Here’s a simple thought experiment to start this post… For the moment, let’s assume whether it’s true or not, that you have sufficient cash flow and savings to spend $1,000. Take a look at the following list. Which would you choose as your top pick to spend your money on?
- A new ‘tech toy’ – smart phone, tablet, video games etc
- An experience – travel, restaurant, theatre, movie etc
- Home appliances – vacuum cleaner, heater, kitchen appliances etc
- Time freedom – paying to have your lawns mowed, laundry done, car washed etc
- Charity donations
- Clothes or shoes – update that wardrobe
- Personal – hair & beauty services, massage, etc
- Gifts – for family or friends (birthdays etc)
- Learning – books, courses, programs
- Pay down debt – credit card, mortgage etc
- Save it – put it into a bank account, superannuation or investment
- Gamble it – lottery tickets, poker machines, horse races etc
Whatever you’ve chosen in this thought experiment, the reality is what you spend your money on will naturally have an impact on your overall sense of well-being and contribute to you living a happy, flourishing and prosperous life.
However, some things that we spend our money on will have a more positive and lasting impact on our overall sense of well-being than others… and while, it certainly depends on your individual circumstances, the scientific research provides evidence that some things matter more.
For example, in their book Happy Money: The Science of Smarter Spending, Harvard Professor Michael Norton and co-author Elizabeth Dunn provide research and evidence on ways to spend our money that will add to our overall sense of well-being.
Overwhelmingly, the research suggests that spending money on experiences rather than on ‘material purchases’ matters most. Interestingly when we spend money on others for example through charity donations or gifts for friends or family, this can provide us with a more immediate sense of well-being than if we spend it on ourselves. Outsourcing tasks by paying others to do things we need to do, but don’t necessarily enjoy, for example, mowing our lawns, doing our laundry or cleaning, etc., can free up our time to pursue more positive activities like exercise and experiences that promote a greater sense of well-being.
Like most things in life, it’s about balance isn’t it?
I’m pretty sure most people would agree, despite what the research might suggest, if you’re drowning in debt but ‘buy into’ the research that spending money on experiences will make you happy, that going further into debt to pay for the experience more than likely won’t in the long run add to your overall sense of well-being.
So what can we learn about living a more happy, flourishing and prosperous life from research on how we spend our money?
My advice is to align your spending with your intentions for each of your life roles.
When you are clear on what living a happy, flourishing and prosperous life means to you, and you take stock of your truth about you, about your current reality, and then get clear on your intentions for you and for the people you impact in your various life roles, what you do with the money you earn is driven by more conscious and intentional decisions.
How intentional are you in the way you spend the money you earn – whatever level of income you’re on?
While the level of income we each earn impacts on what we can and can’t afford to buy, remember, much of life’s experiences with friends and family don’t cost money… and yet its experiences that the research overwhelmingly supports as what will add to our greatest sense of long term well-being.