Go on, spend some money this holiday season! What, not exactly what you would expect to hear from a prudent financial advisor? Okay, how’s this…if you are going to spend some money this holiday season, at least do it in ways that have a shot at giving you some longer lasting happiness.
Yes, it’s that time of the year when people spend their money on lots of stuff. Parties, vacations, entertainment, presents, and charitable giving are all competing for your funds. If you haven’t memorized your credit card number yet, you will by the end of the month.
While parting with at least some of your money is inevitable during the holidays, you should be aware that spending it in different ways can bring you more happiness bang for your hard earned buck. In a recent Wall Street Journal article, Can Money Buy You Happiness?, Andrew Blackman explored the connection between money and happiness. As it turns out, his and others’ research supports the notion that wealthier people are happier to an extent. However, after a certain amount of wealth is achieved it’s more about how you spend it rather than how much you have that leads to more lasting happiness. The wealthier you are, the more difficult it becomes to find happiness by buying more material goods.
So, as you think about how best to spend your discretionary income this year, here are some thoughts and strategies for maximizing your spending and happiness:
The Experience Matters
Since people adapt to their material goods and tend to take them for granted over time, spending money on experiences may provide more lasting happiness even though material goods are tangible. This would suggest that the memory of a vacation, concert, Texans game or other memorable experience shared with family or friends will bring more joy years from now than a new television set that will be obsolete by then anyway. (Warning: Please be advised that not all Texans games will leave you feeling happy).
Be Charitable
People that give money to charity are happier. The dollar amount is not so important as long as the donor sees that their money is making a difference is other people’s lives. That’s why those non-profit ads on t.v. say how much $5 or as little as $1 can go towards helping someone less fortunate. So, don’t wait until you think you have enough to retire to donate to worthwhile charities.
Buy Yourself More Quality Time
Use your money to buy yourself better time by outsourcing some tasks you dislike. For example, if you don’t like spending your time shopping, you might be happier if you hire a personal shopper. However, putting a dollar value on your time might not be a good idea since it may make you less likely to spend your time on things that do not bring you financial compensation even if they make you happy.
Appreciate What You’ve Got
Since feelings of gratitude and appreciation for what we have are hard to maintain, we must consciously try to appreciate our material goods. Other strategies include sharing or depriving yourself of some of your material possessions for a while. In doing so, you may appreciate them more when you get them back.
Save Before You Spend
Spending when you do not have discretionary income to do so can have the opposite effect. Being financially secure can promote happiness while debt and financial distress bring misery. It’s more important to get rid of debt than to build savings. Before you buy an experience or give away all your money to charity, make sure you have adequate savings.
So, yes, money can buy you happiness. However, like most worthwhile things, that happiness comes with some effort and thoughtfulness. Have a Happy Holiday!