Small Spending Experiments
Test desired experiences cheaply before making a large commitment
- Difficulty
- Easy
- Time to result
- ~days to results
- Steps
- 5
- Confidence
- 93%
Richards observes that the habits that build wealth—frugality, delayed gratification, aggressive saving, and discipline—can later prevent people from using money they can safely spend. His response is practice through small experiments. First identify something that may matter, then verify that the plan can support it. Instead of leaping into a large commitment, run the smallest realistic version: buy coffee for a friend, take a trip, rent a boat for a day, or calculate the full economics of private travel. Pay attention to whether the experience creates genuine enjoyment, repeated desire, or unexpected friction. The evidence either supports a larger commitment or releases the imagined goal. The process aligns spending with people and experiences that matter while separating personal value from comparison, status, and abstract affordability.
Origin
Extracted from Masters in Business
Core principles
- 01Accumulation habits can become obstacles when it is time to spend
- 02A small real experience reveals more than an imagined preference
- 03Spending should align capital with people and experiences that matter
- 04Affordability and personal value are separate questions
How to run it
- 1
Name the desire
State the purchase or experience you believe is important. Ask where the desire came from and whether it belongs to you rather than your comparison set.
Pro tip Distinguish the underlying benefit from the most expensive form of obtaining it.
Watch out Instagram, peers, or family expectations can supply goals that feel personal.
- 2
Check the boundary
Confirm what the financial plan can safely support. Keep the experiment inside that boundary before evaluating its emotional value.
Watch out The framework does not turn an unaffordable purchase into a responsible one.
- 3
Shrink the commitment
Find a small, reversible version that preserves the key experience. Rent, borrow, visit, calculate, or try once before buying the permanent version.
Pro tip For a desired boat, rent one for a day before purchasing one.
- 4
Collect lived evidence
Notice enjoyment, inconvenience, repeat desire, and the effect on people you care about. Compare the lived result with the imagined benefit.
Pro tip Include all recurring costs and practical friction, not only the purchase price.
Watch out Do not defend the original desire after the experiment disproves it.
- 5
Scale or release
Spend more when the experiment confirms alignment and affordability. Otherwise choose a smaller substitute or let the goal go without treating that as deprivation.
Pro tip Repeat small acts of spending to practise using money after years of accumulation.
In the wild
During a discussion of whether someone truly wants a boat, Richards and Ritholtz propose renting one for a day as a small experiment. The trial can reveal whether boating itself is valuable before the buyer accepts the cost, crew, maintenance, and resale risk of a large sailboat.
→ The person gains direct evidence about the desire without making a large irreversible purchase.
Ritholtz asked private-aviation providers for actual costs after imagining that avoiding commercial airports was important. The annual expense implied an income level he did not expect or value enough to pursue, so he kept flying commercially and used timing to avoid the worst airport friction.
→ Running the numbers separated the desired convenience from an ownership-level commitment that was not worth it to him.
Common mistakes
Buying the maximum version first
A large initial commitment hides whether the person enjoys the underlying experience enough to justify its cost and friction.
Confusing status with desire
A goal learned from a broader comparison set may disappear once the person tests what they actually value.
Treating all spending as failure
The habits that created wealth can keep operating after they stop serving the person's life.
Is it for you?
Best for
It is best for financially secure people who struggle to spend or are considering an expensive lifestyle purchase.
Not ideal for
It is not ideal when even the small experiment would breach essential spending, debt, or portfolio constraints.
From the transcript
“the very things that got you to that spot are working against you going forward”
“So why not just practice? Like can we pick something small?”
“thinking that something might be important, running a little bit of an experiment, just actually running the numbers, deciding”
From the episode
Sketching Wealth Strategy: Masters in Business with Carl Richards
Carl Richards