5 Ways Money Can Buy Happiness
I think we can agree that the pursuit of money won’t make you happier. However, in my experience, if it’s spent the right way, money can help you enhance the things in life that do make you happy. Here are five things I’ve spent money on that could help raise your happiness index.
One of my favorite things about our modern economy is how specialization means you can find an expert to help you out with almost any problem you run into. As you can probably tell from my Angie's List review, I’m a big fan of the service and have used it to hire contractors for many big jobs around the house.
If you can pay someone to do a job in a few hours that would have taken you most of the weekend, that’s money well spent in my book. Of course, you have to balance the costs against the time saved and what you do with your re-claimed time.
In my case, I’m not particularly great with home improvement or maintenance work, so the time and money I save by hiring an expert more than pays for the expert's fee. I typically spend my re-claimed time hanging out with my kids, then working on my online business once they’re in bed. To me, that’s a better life investment.
If you can spend money in order to save money within a reasonable payback time, then you’ll come out ahead.
So how can saving money make you happier in life? One good example is refinancing your mortgage. You’ll have to pay hundreds or even thousands in fees and closing costs, but refinancing can free up tens of thousands of dollars that would have been spent in mortgage interest over the next 15-30 years. The money you save in interest can be used to go on vacation, help send your kids to college, retire early, or spent on whatever you’re passionate about in life.
I’ve spent a lot of money over the years learning how to improve my investments, career, and business.
On the low end of the price spectrum, you can pick up a lot of great actionable information simply from reading books. If you’re willing to spend a little more, you can buy courses or tools to help you learn or give you an edge. On the high end, you can get personalized assistance by hiring a coach or going back to school.
If you can learn to make money more effectively and/or more efficiently, then you can reduce the number of total hours you spend focused on money and use that time doing other things you enjoy.
I definitely don’t enjoy paying for insurance, but having coverage to protect my family against the financial challenges of catastrophic events can certainly help me sleep better at night. I’m not using that as a figure of speech either. I’ve experienced first-hand how the strain of worrying can have an impact on your health, your relationships, and your ability to sleep.
There are, unfortunately, plenty of opportunities to spend more than you really need to on insurance, so shop carefully. Having at least a minimal level of coverage to guard against the worst case can give you the security you need not to worry.
Insurance is the most obvious example of providing protection, but it can also be something simpler like buying your teenager a cell phone so they can call you in an emergency.
Making Informed Decisions
Big decisions make us uncomfortable before we make them, when we make them, and after they're made. Not only do they stress us out while we're trying to decide what to do, but we also have to live with the results of our decisions.
Some decisions have larger consequences than others (for example, remodeling your house versus planning your retirement). But all big decisions have one thing in common: risk.
The risk of picking the wrong paint and carpet when you remodel your house is that it could end up looking terrible. The risk of planning your retirement yourself is that you may put yourself in unnecessary financial risk, pay more taxes than necessary, or overlook opportunities.
The scope of both risks is different, but they each have associated costs. The cost of bad decorating is you can either pay to have it redone, or decide to live with it and worry about it someday when you sell your house. The cost of poor retirement planning is that you have less money when you reach retirement age.
My wife and I paid money to help reduce our risk when we made both of these decisions. The $50 we paid the interior decorator to give us feedback on our home remodeling was much cheaper than paying to have the paint/carpet redone, and the few hundred we paid a financial planner to review our retirement investments right after we got married was more than paid for by the long-term impact of the advice she gave us on tax issues and diversifying.
How does this make us happy? In terms of remodeling, we're very pleased with the way it turned out. We didn't have to pay money to re-paint the house, and I don't have to console my wife about the ugly carpet for the next 10 years. And even though our nest egg takes a hit when the market stumbles, our diversification definitely helps to cushion the fall and makes us feel secure we’ll have the money when we're ready to retire someday.
What's Your Take?
Can you think of any other ways that spending money can help make you happier? Or do you think you can't "buy happiness" and that the pursuit of money is the root of all evil?