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Money is a powerful tool in our society.
It allows us to pay for basic needs like our rent or mortgage, groceries, utilities, clothing and medical care. It can also be used for education and to save for retirement or specific goals.
Sometimes, after all the necessities are covered, there is money remaining.
Psychology research has shown that spending that money in certain ways can make us happier. However, buying material possessions — such as a new car, a laptop computer, or a pair of designer shoes — will not bring you lasting happiness. It may bring you temporary pleasure, but we quickly “adapt” and revert back to our previous level of happiness. This concept adaptation suggests that we each have a happiness baseline that we typically return to after a positive or negative experience. Fortunately, research has also shown that we can increase our overall level of happiness (and thus our baseline) with intentional actions.
So, if buying more “things” will not make us happier in the long term, what will?
Spend money on family and friends: Recent studies have indicated that maintaining close relationships with friends and family is the most important factor in our happiness. The “Harvard Study of Adult Development” began by studying 238 men in 1938, and the research has continued for over 80 years. The current director of the study, Robert Waldinger, presented a TED talk (available at www.ted.com) titled “What Makes a Good Life? Lessons from the Longest Study on Happiness.” Several factors were studied, but Waldinger summarized the findings by stating “good relationships keep us happier and healthier. The people who were the most satisfied in their relationships at age fifty were the healthiest at age eighty.”
The COVID-19 pandemic had made it more difficult to see friends and family often since early 2020. Perhaps you decide to schedule a family gathering. If travel expenses are prohibitive for some members, consider paying their expenses. This is a great way to spend money to strengthen your relationships with family and friends.
Spend money on experiences: Experiences make us happy, and the planning, anticipation and memories all provide added benefits. Summer is coming, and that often leads to more outdoor activities. Have friends over for a cookout or a potluck. Organize a day to meet at the zoo or the botanical gardens. Attend an outdoor concert. Plan a hike in the mountains with friends. Take a day trip to a nearby town. Go to a farmers market to buy fresh fruits and vegetables.
Note that planning experiences with family and friends is providing benefits from topics #1 and #2 above. Experiences also include traveling, and many families are planning driving trips this summer.
Spend money on your health: The saying “our health is our wealth” is true. When I worked with financial planning clients over many years, the saddest experience was when a client became ill, and their quality of life was affected. This cannot always be avoided as we age, but there are many things we can do to improve our health, such as eating healthy foods and exercising regularly. Small changes can reap big rewards.
If you would like to become healthier, consider spending money to improve your health. Hire a personal trainer or join a gym. Consider a physical therapist who can teach you body-strengthening exercises. Buy a bicycle or new running/walking shoes. Get outside and enjoy nature. Notice the cacti and wildflowers that are blooming. Buy fresh fruits and vegetables, or purchase a food subscription service if it will lead you to eat healthier meals.
Spend money on others: Having a sense of purpose and helping others has a positive effect on our happiness. Perhaps you could volunteer for one day (or a half-day) each week. Research what is needed in your community, and what you may enjoy.
Consider donating generously to charities you select. Not only will it make you happier, but you will be helping others in need.
You may choose to give money to adult family members who are experiencing rough times. In my view, a few requirements must be met first. You must be certain you will have enough money to support your lifestyle until you die, and that your family members are acting responsibly. So, the recipients must express gratitude for the gift. This works best when you and your family members have a healthy attitude toward money, and when the money is given out of generosity and love.
Spend money to have more free time: Outsourcing tasks around your house can free up time to do more of the things you enjoy. For example, if you pay someone to clean your home, you may have more time to garden, read or exercise.
Spend money to do what you love: Some of us know what we love to do. If you do not, take some time to ponder what would make you happy. Consider any of the following, or create your own list: Play the piano or another musical instrument. Take lessons. Be a lifetime learner, and take a class in art, photography, or another subject. read more Garden. Call friends and arrange to play golf or tennis. Write a thank you note to someone special. Call an old friend. Play your favorite song.
Money is an important tool. And by spending it wisely — and intentionally — we can become happier.
Donna Skeels Cygan, CFP, MBA, is the author of “The Joy of Financial Security.” She was a fee-only financial planner in Albuquerque for more than 20 years before retiring in 2021. She welcomes emails from readers at [email protected]