More Happiness for Your Buck
17 Jul 2014
With increasing assets, I have been thinking lately about what to purchase next, home purchasing, vacation planning, investment. You know, personal finances. Then I wonder how we spend in order to make ourselves happier. How can we use our money most efficiently to make ourselves happiest?
We have fine choices betweem 65” 3D plasma TVs, media-integrated BMWs and Audis, Tudor-style houses on the tree-lined avenue. Although we’re all aware of the American Dream and although we might even consciously scoff at it, is it really ingrained in our heads enough to affect our purchases? Despite being aware of materialism, we still spend on items such as an Apple product upgrades or matching furniture sets. But really, compared to what we could potentially be allocating our money towards, are they really worth it?. Buck by buck, there are happier things to spend money on and happier ways to spend it.
The happiness attained from a new toy is fleeting. When I buy a gadget, I get really excited about it for a couple weeks, and then it’s just another item on the shelf. Once in freshman year, I dropped $70 on an HD camcorder. “Think about all the cool life experiences I could record!”, I thought. After playing around with it for a bit, it got stowed away, just as Woody had when Buzz came to town. It wasn’t the actual camcorder that I really wanted, it was thinking about the future experiences I could have.
Thinking back, the best things I have ever spent my money on were experiences. Trips around the world, places like the cultural streets of Beijing, the serenity of Oahu, or the cold isolation of Alaska. They bring back warm (or perhaps cold) memories and instill a rush of nostalgia. It brought about happiness in a way that those $100 beat-up sneakers or that now-stolen iPod touch ever did.
It’s changed my thoughts on getting a nice house or car. Why spend to be stuck at a mundane home or spend to be stuck in traffic (just in cushier seats)? I’d rather use the money saved from not splurging $400K on a house to see the world. Spend money to be with people, go to places, attend shows, try new things. You won’t forget it.
It’s not only what we spend on that makes us happy, it’s how we spend. When we spend in a way such that we attain instant gratification, such as an in-store purchase on credit of that new fridge or getting that candy bar now, it destroys the whole fun of the waiting game. Have you ever eagerly awaited a package to come for weeks? Thinking about all the future possibilites, all the things you can do, all the fun you will have once that package comes. We are happier when we await something eagerly in anticipation. It’s about the journey and not the destination.
Just yesterday, I booked my flight and hotel to Florida to visit my girlfriend working at Disney. It’s almost two months out. But every day, I’ll be thinking about how much fun we’ll have watching the Fantasmic fireworks, how relaxing it will be staying at a 1940s Atlantic-city themed Disney inn, all the delicious food at the Flying Fish. With the date marked on my calendar, it makes me happier every day just eagerly anticipating it.
When you spend on something now, and defer the actual consumption or experience for later, you will much more gratified. Try pre-ordering something you enjoy, plan trips out months ahead, or purchasing online. By practicing patience, you’ll probably even save a bit of cash.
Experiencing something too frequently makes it less of an experience. If you drink a frothy mocha cappucino every day, you become more and more desensitized to its creamy joys. By making something scarce by not buying or experiencing it too often, it becomes more of a treat. So if you’re eating out for lunch every day at nice restaurants, you might want to think about only eating out once a week. Or only get expensive coffees on Fridays. It’ll make those times you do go out that much more satisfying, and your wallet will thank you.
Don’t dwell too much on wasting your time to pinch some money. So Starbucks is giving out free 12oz coffees today? Free sounds enticing but is it really worth the gas, time in dreadful traffic, and waiting in line? View time as happiness. If you have more time, you can do more of the things you want to do. If you just feel like you have a lot of time, you feel much more free.
With that in mind, you should consider how purchases will affect your future time. Ask “will this really make me happier next week?”. If you are contemplating a new TV, you might think it’ll make you happier. Have so many friends over to play FIFA on the so-much-HD. But television doesn’t make you happier or any less stressed. It’s a numbing time-sink. Or perhaps think when you are debating between two similar products such as a Nexus 5 or an HTC One. Sure, when placed side-by-side, those extra megapixels and megahertz might seem like a huge advantage. But think about the product in isolation and see if it will really benefit your future time.
Warren Buffett pledged to give away 99% of his wealth, whether in his lifetime or posthumously. Giving away, passing it forward, being charitable makes people happy. Even happier had they splurged on themselves.
Helping others in need makes it feel like you have a lot of extra free time to give away. And feeling like you have a lot of free time is less of a boulder on your back. So invest in others and invest in relationships. We’re inherently social creatures although sometimes selfish. It works against us. Donate to a charity where you know exactly where your money is going to, or buy something nice for a family member or friend without pressure. It’s money happily spent.