money is fungible
There can be a good reason to be particular about what money gets spent on what, but failing to recognize the fungibility of money can lead to silly decisions and assumptions that can unnecessarily limit how we invest and spend.
Ascribing particular dollars to specific activities doesn’t give us any new information. After all, money is fungible.
People like to think that they’re living only from dividends, but the fact is that you’re living off of your nest egg, and the dividends are just a tax-inefficient payout for most, especially during your working years.
I advocate treating your entire portfolio as a whole and not trying to maintain similar asset allocations in individual accounts. Doing so allows you to invest in the most tax-efficient manner, and it makes rebalancing a whole lot easier, too.
The idea is that if you buy one rental property when your kids are young, the rental income and expected appreciation of the property could pay for your child’s entire tuition by the time they’re college-bound.
If you give him a gift card for a place that he’d never, ever spend his money, you’ve succeeded in giving him some non-fungible money. But you’re also forcing him to spend on something that he might not value.
Take any newly earned or received money and apply it to reaching your longer-term goals while keeping a budget that allows for the occasional splurge you crave.
When you give, you want to make an impact. You want to be sure that all of the money you give goes towards helping other people, cures for diseases, or whales or whatever, and not towards administrative costs, advertising, or paying some executive’s salary.