, enjoying a reasonable balance between been challenged at work, with plenty of time to spend with our young children.  I value my time at this stage in my life very highly.  In my post lotto fantasy, I would work less hours than I do now, and have more choice over my schedule.  I am lucky enough to be able to take leave at half pay, and so save some discretionary income to fund extra weeks of holiday each year.  “Working” on this blog appeals to me because of the flexibility. And the fact I’m a massive money nerd of course! 

What would your ideal schedule look like?  Is it different to your current situation? 

Is it a high enough priority to direct some discretionary money to achieve something closer to your ideal situation?

All readers should try giving some of their discretionary budget away. 

Another secret of happiness is to focus on helping others. 

It feels good to donate to those so much less fortunate.  It gives me a buzz every time I see my donation to Give Direct, doubling another (extremely poor) family’s income for a year so they can get ahead. 


Last, but probably the biggest goal to achieve: Eventually having enough investment income to support you when you want or need to finish work. 

It’s hard to imagine when you would want to retire when you are young, just setting out on your career. 

But neglecting this can result in financial stress and having to work when you no longer want to. 

Early starters need to sacrifice very little to achieve this goal. 

Late starters need to catch up, and without the benefit of decades of interest compounding, will have to make sacrifices to retire when they want or need to.

Deciding what you spend your money on is a series of important decisions, taking into account opportunity costs.  Start acting like your rich and spend on the categories you truly value, and cut the excess.

Aussie Doc Freedom is not a financial adviser and does need offer any advise.  Information on this website is purely a description of my experiences and learning.  Please check with your independent financial adviser or accountant before making any changes.

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This article may contain affiliate links. If there are any in this article they are marked *. An affiliate link means if you click on the link and purchase a product, at no extra cost to yourself, I will receive a small commission.

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