Fun Coupons and Values: Understanding the Psychology of Spending

Remember that hilarious scene (turned meme) from Wolf of Wall Street where Leo's character attempts to bribe law enforcement on the yacht? When the honest agents reject him and disembark the ship, he yells at them while making it rain Benjamin Franklins: 

Hey, fellas! Look what I found in my pocket! Look! A year’s salary right here. You know what I call them? Fun coupons! See that! They’re fun coupons!

Jordan Belfort, portrayed by Leonardo DiCaprio, is infamous. Stories like his (most are too vile for the post) are the kind that leads people to demonize the most wealthy among us and distrust our financial institutions. I don't know if Belfort ever actually used the term "fun coupons," but I've jokingly borrowed the expression since first watching the movie after its 2013 release. 

Not jokingly, I've thought more about what money is — especially after reading a short piece from Present Witness on Economics as a Moral Philosophy. I don't entirely agree with the author, but I found the essay thought-provoking. It led me to examine my beliefs about economics and money. 

David Perell said of ​Economics as a Moral Philosophy: 

I‘ve always been annoyed with the idea that economics is a complete science. It isn’t. Humans are too unpredictable, and the ideas break down too often. But in particular, everybody should know the basics of microeconomics. Though this article doubles as a critique of the discipline, I like the idea that economics is a value system that shapes our decision-making in ways so ingrained in society that they’re invisible to us.

I agree with David —  economics is not a science, a topic economist F.A. Hayek commonly harped on:

“Unlike the position that exists in the physical sciences, in economics and other disciplines that deal with essentially complex phenomena, the aspects of the events to be accounted for about which we can get quantitative data are necessarily limited and may not include the important ones” (Source)

 I'm less interested in economics as a value system of society and more curious about money's relationship to the individual: 

What does our use of money say about us? How do we decide on what to spend? 

Sometimes money is fun coupons, but it can also be relaxation coupons, health coupons, education coupons, experience coupons, survival coupons, or whatever else we need.

Ultimately, money is value coupons —our spending results from (and reflects) our value system.

In his book, Essentialism, Greg McKeown urges readers to focus on the right things — to regain control of their time and energy. He said, "If you don't prioritize your time, someone else will." That quote reflects a reality the Stoics identified over two thousand years ago — that we value time less than things, even though time is far more important.

Seneca said in On the Shortness of Life: 

“Men are tight-fisted in guarding their fortunes but extravagant when it comes to wasting time — the one thing about which it is right to be greedy.”

They are right.

Greg's idea can be translated to personal finance — "if you don't prioritize your finances, everyone else will." Aside from the world's richest, we all have to decide how to spend our money. It's all about tradeoffs. For every dollar spent — that's one less dollar available for something else (or to save for future consumption). 

A dollar can be redeemed for a family coupon, a fashion coupon, or other coupons, but with limited dollars, our decisions reflect what we care about. Meeting basic needs comes first. But after that, there's an endless supply of stuff to buy, trinkets to collect, places to visit, food to eat, etc. 

How do we decide what to buy? 

Some people consume a large percentage of their income on the latest fashion, while others drink their take-home at bars and clubs. I'm not here to pass judgment on which coupons people prefer, only to say that we can better understand what we value by looking at how we spend. If our spending doesn't align with what we claim is essential, it might be time for an audit. 

Just as McKeown advises readers to apply a selective criterion when deciding where to channel our time and energy, I recommend we do the same thing when choosing where to direct our money (which coupons to redeem our dollars for). 

When it's time to exchange value coupons, ask yourself, is that what I want — does this reflect my values? Or is this what others around me want? So spend those fun coupons (although maybe more judiciously than Leo’s portrayal of Belfort), but keep in mind that money-value alignment shrinks the stress that often accompanies finance and generates more satisfying financial results.

Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. I encourage you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from James Vermillion, and all rights are reserved.