How’s That Third Scoop of Ice Cream?

Hands down, my family’s favorite ice cream shop is Ozzie’s Ice Cream. It’s just down the street, has an old-timey feel, and boasts dozens of flavors. We’ve been enough times that I can tell you our kids’ orders without asking them:

Everett, Age 6, at Ozzie’s with One Scoop of Cookie Monster
  • Everett (age 10) – Either cookie monster or cotton candy (both of which turn your mouth blue for a day).
  • Finley (age 13) – Salted caramel (or salted caramel cookies and cream.)
  • Grayson (age 15) – Something fruity like peach, black cherry, or strawberry.

Those are wildly different orders! But the one constant is that every time, just as we’re about to order, one of the kids will ask, “Can we get two scoops?” This wouldn’t be surprising except that a) we’ve never ordered anything more than one scoop, and b) they can barely finish that single scoop without exhaling and groaning, “I’m fulllll!”

Diminishing Marginal Utility of Ice Cream

There’s a fancy economics term for this: “diminishing marginal utility.” Textbooks use far too much paper trying to explain it when really they should just talk about ice cream. The idea is that the first scoop of ice cream tastes great. The second scoop of ice cream tastes a little less great than the first. And the third scoop of ice cream might make your stomach hurt.

Are These “First Scoop of Ice Cream” Dollars?

We think it’s helpful to view how we spend our dollars through the lens of First Scoop versus Third Scoop expenses. It is easy to identify some First Scoops (basic food, shelter, and clothing) and some Third Scoops (that streaming service you never watch.) But between those two extremes, it gets harder because people have different tastes, and our tastes change over time.

People Have Different Tastes

As much as Everett loves his blue ice cream, I’ve never felt the need to get it myself. My first scoop of ice cream can be different from yours. Similarly, how I choose to spend my money and my time (especially my First Scoops) only needs to make sense to me.

For one person, a new car could give them the comfort of dependability and the ease of not making more car choices for a long time. But for someone else, a new car could give them the anxiety of parking lot dings and the regret of not using those dollars for something they value more. And they would both be right!

A First Scoop Can Become a Third Scoop

We must recognize and be comfortable with our priorities and goals changing over time. For example, a Second Scoop vacation house could become a Third Scoop regret because something always needs repairing ($$$) and the kids’ school and sports schedules make it so we rarely get to enjoy it. However, as kids move out and incomes go up, the vacation house could move up the ladder to a First Scoop retreat. But at some point later, the burden of maintenance and a desire to travel the world might make the vacation house seem more of a Third Scoop burden.

Those shifts shouldn’t be surprising. But if we refuse to acknowledge them, we face two hazards: never trying a new flavor and never giving up on a flavor. If I told myself that a vacation home would never be in the cards (without thinking through it or modeling it into my financial plan), then I could miss out on some great memories and quality of life. Similarly, if I’ve owned a vacation house but never entertained the idea of selling it, then I could miss out on what I could experience with the time and money that I continue to put into the house.

What are Your First and Third Scoops?

Just like we would spend plenty of time looking at all the flavors on the wall at Ozzie’s, it’s worth considering our First and Third Scoops wherever we spend our time or money.

It is a great exercise to look over the past 3-12 months of spending with a careful eye toward your First and Third Scoops. But we encourage you to look past just the labels to think about what those scoops mean to you: 

  • Starbucks can be a First Scoop. (That’s where I get together with my best friends), and a charity could become a Third Scoop (I’m no longer passionate about that organization.)
  • A “cheap” gym membership can be a Third Scoop (I went one time three years ago), and an “expensive” Peloton can be a First Scoop (That’s the only thing keeping me active.)

No matter which flavor you choose, we would love to see you pick it with intention. Where we can help in that process, please let us know. 

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Justin Smith

Justin Smith

Senior Financial Planner, Chief Investment Strategist at Smith Partners Wealth Management
Knowing full well that financial planning is about far more than numbers, Justin loves to help clients walk through both the routine and the significant decisions in life. While he could have been perfectly happy with a career as a mathematician or counselor; he is delighted to get to be both...often within the same meeting or even sentence. Justin thrives on being able to transform complex financial and relational issues into practical plans and clear action steps.
Justin Smith
Justin Smith

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