WE BELIEVE money can buy happiness—and yet our closets and basements overflow with possessions we don’t care about and perhaps even regret purchasing. We had great hope for these items when we bought them. We were wrong.
Could we do better? Research has uncovered a host of specific spending tips that can help us squeeze greater happiness out of our money. These various pointers can be clumped into three broad strategies.
1. Use money to buy time. We may feel like we never have enough money. But in truth, the ultimate limited resource is time. How can we buy more of it? As we spend our money, we should look to save ourselves time.
That might mean moving nearer to work or taking a job that’s closer to home. We might hire others to do chores we dislike, like cleaning the house or mowing the lawn. When we spend our dollars, we should think not only about the pleasure that comes with the purchase, but also the hassles—such as the need to service the extra family car or the doubling down on repairs and maintenance that comes with a second home.
What should we do with the time we save? Each of us will have a different answer. But you might devote yourself to activities that you’re passionate about and find challenging. Such activities offer the chance for so-called flow—those moments when we’re so absorbed by an activity that we lose all sense of time.
2. Make it a priority to spend time with others. This doesn’t necessarily involve money—you don’t need to spend anything to take a hike with friends—but often money is involved. We might use our dollars to create memorable occasions, such as family reunions, trips to see the grandchildren, attending concerts with friends or heading out to dinner with our spouse. Also consider volunteering, which typically costs nothing, helps the community and leaves us feeling good.
3. Design a financial life where worry is minimized. Ponder all the financial issues that cause you concern, and then make every effort to address them. That might mean eliminating nagging concerns by getting the right insurance and estate planning documents, building up at least a modest cash reserve, automating the payment of bills and paying off credit card debt.
It’s one of life’s great tradeoffs: By expending a little time today and by spending a little less on purchases that will likely bring only fleeting happiness, we can build a firmer financial foundation—and give a significant boost to our long-term happiness.
With time, this firmer financial foundation should eventually turn into full financial independence. The accompanying sense of freedom will grow ever more important as we advance through our careers. Once we get into our 40s and 50s, we often crave a life where we can spend our days doing what we want, rather than what the boss demands—and that’s what smart money management can buy us.
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