We’ve all heard it said a million times: money can’t buy happiness. Well, I’m here to tell you some great news! It seems money can buy happiness after all. There’s a catch, though. It doesn’t happen in the way you might think. But stop. Let me back up for a minute to share with you how all this started swimming around in my head, and why I can’t stop thinking about it.
Last weekend, I had some precious time to read, and I picked up Jonathan Clements’s book How to Think About Money. What drew me to the title wasn’t Clements himself, or even the fact that I’m always up for new ideas about money and finance. The attraction was the fact that William J. Bernstein wrote the foreword to the book, and I’m a big fan of his. (His book If You Can: How Millennials Can Get Rich Slowly is simply fantastic.) So I dove in, and I am absolutely thrilled I did. One of the reviews of the book called it “financial feng shui,” and I agree completely. The book includes five steps covering “how to think about money.” The first step covers (you guessed it) happiness. Specifically, how to buy more happiness. If you thought it wasn’t possible, Clements offers some valuable food for thought.
First, he points out that we simply aren’t very good at figuring out what will make us happy. That’s probably no news to anyone. So many of us live the majority of our lives doing work we don’t enjoy, commuting way too many hours of every day to get to that work, and then coming home exhausted to a home that costs us way too much time, energy, and money to afford and maintain. Clements recognized the conundrum, and he turned to research on happiness to put the pieces of the puzzle together. Here are just a handful of the things he learned from the academics:
“Money can buy happiness, but not nearly as much as we imagine.”
All of us have purchases that make us happy, but how happy do they make us over the long term? Is buying the new car more exciting than how we feel driving it six months down the road (pun intended!)? And how dependent is our happiness on our own comparison of the “stuff” we own compared to our friends and neighbors? I may be thrilled with my new Hyundai…until I look around and see myself surrounded by BMWs and Mercedes. And yet, if my parents always drove older cars because they couldn’t afford new ones, I may feel thrilled to realize I’ve upped the ante, at least in this regard. Happiness is complicated! But ultimately it’s up to us to choose how we lead our lives—including how we live and, yes, how we spend our money.
“We’re often happier when we have less choice, not more.”
Think about it: decisions are stressful! Even little things like deciding what to wear each morning can cause some stress. Bigger decisions—like where to live or which job to take—can keep us up at night and lead to some very real anxiety. I remember when I first read The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering and Organizing by Marie Kondo, I was struck by just how much stuff I’d accumulated… and spent my hard-earned money on! When I started asking myself if all of these belongings really “sparked joy,” I was surprised at how little of them did. (For more thoughts on getting rid of all that stuff, read my blog It’s that time of year: change is on the horizon.) Ultimately, it’s not the stuff that brings us joy. There’s something much better that money can buy.
“We place too high a value on possessions and not enough on experiences.”
So if our “stuff” doesn’t define us and make us happy, what does? Experiences. Specifically, experiences with family and friends. Interestingly, anticipation is a big part of the equation. I know when I’m planning a vacation, the anticipation is half the joy! But even more, experiences create memories that become part of the fabric of who we are. At Christmas, I decided to take my whole family to see Disney’s wonderful new movie Moana. We all went together, sat in the big, comfy seats, munched on treats, and had a great time. Every one of us walked out of the theater happy and filled with memories that will last a very long time. Was it expensive? Yes! But no more than an Apple watch. And while my grandson may have been happy in the moment as he slipped a new watch on his wrist, I know this experience was much more worthwhile. It made us all truly happy.
That’s just the tip of the iceberg— just step one out of five—but I hope it’s enough to get your wheels turning and wondering “what really makes me happy?” Everyone wants and needs to have enough money to live. That’s a given. But how we spend that money really can buy us happiness, but only if we make careful, deliberate choices based on what will bring us happiness over the long term.
I must add that being able to make these choices in the first place requires achieving some level of wealth to begin with. As Clements writes in his introduction, “Growing wealthy is embarrassingly simple: We save as much as we reasonably can, take on debt cautiously, limit our exposure to major financial risks, and try not to be too clever with our investing.” And if that seems simple, but not easy, email me. As always, I’m here to help!