Does Your Money Buy You Happiness? Another Thanksgiving has come and gone. As a financial professional, I always count on two things: the stores open for the after-Thanksgiving sales earlier than they do the previous year, and the TV news always try to predict how retailers will fare during the holiday shopping season. This year is running true to form.

Now, granted, a healthy retail sector is good for the stock market. And it certainly makes my job easier when my clients are satisfied with how the Dow is doing.

But it’s also part of my job to talk with my clients about their goals in life and about their values and feelings about money. It helps me pinpoint their financial destination and how able they are to get there.

I work with many people who are, by most standards, financially successful. They make decent or comfortable salaries. They have lovely homes, stable marriages, and wonderful families. But they can feel stressed or dissatisfied. Some work jobs that give them little personal satisfaction or less family time. They’re concerned they won’t ever have enough for their own or their children’s futures.

When we examine their spending habits, we often make some crucial discoveries. Some spend more money than they should on things they don’t need. When they realize this, we make significant progress toward reducing their concerns.

Now I’m not suggesting that we give away our belongings and live in the mountains. And not all purchases are bad: we all have hobbies and interests that give us sustained and long-lasting pleasure and make us well-rounded and interesting people. But some careful consideration of our spending may pay off in greater levels of personal happiness and financial security.

Think before you buy.
With all the online shopping, shopping malls, shopping channels, and catalog shopping, it’s not surprising that Americans are carrying a record level of credit card debt. We often forget that what we can pay for and what we can afford can be two separate, very different, things.

So I propose a little experiment: for two weeks, pause before you buy anything that’s not related to a true human need like food, health care, or shelter. It can have a great impact on your personal finances.

Some people make a list of what they want and wait a month before they buy it. Or they freeze their credit cards in a bowl of water and buy things only when the ice defrosts. Or they leave the store immediately to think, giving themselves time to let their urge to splurge cool off.

Next time you have an impulse to purchase, ask yourself if the item you crave fulfills a want or a need. If you carry a credit card balance, how many months of additional minimum payments will purchasing this item obligate you to? Does this purchase get you closer to accomplishing the most cherished dreams you have for your life?

Don’t buy more things, buy more experiences.
According to the National Association of Home Builders, the average American home size has increased by 40 percent since 1970. We’ve got more closets, bathrooms, and kitchen cupboards than ever before. But the size of the average American family has decreased.

What happens with all that extra space? We fill it with possessions, many of which we upgrade or trade in far before they outlive their usefulness. If we charge these purchases, we may pay for them long after we’ve gotten rid of them. If we’ve bought too much house, we may be tied to more mortgage, utility, and upkeep payments than necessary. These can add to our stress level and our worries about financial security.

So instead of a flat-screen TV in your mud room, for instance, take a family vacation—you’ll have photographs and memories you’ll treasure far longer.

Better yet, buy your freedom.
Our retirement years are supposed to be our “golden years”—the reward we finally earn after working hard for decades. It’s our time to call the shots and live our life the way we want. But is golden really good enough in this age of platinum and titanium credit cards?

Many of us put our desire for instant gratification ahead of our need to live a financially secure life. We don’t pay enough attention to funding our retirement until it manages to sneak up on us. And then we get worried.

Many of us work to maintain a lifestyle, not a life. When we know the difference between the two, we can make sounder financial choices that reduce worry.

If you do well, spend some money on doing good.
We’re lucky to live in a great country, but there are people across the globe—or even across the street—who are not so blessed. Helping the less fortunate can give our personal wealth and the sacrifices we make for it much greater meaning than buying a new car every three years. And, in many cases, charitable giving can reap tax benefits for you, too.

Be happy with what you have.
Some experts suggest making a list of all of the things that make us truly happy, paying specific attention to those things you can’t buy—like the love of our families and our good health. When we refer to that list regularly, it helps us stay focused on what’s really important.

And maybe a little thanksgiving every day, instead of once a year, can help us eliminate our emptiness and empower us to make smarter financial choices.

Labels: Happiness, Money

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