Overall Gist: In this blog post, you’ll learn the five ways to happier spending as well as some financial tips for you to implement in your everyday life. Enjoy!
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5 Ways to Create Happier Spending
Spend your money to improve your happiness. Sounds easy, right? Yet, too many people buy trinkets, gizmos, gadgets, and impulse purchases which later just sit on a shelf or end up in the trash. Even worse, many people get sucked into large purchases which are part of the American Dream or to Keep-Up-With-the-Joneses and then can’t buy things they really enjoy since they’re paying off debt.
My challenge to you is to buck these trends and intentionally spend on the following five categories to improve your own happiness.
Happy Money: The Science of Happier Spending by Elizabeth Dunn and Michael Norton
I recently read this book which I purchased at TEDxMileHigh. It had a comical tone and referenced numerous studies which validated their recommendations. Let’s dive into the five categories explained by the authors.
1) Experiences vs. Things
Stories, social bonding, and memories lead to personal enhancement. The authors describe how adventure races like the Tough Mudder have higher satisfaction rates versus someone running a marathon since the Tough Mudder is a team effort. The Tough Mudder promotes a shared experience while bonding with others throughout the race. Look into experiences to connect with others so you can create shared memories.
Would you rather stay at an ice hotel in Canada or a budget hotel? Which one provides a better memory? Studies have shown when people look back at their lives, they discuss experiences and moments versus buying things. We all know this to be true so it’s a good reminder to embrace this mentality otherwise we all become consumed by the rat race.
- Financial Tip
To quote the authors, they summarized these reminders:
“…Our discussion so far suggests that across a wide range of different types of experiences, you’re likely to get the biggest bang for your buck if:
- The experience brings you together with other people, fostering a sense of social connection.
- The experience makes a memorable story that you’ll enjoy retelling for years to come.
- The experience is tightly linked to your sense of who you are or want to be.
- The experience provides a unique opportunity, eluding easy comparison with other available options.”
2) Treat Yourself
The comedian, Sarah Silverman, was referenced many times for her style of making fart jokes a treat. Stay with me here 🙂 Her philosophy doesn’t want to overuse fart jokes throughout her comedy so she intentionally puts fart jokes into her performances as a treat and a surprise for her audiences.
The authors state that abundance destroys our ability to appreciate the little things. If we always expect to have chocolate every day then you won’t enjoy chocolate as much as Charlie from Charlie and the Chocolate Factory whose family could only afford one chocolate bar a year. Think about when you go camping and you don’t shower for multiple days. That first shower feels much better than your typical daily shower.
The French call this philosophy petits plaisirs. Americans call it little pleasures. Do your best to savor the little things.
- Financial Tip
Think of your spending in the same way. Think of a daily habit or indulgence that you can make into a treat. Be it a latte, a snack, etc. Instead of purchasing the same thing mindlessly, only buy it once a week or, even better, whenever you accomplish something to make it a reward. With the latte example, you can drink regularly brewed coffee every day of the week and then a latte one day a week, thus saving money in the process. You’ll then have a Latte Day to look forward to.
3) Make Your Life Easier
A person who loathes housework should buy a Roomba – a robotic vacuum cleaner. A person who hates sitting in his/her car in traffic should move closer to the office or work from home more often.
There are ways to spend money to give us more free time. In our busy worlds, we get caught up with responsibilities and, if we have some time to do nothing, we sometimes fill that time with thinking about which responsibilities we need to do next.
The authors describe the Swimming Pool Paradox. Everybody wants a pool but in order to afford it, many Americans move to the suburbs to find a house with enough land for a pool. Then comes the maintenance for the pool sucking time and resources. One example: the never ending amount of leaves needing to be scooped out of the pool. Chances are you’re also farther away from the office which causes longer commutes to and from work. Is the pool really worth it?
- Financial Tip
Commuting sucks. I live in Denver and traffic is becoming more like Los Angeles. Personally, I loathe traffic since it becomes a competitive landscape against the other cars. You see people become their worst selves because they’re in the shell of a car.
This is why I intentionally choose to take the public light rail whenever it makes sense. While in the light rail, I read and listen to music, two of my most relaxing activities. Then when I get to the destination, I’m less stressed and also saved money because parking downtown can be expensive. To destress, prevent drinking and driving, while also saving a few bucks, investigate public transportation.
4) Buy in Advance
Visualize this example. You’ve been planning a vacation for months and the time has finally come to get on the plane. Are you thinking about the price of the plane ticket? Most likely not because you’ve prepaid the flights and now you’re simply excited to participate in the journey ahead. When you purchased the tickets, you weighed heavily on the price and possibly felt a little guilty for spending a large amount. But when it’s time to board the plane, your purchase is water-under-the-bridge and you’re no longer feeling guilty.
The authors describe handy strategies on how to spend wisely so you can enjoy your life versus always looking at the price tag throughout your day-to-day routine. These strategies include prepaid packages for babysitting, all-inclusive hotels for weddings so guests can enjoy themselves versus looking into the ongoing expenses, and slower shipping. Slower shipping? Yes, by opting for longer shipping times, you enjoy your purchase whenever it comes because you have the opportunity to forget about your online purchase. Also, anticipating your package is sometimes half the fun.
- Financial Tip
Whenever you regularly frequent an establishment, ask them about prepaid services. These expenses are worthwhile ONLY if you’re confident that you’ll use all the services provided. Examples include daycare, babysitting, haircuts, and pet boarding. Also, don’t buy a Groupon unless you have a specific date on the calendar to use it.
5) Spend on Others
A preschool class had a puppet show. Monkey was one of the star puppets and was fed snacks by the puppeteer throughout the show. Monkey promptly ate the snack and then rubbed his belly while expressing a loud, “Yumm.” After the performance, the toddlers were given snacks to enjoy. They had the option of giving some of their personal snacks to Monkey. The kids who independently gave a goldfish cracker to Monkey beamed with happiness. The point is: we’re social creatures and we feel good about giving to others.
When given the opportunity to donate people enjoy making the choice themselves. Research shows that people feel great when they know they made the decision to give and that their donation will make an impact. Be it to friends, family, a local community, or a cause you care for, giving feels good. Do it more often 🙂
Have you been searching for a non-profit to make a direct impact to but can’t find one easily? Well, there’s two that I recommend for online giving.
- The authors mentioned this organization where you can find specific classrooms that need specific projects funded. You can search for your local community or by the subject. Check them out: www.donorschoose.org
- If you desire to help the global community, look into this organization that finds small businesses throughout the world that need loans to fund their entrepreneurial efforts. You can search by region or by type of mission. You can easily get hooked on helping people from all over the world. Check them out: www.kiva.org
Now go spend with happiness on your mind! If you’re interested to dive into the book, check out your local library or find it on Amazon here: Happy Money: The Science of Happier Spending.
Hope you enjoyed reading and if you have a Financial Planning question, feel free to get in touch here: Contact Dan.