What does money mean to you? For some people, it means freedom and flexibility; for others, peace of mind and independence. For still others, it represents power and control.
Once you determine what it means to you, you can evaluate whether your approach to saving, spending, and investing money increases your happiness—or leads to dissatisfaction.
Has Your Money Bought You Happiness?
If it hasn’t, financial planning may be the ticket you need. Financial planning can help you gain clarity, confidence, and control over your finances.
When you demystify complex issues such as investments, taxes, and retirement, you can empower yourself to make better financial decisions with confidence. You won’t ever be able to control stock market volatility and interest rate fluctuations, but you can control how you perceive, handle, and value money.
Start by developing a written financial plan. Be sure it includes integrated financial planning advice in terms of investments, taxes, risk-management, retirement income, estate planning, and charitable giving.
What is enough ?
Resist the temptation of thinking that no matter how much you make, you will still need more. While I don’t believe you should equate your self-worth with your net worth, I do believe that developing a healthy relationship with money is an important ingredient in your overall happiness.
Here are four strategies you can use to embark on your own happiness project, so that you can be truly happy, healthy, and wealthy.
Celebrate the experience. According to Dan Gilbert, Harvard University psychology professor and author of “Stumbling on Happiness,” the key to being happy is to spend your money on experiences rather than on accumulating material objects. Memories of people, places, and activities don’t lose their luster the way stuff does. Prioritize relationships over possessions and status. Spending time with close friends or family, even when the activity you’re sharing is not exciting, makes people happy because it fosters a sense of togetherness and connection. For example, as I have mentioned in previous columns, it’s not easy raising financially savvy kids in consumer culture where delayed gratification seems like an outmoded concept. When my kids came home with good report cards, instead of buying them toys or gifts, we went to a water park or concert, or shared some other activity together. Spend on others. Experiments by Harvard University researchers showed that spending money on others (“prosocial” spending) improves emotional and physical health. Contrary to expectations—and despite people’s inclination to want to indulge themselves—one of the best ways to derive the greatest personal benefit from a $20 windfall is to spend it prosocially. A concrete example of how my family integrates prosocial spending into our activities and budget is by preparing school supplies for children in transitional housing, and by purchasing gloves, mittens, and scarves for winter coat drives. Giving generously to charities, friends, and coworkers may well be a fundamental part of human nature, as well as a productive means of improving our overall health and the lives of others. Enjoy mini-splurges. Most of us have already discovered for ourselves that an extravagant purchase does not result in long-term happiness. Still, we often focus mistakenly on earning money and spending money—while overlooking using money to create and provide value. When we focus on money solely as a medium of exchange, we reflexively seek ways to have more money so that we can do more or buy more things. Most of the things we buy have only short-term value to us, and some have no value at all. Money is for spending after all. I explain to my clients that I want to make sure that they invest for their retirement so that they can continue to enjoy their splurges in the future as well. Treating yourself to inexpensive indulgences is a more prudent—and effective—way to achieve sustainable happiness. Buy what you value. Just as I teach my kids not to succumb to peer pressure, I know it can be hard to say “no.” My mantra is a Will Rogers aphorism: “Too many people spend money they haven’t earned, to buy things they don’t want, to impress people that they don’t like.” Learning to say “no” can be empowering. It becomes much easier to resist temptation if you can identify and clarify what you value. Discovering what you value is a worthwhile investment of your time. Spending time reflecting on your financial life goals can help lead you in the right direction on your own happiness project.
Don’t Ignore the Ancient Wisdom About Happiness
Sometimes the advice we need to be happier was first given centuries ago. For example, most of us would benefit by taking to heart the wisdom of Seneca, a Roman philosopher, statesman, and dramatist:
“True happiness is to enjoy the present, without anxious dependence upon the future, not to amuse ourselves with either hopes or fears but to rest satisfied with what we have, which is sufficient, for he that is so wants nothing. The greatest blessings of mankind are within us and within our reach. A wise man is content with his lot, whatever it may be, without wishing for what he has not.”
