‘Money is better than poverty, if only for financial reasons’- Woody Allen
Let us allow ourselves to be selfish for a moment, ignoring society, community and others, just for a moment and consider what makes you happy? Have you thought about this lately? Many people don’t and continue to avoid things that make them happy, or fail to discovery them, or even worst continue to do things that make them unhappy.
We all have responsibilities be they work, social, family or personal. But you only get one shot, life is not a rehearsal, so why not take time to revaluate what makes you happy and get on with building a happy life and creating memories?
A new book on the subject of financial happiness – ‘Happy Money: The art of smarter spending’ by Elizabeth Dunn & Michael Norton, suggests that how we spend our money, rather than how much money we have, determines our overall level of happiness. Dunn and Norton are behavioural science experts who have researched how spending influences human happiness and they have found five core principles that increase happiness. Here’s a quick overview of their findings.
1. Buy experiences, not things
The excitement and satisfaction we derive from buying material things – a new car, clothes, jewellery, gadgets etc. – soon wears off. On the other hand we remember things we’ve done, people we’ve met and places we’ve visited long after we forget the price we paid.
Recently, clients who had longed to visit family in New Zealand but could not face the thought of travelling such a distance have returned from what they described as a trip of a life time with an album of memories. With some encouragement and persuasion (come on their bucket was overflowing) they travelled business class and it transformed their journey, so much so they are planning their next trip.
2. Make it a treat
If you set yourself a goal or give yourself conditions for acquiring material possessions or buying experiences, you’ll enjoy them more.
So, what challenge could you set yourself today, then link it’s achievement to a related acquisition? While you may be able to afford the item anyway, completing personal conditions and goals will give you far more satisfaction when you eventually make the purchase.
3. Buy time
Life is too precious and short to waste it doing things we aren’t good at, don’t love or that get in the way of us spending time on things that are more important to us. For example I hate completing my tax return, ironing or paperwork. I therefore spend money to delegate these tasks to people who are paid to do them and are better at these than me.
Spending money to save time, avoid delays or achieve things quicker leads to greater happiness. What or who can you pay to delegate or avoid freeing up your valuable time?
4. Pay now, consume later
Deferred gratification increases happiness. Research suggests that saving up for something and then buying it makes us feel much better than buying something on credit. Even if you have the money to buy something, why not defer it and save up the funds to buy it? For example, instead of paying my tax in two big lumps each year, I now pay it monthly in advance, to avoid the pain I felt every time I had to send off a payment every January and July. Now I don’t notice the tax liability quite as much as I did.
5. Invest in others
Helping others financially makes us happy. Whether it’s sponsoring someone for a charitable event, making a small loan or gift to help them achieve something, paying for them to have a meaningful life experience or buying them something special, it improves how we feel.
Our level of happiness is influenced by many things but the research in this book suggests that how we spend our money can have a big impact. Have a good look at what you spend your money on to ensure that you really are getting the most happiness for every pound that you spend.
