Money Management

Money Can Buy Happiness, But You Really Have to Know How to Spend It

By  Karen Banes

Disclaimer: In order to make Wealthtender free for our readers, we earn money from advertisers including financial professionals and firms that pay to be featured on our platform. This creates a natural conflict of interest when we favor promotion of our clients over other professionals and firms not featured on Wealthtender. Learn how we operate with integrity to earn your trust.

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We talk a lot, here at Wealthtender, about saving money and investing money, but sometimes its important to think about spending money, too, and what we spend it on. Money can’t but happiness, they say. But they’re wrong. Money can definitely buy happiness, but only if you spend it right. Here’s exactly how to do that.

 Financial Security Is the First Step

While having lots of money doesn’t guarantee happiness, not having enough to meet basic needs is stressful, traumatic and pretty much guarantees unhappiness. Many people lack financial security due to circumstances that are difficult or impossible to change right now. The crazy thing is, lots of people who earn decent money also lack financial security, because they’re simply spending it on the wrong things.

Only you know exactly what you need to feel financially secure. Maybe it’s money in the bank. Maybe it’s excellent health, property and auto insurance so you can’t get caught out by unexpected and expensive repairs, to yourself or your possessions. Maybe it’s a growing 401k, or IRA, and HSA. Maybe it’s a large emergency fund and some solid investments. Maybe it’s even membership of a professional network where you know you can improve your marketable skills, make connections and find new clients for your business when you need to.

Spending money on the things that give you financial security may not be ‘joyful spending’ (see more on that below). What is does offer is contentment and a base to build on, free of the worry and stress that comes with the constant feeling that you can’t quite make ends meet.

Spend on What Brings You Joy

This is where money can (directly) buy you happiness. When people say ‘the best things in life are free’ they are often talking about things like family, friends, and nature. But obviously this is not always accurate. Raising a family isn’t free. Going for a fun night out with friends isn’t free. And traveling to visit amazing natural wonders isn’t free. Many of the things that bring us joy require money, and optimizing our spending to maximize our joy is part of how we can buy happiness.

When we spend money on what’s important, meaningful, and joyful, for us, our happiness increases. It’s not rocket science. What brings you joy? Is it having great relationships? Traveling to new places? Feeling fit and healthy? If its all three, it’s fine to spend money on a health retreat, with like-minded people, in a place you’ve never been to.

You can apply this to almost any aspect of spending. I did it recently with my subscriptions. Most of them (unsurprisingly) weren’t bringing me much joy. Right now, apart from a few thing I need for business, I’m down to just a few subscriptions. Things like Masterclass (learning new things from A-list instructors who are top of their game brings me joy), Medium (reading high-quality articles on everything from health, to finance, to social justice issues brings me joy) and Kindle Unlimited (reading books also brings me joy).

Don’t Spend on Things You Don’t Want

Seems obvious, right? But a huge amount of our spending is thoughtless, unconsidered spending on things we don’t want, dictated by what the people around us want, or just impulse spending on things we may or may not want. We don’t even know for sure, because we haven’t thought it through.

Spending money can make us deeply unhappy, if we’re doing it for the wrong reasons, and there are so many wrong reasons. We spend money to impress people we know, and even people we don’t. We spend money out of duty or obligation. We spend money doing things to please other people, whether it’s traveling home for the holidays, when we’d rather not, or going out for a meal with friends we’re no longer that close to.

There’s no need to be selfish. Some obligations do need to be met, but if you’re constantly spending money on things you feel you have to do, rather than things you get to do, it’s time for a re-think. If a social event costs money, and you’re not 100% enthusiastic about it, consider firstly if you really have to attend, and secondly if the event can be changed to cost less money. Maybe your friends don’t want to spend money on fancy restaurants either. Maybe you’d all be happier taking a picnic to the park.

Spend on Experiences, Not Things

More than one study on this topic has shown similar results. We’re generally happier when we spend on experiences, not things. The reasons are complex. Many of us feel that the things we own define us. The designer purse or the fast car – they’re part of who we are, right? Wrong, actually. Experiences are what define us, more than possessions. Experiences really do become part of our identity. We are an accumulation of what we’ve done, what we’ve seen, the places we’ve been and the people we’ve met. What we own isn’t what changes our lives. What we do is.

Experiences can even lead to stronger connections, partly through conversations. We connect with people who have had similar experiences to us, those who want to do the things we’ve done, and those who have done the things we want to. We’ve all had conversations with people about a vacation, or an event. You can tell someone, at length, about your trip to Rome, or the time you swam with wild dolphins, especially if they too have done those things, or want to. How long can you really talk to someone about your new shoes?

Ultimately money can buy happiness, but not the way many of us spend it. When you know better, you spend better. So it’s really worth thinking about spending, every bit as much as you think about saving and investing.

Karen Banes

About the Author

Karen Banes

I’m a freelance writer specializing in online business, personal finance, travel and lifestyle. I also work as a content creator for hire, helping brands and businesses tell their stories, grow their audiences, and reach their ideal customers. I’ve lived, worked and studied in six countries, across three continents. Stop by my blog TheSavvySolopreneur.net to learn how to run your own (very) small business on your own terms. You can also connect with me at my website KarenBanes.com or follow me on Medium.com

Disclaimer: In order to make Wealthtender free for our readers, we earn money from advertisers including financial professionals and firms that pay to be featured on our platform. This creates a natural conflict of interest when we favor promotion of our clients over other professionals and firms not featured on Wealthtender. Learn how we operate with integrity to earn your trust.

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