I've talked a lot on this blog about what makes me happy. I'm certain that what makes me happy is not what makes you happy. But the specifics aren't important. What is important is figuring out how to save and spend to maximize happiness (regardless of what happiness is for you) and minimize stress.
I've talked up the awesome site LearnVest before, but its worth mentioning again (and I'll link to a few pertinent articles throughout this post). I know, gentlemen, I know. Its a financial site for chicks. But whether or not you have a vagina, I think that site is worth taking a look at, if only for the personal stories that are shared -- it makes it easier to relate to people and see you're not the only one in debt or in a dead-end job or trying to make ends meet. And they have great articles on ways to spend on yourself without breaking the bank -- and making that spending count! Check it out. And if you don't like it, check out some other personal finance sites and find the one that fits you best (men might want to check out Lazy Man and Money). I like having a daily money reminder from a personal finance site in my inbox. It helps me remember to pay bills, check out deals and think about the best ways to save and spend.
As I've said so many times before, you should minimize spending on things that don't matter to you so you can maximize spending on things that relieve stress and make you happy. A lot of people talk about how short life is, but on the contrary its the fact that its long that worries me. You need to take care of yourself now (by maximizing happiness and minimizing stress) so that you don't have a heart attack by age 40 or 50. Unless having a shorter life is important to you, in which case, stress away, my friends!
So how do you do this? Well, first of all, as previous posts have stated, you need to first figure out what makes you happy and what you don't care about. Then be frugal about the things you don't care about so you can spend more on the things that make you happy.
BUT: the way you spend on the things that make you happy matters too. You shouldn't just splurge on things left and right without really thinking it through. First of all, you don't want to inadvertently add to your possible debt, thus decreasing happiness over time. Second of all, you want to spend money to maximize the lasting effects of the happiness these things bring you, not just get a small bump in happiness and immediately go back to normal (or below) the next day. And while we live in a country that values possessions and more, more, MORE of everything, you might be surprised to learn that, scientifically speaking, its actually spending less money that makes us more happy.
According to this NY Times article by Elizabeth Dunn and Michael Norton, the authors of Happy Money: The Science of Spending, what we do with our money matters way more than how much we make, spending less on ourselves overtime (and spreading out indulgences) will make us happier in the long run, spending on experiences rather than material goods make us happier, and spending money on others instead of ourselves also leads to increased happiness.
The reasons for this? Well, they're pretty simple.
Why you shouldn't overindulge
Just as you might become desensitized to violence if you're around it all the time, if you are constantly indulging yourself, the happiness from these indulgences diminishes over time. Sure, your first spoonful of frozen yogurt tastes amazing, but by the time you finish the whole bowl you're less impressed with it. And you'll be even less impressed if you treat yourself to fro-yo every single day. Making yourself wait for an indulgence helps by stopping this desensitization (renewing your love of whatever it is that makes you happy) and also curbing constant spending. Instant gratification will never make you as happy as waiting for something you know will eventually be amazing. This is also why some people get burned out very easily with new hobbies, interests, or relationships if they spend all their time and energy on them right away. Make sure you're giving yourself time to breathe or else the magic will wear out very quickly.
Read more about splurging the RIGHT way over at LearnVest -- that way you'll know how to splurge mindfully instead of mindlessly, thus, increasing your happiness (and decreasing unnecessary debt).
Why you shouldn't spend more on "things" than "experiences"
Think about the last physical thing you purchased, whether it was a pair of shoes, a TV, a car...whatever it was, I'm sure you were really happy about it the first day you bought it and then haven't really thought about it since.
Experiences allow you to do something these things can't: which is create lasting memories you can savor (and use to increase happiness) at any time, thus making these types of purchase more meaningful. You can also create these lasting memories with friends and family (and relive them when you see these people again) while purchasing things tends to be a more individual affair. Experiences might expand our knowledge, they might increase our health, they might strengthen relationships, they might give us a new way to spend our time and energy -- things that "things" just can't do for us in the long-term.
And the happiness lasts a lot longer because we are able to watch ourselves save up for a big vacation down the line and relive the memories from it long after its happened. We can stretch our enjoyment (and, in turn, the money we spent) and thus increase happiness over time.
PLUS: Chicago has some AMAZING opportunities for you to experience things without spending a cent. I already outlined some for the summer season, but check out Choose Chicago, Metromix, TimeOut Chicago and check back here often for some awesome free events for fall. I love Chicago!
Read more about savoring over at LearnVest -- it could increase the happiness you derive from things you're already spending on.
Why you should spend on others instead of yourself
Anyone who has watched a family member or a friend open a present knows that spending on others can lead to great happiness. After all, once Scrooge had his turn-around, he didn't go buy himself a caddy, he bought a huge dinner for his new-found friends. What Scrooge did is something I highly advocate: combining spending on experiences and spending on others to lead to the most happiness you could possibly get from a purchase. I try to make the gifts for my immediate family all experienced-based. That way I'm spending money on the two things I love most: those I care about and gaining new experiences. Double-whammy.
So make sure you take some time this week to #1 think about the things that make you happy and #2 think about the ways you spend on them. You might need to re-prioritize some things. And make sure you are thinking about the things that make you truly happy and lead to lasting happiness, rather than the things that make you excited but really don't matter in the long run.
If the key to living a good life is finding frequent and lasting happiness, then the key to frequent and lasting happiness is learning how to spend money the right way, not necessarily just having more of it. Think about it.
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