
There’s a concept in economics called the marginal utility of money. “Utility” is a nice word that means satisfaction or enjoyment. “Marginal” refers to the concept of the next one.
So the simple definition of marginal utility is the question of how much satisfaction you’ll get by consuming the next unit of a good or service.
Here’s the thing: The marginal utility of spending money is negative.
This means that every dollar you spend on something brings you less satisfaction than the dollar before it.
So if you were to graph the marginal utility of money, it would be a line going down and to the right.
If you graphed your total utility, it would be a domed curve like a semicircle. In fact, it would look something like this:

Let’s take a look at a couple of examples that will help us understand why this graph looks this way.
Example #1: Televisions
If your house doesn’t have a television, you’ll probably be very happy to buy one.
You’d still be excited about buying a second. You could put it in the kitchen or in your bedroom to be able to watch TV in situations where you previously couldn’t. It wouldn’t bring quite as much satisfaction as the first, but it would still be enjoyable.
At some point though, it starts getting expensive and you start running out of rooms. Eventually, you have more physical TV’s in your house than are practical to watch. At some point you have too many to even display effectively, you just need room to store them.
This example is a little far fetched, because no one buys TV’s until there’s too many to enjoy, so let’s consider another example.
Example #2: Eating Out
If you never eat out, going to a restaurant is a real treat.
Going a second time is also amazing, although less magical than the first time.
Since there are so many tasty options out there and it is so much more convenient than cooking, it seems like the more you eat out, the better your life will be. Except it isn’t true.
At some point, you start to get used to eating out. Then you start to get mildly disgusted with it. I’m sure you’ve had the experience of talking with a spouse or close friend about dining options and one of you has said “ugh, I’m sick of all our normal places.”
And of course, there are other negative side effects that start to stack up. Eventually your wallet is noticeably lighter and your belly is noticeably heavier.
Not exactly a desirable combination. You’ll have to to trust me on the weight gain bit, but I’ve already documented how cooking is cheaper than eating out.
This illustrates the point that the satisfaction from additional spending doesn’t just drop to zero, it can drop below zero.
When this happens, your total satisfaction—which had been leveling off—actually starts to decline:

Enough is Enough
If you’ve been reading this blog for a while, you might have recognized that the total utility curve is the same as the fulfillment curve from Your Money or Your Life:

You can apply it to spending on a particular good or service, or just to spending in general.
The first bit of money that you spend is the difference between destitution and survival and it brings enormous relief, fulfillment, and joy.
Beyond that, you can start to enjoy some comforts which add enjoyment, but not at the same rate.
Further beyond that, luxuries offer the cherry on top.
But once you are indulging in luxuries, there’s nowhere to go. There’s no category above luxuries. Once you’re rich enough to afford luxuries, all you can do with money is to buy more luxuries.
Marginal utility has been going down this whole time. Sometime after you start buying luxuries it dips below zero and total utility (or total fulfillment) starts declining.
Looking at it this way is a great argument for the power of frugality to help you live a more enjoyable life.
An Alternative: The Barbell Approach
There’s an aspect of human nature that is both a blessing and a curse: You can get used to almost anything.
It’s a blessing because it means you can endure hard times.
It’s a curse because it means the fun wears off.
If you treat yourself to everything your heart desires, the result isn’t happiness but boredom.
I’d like to propose an alternative. I call it the barbell approach.

After you get over your initial amazement that I graphed a barbell, let’s take a second to talk about what this actually means.
The X-axis here represents time, and the Y-axis represents intensity.

The weight plates on the right represent a period of higher intensity than normal. Specifically they represent voluntary deprivation. You actively deprive yourself by choice.
The bar represents the “normal” baseline pattern of your life.
The weight plates on the right represent a period of high intensity, but this time not the intensity of difficulty. Now you can think of intensity as the intensity of pleasure. This is a period of indulgence.
So here’s the full picture:

Of course, as time goes on, you want to run through the barbell cycle many times:

An Example: Intermittent Fasting
I engage in intermittent fasting on two levels.
The first level is sometimes called time-restricted eating, or TRE. The idea is that you set up a window of time to do all of your eating. Let’s say noon to 8 pm. In this example, you’d have an eight hour eating window (noon to 8), and a 16 hour fasting window (8-noon the next day). This is known as 16/8 TRE.
For me, 16/8 is my baseline “moderation.” I also have a day (usually Friday) of intentional restriction, where I do OMAD (one meal a day). This is usually between a one and three hour eating window.
This restrictive day is balanced by a day (usually Saturday) with a more liberal 12 hour eating window. I start my day off right with some guilt-free donuts from Dunkin’ and I don’t look back. This is the right side of the barbell.
The second level of intermittent fasting is my monthly extended fasts. I start every month off with a 3-day water-only fast. Is it difficult? Yes. Remember, the left side of the barbell is high intensity. Is it boring? Also yes.
But here’s the principle: Periods of feasting should be balanced by periods of fasting.
I’m guessing you have periods of feasting (birthdays, holidays, Superbowl parties, etc.), do you have any periods of fasting?
I used intermittent fasting to lose 15 pounds in 2020 when everyone else was gaining weight. I’ve kept it off so far in 2021, and at 34 years old I’m in the best shape of my adult life.
I joke that intermittent fasting is like weight loss by gluttony. Yes, sometimes I’m fasting, but I’m also frequently indulging and I get so full my stomach hurts.
Moderation vs Symmetrical Loading
People often talk about balance as if it’s synonymous with moderation, but it isn’t.
You certainly can achieve balance through moderation:

But you can also achieve balance by symmetrical loading:

You want to live your life like you load a barbell. Put some weight on both ends. Balance feasting with fasting. Comfort with discomfort. Relaxing with working. Spending with saving.
Or you could look at it the other way around: Balance feasting with fasting. Discomfort with comfort. Working with relaxing. Saving with spending.
Here’s another way to think about it (and another way the barbell analogy fits): Contract, relax.
Final Thoughts
Mindless consumption gets you the diminishing marginal utility of money.
The barbell approach keeps things fresh and lets you enjoy life the way it was meant to be enjoyed: In seasons.
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