Deriving More Happiness from Your Spending Habits
Not all purchases are created equal. No matter your tax bracket there is often the feeling that there isn't enough to do what you want, pay off what you need to, and sock enough away for down the line.
There's always some excuse for not getting on top of our finances, we are busy after all, and between work and families, there's little brainpower left to devote to balancing the books and making more mindful spending choices. But what if, with just a few tweaks, you could? In this article, we will walk you through a few techniques that can help you feel happier about your spending habits and your money management skills.
Technique One: Make Spending a Treat
Are you the type to grab coffee out every day? How about lunch? If so you may be spending thousands of dollars a year. By bringing a lunch and making your own coffee you could pay off a credit card bill, go on a great vacation, or have a nice chunk of change tucked into your savings. We nickel and dime ourselves all the time and retailers know this. Supermarkets and department stores are designed to make the things you need harder to find and encourage impulse buying along the way. Online retailers create urgency with sales, email campaigns, and coupon codes. On top of that, keeping a credit card on file makes it all the easier to make last-minute instantaneous purchases. The less we use cash, the less we feel these fast, impulsive purchases. A great place to start tweaking our relationship with money is making the little purchases more of a treat than a given. Paying in cash is a good way to see where your money goes, allotting yourself a certain amount of spending money a day, when your wallet is empty, then you've reached your max. By practicing mindful buying you can also fight the urge to just speed-spend. Pick up items, try on clothes, price comparison shop. Retailers are very savvy about the psychology of the shopper's brain and design your experiences to upsell you. So, step one is to talk a pause and really think before you buy. Do you need a $5 coffee (and the extra calories?) is it better to grab a $10 wilted salad or to brown bag it? The average family wastes over $2,000 a year throwing out leftovers alone.[i] You may find that by making your purchases more of a special treat and not just a blah exercise in consumerism, that the things you own start to mean more. That cappuccino becomes a treat and not a daily caloric indulgence.
Technique Two: Buy Experiences Not Stuff
Did you know that people feel happier about spending on experiences than on things? Studies have shown money spent on experiences feel like a better deal in the long-run. The good thing about that is, now you don’t have to worry so much about buying your kid (or yourself) the newest most expensive thing, right? It may not stop your kid from demanding every new thing, but like the first step above, treating spending like a treat makes the purchase more rewarding. Spending money on wonderful experiences, time out with friends, trips, adventures for yourself and your family will enrich relationships, build memories, and closeness. Not every experience needs to be an extravagant, expensive affair either. Quality over quantity works in nearly every case. Picnics in the backyard, watching fireworks, nature walks, concerts on a beach, are just a few examples. Having good friends, for example, keeps us healthier and longer lived.[ii] There are so many amazing, enriching and cost-effective options, not every experience needs to be opulent or elaborate to be memorable or special. A little creativity goes a long way.
Technique Three: Buy Yourself Time
We lead busy lives and it's easy to feel like we are always a day late, a dollar short, and missing out on quality living and experiences. If you can afford it, paying to simplify your life and get more free time back, may be worth the investment. There's an old adage that to do anything you need 2 out of three of time, effort, or money. If you have the money and not the time, paying to have your house cleaned for example, or groceries delivered, or taxes, or yard work, may free up time for what brings you joy. The key is to outsource the obligations you dislike doing. Don't have time to bake for a bake sale, bakery cupcakes can be just as good (or better depending on your baking prowess!) and you've just bought yourself more time to focus on what you want to do. Thinking about your time as valuable will also influence how you choose to spend your newfound free time, if you are using the above two techniques, it will probably hold more value than it had in the past.
Technique Four: Think Bigger
Charitable spending stimulates the pleasure centers in our brain. In short, helping others makes us feel good. A lot of happiness studies find that having a purpose outside of yourself brings satisfaction.[iii] Thinking bigger gets us out of our heads and more connected to the community outside. Each and every one of us is passionate about something, be it children, the environment, the arts, food, animals, and on and on. Finding ways to give, be it through volunteering, donation, mentorship, etc. will help not only the cause but our overall state of being. There are so many worthwhile causes that would value your contribution. Practicing gratitude for all that you have and paying it forward to help others won't grow our bank accounts, but it will grow us as part of more than the rat race and the "keeping up with the Joneses" that can easily compel us to overspend without much thought.
Mindfulness Brings Money Happiness
You’ve probably noticed a theme to this article, each technique involves a little bit more thought than just swiping a card through a machine. The more we value our work, our time, and our money, the better we will be at spending it. Everyone wants to look back at their path and feel they’d lived their life well. Having a healthy relationship with how and why we spend money will help get us on the right path. This path of financial thoughtfulness is also a wonderful gift to pass along to further generations. Leading by example and pursuing meaning over clutter.
About the Author
Carroll W. “Bill” Hayes, MBA, CFP® Mr. Hayes started his financial career at Merrill Lynch in 1989. In 1992, Bill left Merrill Lynch for Fidelity Investments. During his career at Fidelity Investments he held roles in various divisions of Fidelity. Those roles included positions in the Trust, 401(k), Brokerage, and Money Management divisions. Bill held management positions at Fidelity and in 2001 led a Private Access team based in Boston. In the Private Access role his responsibilities included managing a book of business in excess of $3 Billion and a client base that was international in scope.
In 2008 Bill established Charles Carroll Financial Partners. The firm is an Independent FeeOnly Financial Planning and Investment Management firm. Charles Carroll Financial Partners embraces its fiduciary responsibility to its clients.
Bill is a graduate of Marquette University, and holds an MBA from the Sawyer School of Management. Bill holds the designation, CERTIFIED FINANCIAL PLANNER, and currently presides as a Commissioner on the Disciplinary and Ethics Commission of the Certified Financial Planner Board of Standards. Bill resides in Massachusetts with his wife Christine and travels up and down the East Coast meeting with clients of the firm.