Ask Melanie

Ask Melanie: How to maximise pleasure without emptying your pockets

Melanie Nutbeam, a certified financial planner based in Hong Kong, addresses common personal finance queries. Send your questions to

PUBLISHED : Monday, 10 December, 2012, 12:00am
UPDATED : Monday, 10 December, 2012, 2:28am

Christmas and Lunar New Year are a blowout season for me: eating, drinking, presents, and an expensive pilgrimage to family overseas. My bonus has paid off overindulgence in previous years, but that and job security are shakier now. Any tips on trimming festive season edges without giving up too much on lifestyle and goodies?

Mentioning the word "budget" takes all the fizz out of festivity, so let's not start there. Let's start instead with hedonism, or the pursuit of pleasure, which certainly sounds like more fun.

Early Greek and Indian philosophers identified ethical hedonism as a virtuous pursuit. They argued that conduct that increases pleasure and minimises pain, for ourselves and others, is the highest good. The debate has continued ever since.

Applying the concept of hedonism in the world of behavioural finance, Professor Shlomo Benartzi, at University of California, Los Angeles, has been a key contributor to developing the idea of "hedonic arbitrage". Basically, he says it's possible to increase your pleasure without raising your spending.

The concept relies on realising what brings us pleasure and on framing our spending decisions differently. This came to mind while I had a drink recently with a senior manager from a Swiss private bank. Based in Singapore, he spends a week each month in Hong Kong. When asked where he stays in Hong Kong, he told me the bank will pay for a five-star hotel, but he prefers a three-star that is part of an international chain. He earns loyalty points there, which he redeems against hotel rooms for his university-age sons when joining them for overseas holidays. He was pleased he and his boys could enjoy an extra night or two together while saving his, and the bank's, money.

He didn't miss the amenities, or status, of a five-star hotel at all. That's hedonic arbitrage at play.

It's a useful mental tool to apply to your holiday spending. It can help ensure that you optimise pleasure while minimising financial pain.

Make a quick list of your major holiday expenses. Next make a list of the things you most look forward to or give you the most pleasure. Your second list might include time with those who are special to you, or relaxing with a good book. Happiness studies show the greatest pleasures for many are derived from a sense of community and connectedness, not consumerism.

Think about whether each item on your first list will bring its fair share of pleasure or whether the money can be allocated to items that will bring greater pleasure now or later. One expensive dinner might be replaced with two that are less expensive but equally enjoyable. Flying economy rather than business might allow for a second holiday later. A less expensive gift now might allow for another valued treat later. Framed in terms of the pleasure they bring, you might wonder why some items are on the list at all. If so, strike them out to reduce pain later.

We are all under pressure to buy, and to buy on impulse, at this time of the year. Caving in can reduce, rather than increase, our pleasure. Work out your values and keep them in mind when making spending decisions. That way you might enhance your holiday season without suffering financial whiplash.

The views presented are of a general nature. For specific advice, talk to a professional planner. See the column archive at