I'm happy, generally speaking, but it wasn't always the case. I did a lot of silly/stupid things in the last 25 years that could have set me on a very different course.
Why 25 years? Because before age 15, I hadn't really started changing my behaviour to match what society was telling me to do and want. Sure, I listened in school and did my homework, but I think my personal sadness spiral started once I got my first paycheque.
Here are some of the sorrow and regret-inducing activities I engaged in:
- Staying in bad/depressing/low-paying jobs for too long.
- Becoming car-poor at the tender age of 16.
- Dating the wrong guys despite how they treated me...and saying "no" to the right guy for too long.
- Buying copious amounts of clothes, accessories and makeup, thinking I could change myself from the outside in.
- Buying fashion magazines and thinking I wasn't good enough unless I starved myself thin.
- Deciding that moving out was a good idea while I was still in school, and choosing the worst possible roommate.
- Leaving a family business after finishing University to go work for a bigger paycheque in a company I didn't care for, working with people I didn't like.
- Working at jobs that required a 30 to 60-minute commute because I thought that was normal.
- Taking a promotion I didn't really want because I was supposed to move up the ladder.
- Buying the big fancy car because I had to display my status to the world.
- Spending on conveniences--restaurants, laundry, high regular retail price items--because I felt I didn't have time or was just too physically or mentally exhausted to care about wasting money.
- Buying expensive electronics and home furnishings to be able to entertain properly.
- Buying expensive gifts for family and friends.
- Letting labels and price tags decide whether food and drink was good, as opposed to letting my taste buds decide.
- Avoiding activities that were pleasurable because they were a waste of my precious time.
- Building a home and mortgaging it on a 30-year mortgage, figuring that the low monthly payments would allow us to buy more stuff and do more of the "right" things. And, thinking that a 2,000+ sq foot home was merely a stepping stone to a bigger and better house.
Then something changed. Something clicked for me...by pure accident. I don't know exactly when I started thinking differently or why, but it worked. My life started changing and I accidentally stumbled on a way of thinking that made pursuing financial independence, without even quite knowing what it was that I was doing and why it was working.
That's why I was both surprised and excited to read Happy Money because I've now found a reference I can point to to help clearly articulate--and back up with great research--what I know to be attitudes and actions that can make us all happier.
Here are some do's and don'ts the authors present that can help us maximize our potential for current and future happiness.
What Three Spending Mistakes Cost Us The Most?
Want to be happier? Elizabeth Dunn and Michael Norton tell us to spend less on the following:
- Our home
- Our car & commute
1. Our Home
We hear that home is where the heart is, but this has nothing to do with square footage. As it turns out, the amount we spend on housing has little to no bearing on happiness, and that's a scary thought when we consider that, on average, 35% of a typical household budget is allocated to housing.
Spending less on housing, either by buying less square footage or buying/renting in a cheaper part of our city/country, or both, frees up resources for us to invest in other areas of our life that will have a greater impact on overall happiness.
2. Our Car & Commute
Transportation is the second-biggest household expense at a staggering 16% of income and, like housing, has little to no impact on happiness. If fact, one could argue that it's inversely correlated, because the more money spent on transportation, the more likely we are to have a longer commute.
North Americans have turned shopping into a sport. Too bad it does little for our happiness. Shopping is a lousy activity for a number of reasons:
- It costs money, and wanting "stuff" can push us to take on debt.
- It's a stressful activity.
- It costs time and effort, often with little to show for it.
- Shopping begets shopping - the more we shop, the more we want either more of the same stuff or better stuff than we already have.
Funny thing with shopping is that the more income we make, the greater our tendency to increase the amount of time we spend shopping because we have access to increasing amounts of disposable income to fill our homes and lives with more, and more, and more...
Ok, so now we know what types of spending to avoid because they either don't add to or, worst, decrease our potential for happiness. But what should we focusing on?
Here Are Five Things We Can Do To Increase Our Overall Happiness.
- Value time over all else
- Save more
- Spend on experiences
- Buy less and pay in advance
- Invest in others
1. The Value of Time
The saying that "time is money" could very well be the worst thing that's happened to us as a society because it's caused important negative consequences in how we view our lives and ourselves:
- We equate our personal worth with our earning power, despite the lack of correlation to overall happiness over a relatively low threshold.
- We avoid pleasurable activities because of the time investment they'd require, despite the fact that these activities would make us happier than the money we'd make spending the same amount of time earning it.
- The more money we make per hour, the more likely we are to make decisions about how we spend our time based on how much time we'll be "losing" or "wasting", which also pushes us towards the propensity to multitask our way through life.
When we feel time rich, we lead happier lives because we spend time on the things that truly matter: experiences, health-sustaining activities such as sleep & exercise, fostering stronger relationships, eating right, and continuous learning.
2. Saving More
A significant part of dissociating our time from our earning potential has to do with saving and each savings level we can achieve brings about the ability to choose differently.
Level 1: If there's money scarcity, focusing on having second and even third jobs to boost income can certainly be top of mind, making time spent on leisure less immediately desirable. So the first step is certainly to create enough padding that we can take immediate money issues off our minds and have sufficiently set aside (aka an emergency fund) to weather the storms life inevitably brings about from time to time.
Level 2: Having a greater amount of savings, beyond an emergency fund, then makes us feel we have more flexibility in the life choices we make. It frees us to seek more clarity around what really matters to us, such as whether we really like our job, how we want to be treated, what dreams we might hold for ourselves, and how we want to invest in ourselves.
Level 3: Once we reach a level beyond sufficient savings, something pretty cool happens. The more we save and invest, the more how we think about money changes. We stop feeling like we're either choosing to spend time earning money or spending it. Making money starts happening without having to work to make it happen. How we spend our time starts to become increasingly disassociated with increasing wealth and the pressure to earn can all but disappear. This feeling seems to cause a bit of a snowball effect. The more we have a taste for personal freedom from financial obligations, the more we start to equate spending with a cost in potential present and long-term happiness, as opposed to a way to increase it. It's pretty cool. It's like the antidote to what marketers, and society in general, want us to believe.
3. Spending On Experiences
Spending on stuff doesn't increase our happiness, but spending time and money on experiences does. The good news is that these experiences don't have to be wild, expensive and/or take long...they just need to be highly anticipated, memorable and meaningful.
Highly anticipated experiences are the best. Not because of their nature, but because the time we spend anticipating them is often even sweeter than the experience itself. That's right! We get more out of an activity or experience we planned for well in advance than we get from spur-of-the-moment experiences. We get to imagine what it will be like. We get to spend time planning for it and dreaming about it. We get to live it over and over in our minds, even though it hasn't even happened yet. Talk about bang for your buck!
After anticipation, the memories we create are the biggest payoff experiences have to offer. We can recall experiences over and over again. They help punctuate our personal timeline, helping prevent previous days, months and years from blurring together, and they help build our personal stories in ways that are most meaningful to us. To boot, the more meaningful an experience (aka doing something because you really want to, not because you have to), the more powerful it is in helping us continuously (re)define who we are and what we're about--hence the value of a bucket list. And, something doesn't have to be big and showy to be meaningful. In fact, it's quite often the opposite.
4. Buying Less and Pay In Advance
If shopping causes us to be more stressed and less happy, logic would have it that buying less stuff would increase our happiness. That's absolutely the case for a few reasons.
Having less stuff:
- Makes you use, and appreciate, more the things you own.
- Makes you more thoughtful and selective about what you do buy, which likely results in purchasing fewer but higher quality items.
- Reduces your sense of obligation to store, maintain, and upgrade what you own.
- Increases your freedom to make lifestyle changes because you don't feel anchored by past purchases.
- Decreases your focus on what you have to lose and shifts it to what you have to gain by living with less.
- Makes you less likely to have personal debt.
That last point is an important one, for two reasons.
First, having debt has a greater negative impact on happiness than income.
Second, debt means we have purchased items that are not yet paid for, which reduces the happiness we derive from owning the items in the first place. Talk about a double whammy!
Wait, there's more! Just as we discussed the benefits of anticipation when it comes to experiences, we derive the same benefit from having to delay purchases by saving up for them first. Delaying a purchase makes us feel happier about the item we ultimately buy. Feeling the pain up front makes us understand and appreciate what it took to get there, both in terms of wait time and financial sacrifice.
And, you still get that benefit even if you have the money immediately available but wait until you really, really want something to get it. If you need a recent example of that, just think about last Christmas. There were likely a number of items under the tree that you could easily have purchased and used right away, but having to wait until Christmas Day just made having them that much sweeter.
5. Investing In Others
So what could be better than investing in ourselves by freeing up our time, saving more, spending on experiences, and buying less? Investing in others by giving our hard-earned money and precious free time to help others. Spending our own resources on others offers the best return on investment we can ever hope for when it comes to happiness.
Of course, it's important to make sure we take care of ourselves to then be able to pay it forward, but it turns out that lending a helping hand, even in a small way, can make a big difference in how we feel about ourselves and about our lives. It turns out that giving even a little bit of your time and money can make you feel you have more of each!
According to the book's authors, here's how you can make sure the time and money you spend in a giving way has the greatest impact on your happiness:
- Make it a choice: forced giving doesn't increase happiness but choosing to give does
- Make a connection: when giving creates a connection between you and the recipient, the result is that your gift holds a deeper personal meaning for you.
- Make an impact: if you feel your time and/or your money is making a real difference in a recipient's life, you're more likely to feel the investment was worthwhile
How Did I Accidentally Stumble On Happiness?
I don't know whether having read this book a decade ago would've made a difference at that time. Sometimes, I think that positive change comes from having not only the right information, but being able to have it at a time when you're able and willing to receive it.
I wish I could say that the happiness lightbulb came on all of a sudden but, unfortunately, my version included a dimmer switch.
First, there was the change from using a car to active commuting when I ditched the expensive SUV and started walking or biking to work. This small change made a very big difference in my life for four reasons:
- I spent less time stressed out in the car - no more road rage caused by bumper-to-bumper traffic.
- I got my daily exercise and precious extra time to think.
- I started noticing that this time made me feel better than I had felt doing other, more expensive things
- We freed up over $8,000 per year, which we shifted from our transportation to our leisure & savings funds.
This first step lead to a progressive change in my values*, which translated into incremental changes toward how we now spend our time and money. In order of least to most recent, we started:
- Valuing the importance of sleep and R&R.
- Eating out less often and making better food at home.
- Avoiding obligatory gift giving (no participation in Christmas, birthdays, Valentine's Day or other gifting occasions, except for a host gift when invited to dinner) in favour of gifting time and attention instead of material goods.
- Choosing vacations based on experiential value as opposed to how "time efficient" they'd be.
- Buying less and getting rid of some stuff of we already own.
- Allowing active leisure to displace passive leisure such as TV watching...and ultimately replacing cable with Netflix.
- Spending more of our time and money on continuous learning and play as opposed to expensive entertainment.
- Slowing down and spending more time appreciating the present.
- Spending more of our time with family and friends and seeking out and making new connections with people who share similar values.
- Making greater use of public services and spaces (parks, libraries, transit, community centres).
- Saving an ever-increasing portion of our yearly pretax earned income.
- Declining potential increases in income that didn't feel like they'd add to our quality of life (promotions, overtime, contracts).
- Giving a greater portion of our income and our time toward people and local causes that matter to us.
- And finally, giving up significant opportunities for paid work because we choose to do other things.
*I say "my values" because a lot of the spending in our household was driven by yours truly. My husband was patient enough to let me discover, and catch up to, what he already knew to be true sources of happiness and contentment. Who knew I was living with my "white rabbit" all along.
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