I am a big fan of books which help me maximize my life based on my limited span and resources. Happy Money is one of these books, based on 5 simple principles embodied in their chapter headings:
1) Buy Experiences (BUY that concert ticket, plane ticket, adventure, etc)
2) Make it a Treat (RATION those things which bring you pleasure, and you will intensify the pleasure you experience)
3) Buy Time (outsource those tasks you despise)
4)Pay Now, Consume Later
5)Invest in others.
The goal of the book is NOT to help you earn more, but to change the way you spend your money. Here are five principles the authors put forth to summarize the research of happiness and spending habits:
1. Buy Experiences
Rather then spending your money on material objects (even bigger houses!), you will be more satisfied with experiential purchases, which will be more likely to connect you with others, produce more positive memories, and not result in buyer’s remorse. If you’re looking to buy an experience, make sure it connects you with others, provides a memorable story that you’ll enjoy telling in the future, is linked to your sense of self or who you want to be, and provides a unique opportunity that can’t easily be compared with alternatives.
2. Treat Yourself
The more you are exposed to something, the less impact it will have. Don’t do your favorite things every day, don’t eat your favorite food or drink your favorite latte every day. You will enjoy it more if you make it an occasional treat. At the same time, you don’t need to take it to an extreme: Minimalism doesn’t actually result in bliss, what matters is your mindset, and ability to enjoy the small pleasures in your life.
3. Buy Time
Many people sacrifice much of their time in efforts to save a little money, e.g. through comparison shopping (which can also influence us to pay more for features that won’t actually make us happier). Other people spend a lot more time in stressful activities, e.g. working, in order to make more money. Watching less than 30 minutes of television per day can also be more satisfying, while spending more money on a bigger TV may only result in more time spent alone. Spending time playing with your child or walking your dog will provide more payoff. Consider how any given purchase will affect your time.
4. Pay Now, Consume Later
While iTunes and Amazon allow you to immediately consume our products, it can be counterproductive, because many of the pleasures of things we buy come prior to actually getting them, e.g. the planning phase of the trip. Waiting for things will make them more enjoyable when the wait makes you think about the details of how good it will be, when it makes you drool (literally, as it might in waiting for a piece of candy you really want), and when your consumption of the item won’t last very long.
5. Invest in Others
Finally, spending money on other people can provide more happiness than spending on yourself. The amount doesn’t matter—what’s important is that you don’t feel pressured or compelled to give: in fact, you are likely to feel worse after giving when you feel compelled to give. It is also beneficial to connect with those whom you give to. Be knowledgeable of the cause or purpose of your charity.
Try tracking your expenditures for one week, according to these five principles. See what falls outside of these categories, and what you can move around.
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