Money Can Buy Happiness
Money does buy happiness in that it protects from hardship. But if we are in the position to be able to afford more, can we be happier spending more?
I am not advocating for spending carelessly. But, when the resources are there, are there ways to make your money “work for you” outside the investment realm?
Authors Elizabeth Dunn and Michael Norton published a well-researched book called Happy Money: The Science of Smarter Spending. They espouse five ways to spend money to increase happiness.
- Buy experiences. (I suggest that you buy things that allow you to do what you want to do. For example, my e-bikes allow me to significantly enhance my bicycling experience and that makes me happy.)
- Make it a treat. Don’t indulge in your favorite ice cream every day—it stops being a treat.
- Buy time. Pay people to do what you don’t like doing.
- Pay now, consume later. That paid-for vacation seems “free” by the time you take it.
- Invest in others.
I would say those five criteria make a pretty good start.
Donate to Charity—Spend Money on Others
Dunn and Norton make some great observations about charity. What’s most important is that you spend money on somebody else. They found a universal positive correlation between giving and happiness.
Purchasing and distributing 50,000 KN-95 masks to charities, family, friends, and clients was “worth” many times what I paid for them.
This increased happiness can be achieved by supporting your favorite charities on a large or small scale.
Simply doing something to help others—no money involved—can really improve your sense of happiness and belonging.
I belong to a business coaching group, and we did an interesting exercise. The coach told everyone to write down what they would do if they had an extra 1,000 hours of time per year. Answers included spend more time with family, travel, play more golf, write a book, join a gym, etc.
Then, he said, “Now figure out a way to free up those hours.” The way I free up time is to pay others to do stuff that I don’t want to do.
Hint: Delegating chores to your spouse is not what I have in mind! I encourage you to make your own list and think about ways to free up your time to do the stuff you want to do.
Host a Family Vacation
For over 25 years, my father-in-law has hosted an annual family vacation picking up the tab for the entire family. For a four-day weekend, the entire family drives or flies into a resort in the Poconos. All the children, grandchildren, and great-grandchildren hang out together to play games, swim, go to the “beach,” kayak in the lake, play golf, laugh at the Comedy Club, and enjoy family activities. We eat all our meals together. It has fostered family ties in a way that none of us could have imagined.
This advice is consistent with multiple authors who say, “Buy experiences, not things.” Imagine how much your loved ones would appreciate such an experience after being unable to go anywhere during the pandemic. Better yet, make it an annual event.
Beware of False Economy—Treats are Okay
I took my mom on several mini-vacations. Can you think of a better way for me to spend my time and money? She was in her mid-nineties when my wife, Cindy, my daughter, Erica, and I took her to New York. A retired professor, my mom was as sharp as ever. One of the top attractions for my mom was to buy a silk scarf at Bloomingdales! She spoke of it many times, and we were very aware that it was a priority for her! But when the saleswoman told Mom the scarf cost $100, she said that that was much too expensive. I pleaded with my mom to let me buy her the scarf. She would have none of it.
How do you balance desires with practicalities? On the scale of the trip, buying the scarf was inconsequential. But for my mother, the financial outlay of $100 for a scarf crossed the line.
But for all these issues, keep in mind the person that dies with the most money is not the winner.
The suggestions above encompass many ideas that I fully embrace, and I encourage you to think about ways you can spend your money to buy more happiness.
We work with clients to develop Personal Financial Masterplans covering spending, saving, investing, gifting, estate planning, etc. Of course, we also tell you how much money you can afford to spend. If you have an interest, please call Edie at 412-521-2732.