Joy-Based Budgeting: Does It Actually Work?

How spending on things that make you happy could help you reach your long-term goals.

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Edited by other Published Apr 16, 2026 What if those fancy foamy coffees you love aren’t just allowed in your budget, but encouraged? Or taking a salsa class, or buying gardening supplies? Welcome to joy-based budgeting: The practice of spending money on the things that enrich your life while still meeting your savings goals. For some, this shift can make saving feel more sustainable. Kaylee McClellan, a certified financial planner with Innovative Planning Group in Minnetonka, Minnesota, works with a couple in their 30s who are “a little bit pessimistic about the future of the world, so for them it’s challenging to want to save all this money for this future date,” McClellan says. Her clients value being able to travel and even live abroad for brief stints, so they’ve designed a budget that allows them to do that, while still saving for later. Without the travel, McClellan says, “they’d be miserable. And they wouldn’t be able to buy into the long-term savings plan.”

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Why joy-based budgeting is effective

Joy-based budgeting can be successful because it includes the fun parts of life, instead of a more limiting style of budgeting that “fails almost every time,” McClellan says. “It restricts people way too much." In much the same way that including some chocolate might help you stick to a diet, including some joyful spending can help you stick to a long-term financial plan. “It’s spending on purpose,” says Ashley Bleckner, a CFP with financial services company Ellevest in San Diego. “Spending intentionally.” And spending with your goals and values in mind can lead to better decisions. “There’s a theory out there called ‘The Red Car Theory,’” says Nick Gertsema, a CFP and CEO of Gertsema Wealth Advisors in Saint Joseph, Missouri. If you’re thinking about buying a red car, he says, you suddenly notice red cars everywhere. Once you start training your brain to look for opportunities to spend on things that enhance your life, he says, “you’ll stop spending on the things that don’t bring you the joy or fit with what you want to do.”

Putting joy into practice

If intentional spending on happiness is appealing in a world that’s a little stressful right now, here are a few steps to get you started: Identify what brings you joy. This may sound simple, but if you’re staring at the ceiling wondering where to begin, there are several online quizzes to help you narrow it down. (McClellan recommends this one from Think2perform, a performance development company.) Identify what brings you joy. Track spending for 60 to 90 days. Choose a period that reflects your typical spending (read: not the holidays) and look closely at where your money went. Are you spending on things that make you happy or enrich your life? Track spending for 60 to 90 days. Adjust accordingly. If you find that your money is going to things that don’t bring you joy, think about how you can tweak your outflow so that it does. “Start looking for the opportunities to save the money and consume things that align with what’s important to you,” Gertsema says. Adjust accordingly. Revisit regularly. “Life evolves,” Bleckner says. “Goals evolve. Values evolve. So it’s a healthy exercise to check back in on an annual basis.” Revisit regularly. This kind of budgeting might take some practice, but in the end, it’s still just managing your finances — with a new focal point. “I am still encouraging my clients to save,” Bleckner says. “You can have a great portfolio and still feel disconnected from your life. So these concepts are what’s bridging the gap.” Explore more on About the author WMS™ Kate Ashford is a writer and spokesperson for NerdWallet. She is a wealth management specialist (WMS)™ and certified senior advisor (CSA)® and has more than 20 years of experience writing about personal finance. Previously, she was a freelance writer for both consumer and business publications, and her work has been published by the BBC, Forbes, Money, AARP, LearnVest and Parents, among others. She has a degree from the University of Virginia and a master’s degree in journalism from Northwestern’s Medill School of Journalism. Kate has been quoted by outlets including the Associated Press, MarketWatch, NBC and Fortune. She is based in New York. Published in How to Pay Off Debt: Top Strategies for 2026 Credit Score Ranges: What They Mean and How They Work How to Budget Money in 5 Steps 28 Proven Ways to Save Money Get Your Free Credit Score By NerdWallet How to Pay Off Debt: Top Strategies for 2026 By Lauren Schwahn, Jackie Veling 50/30/20 Budget Calculator By Amanda Barroso, Elizabeth Ayoola