You’ve heard all the advice on saving – adopt cost-conscious habits; spend only on needs not wants; plan for your retirement; practise delayed gratification; be frugal, and the list goes on.
All these strategies project the image that spending money is evil.
You work hard for your money. Shouldn’t you enjoy spending it? While you should plan for your future financial needs, you should also live in the present.
Here’s how…
1. Budget smartly
When drafting your budget, focus on spending less while spending smartly. Allocate your expenses towards things and activities that give you joy and improve your well-being. Spend more on what offers you the most bang for your buck.
Many of you already know fixed expenses and variable expenses are the two primary categories of a budget. But, there’s another way of looking at a budget.
Instead of “fixed” versus “variable”, you can separate the expenses into “Wants” and “Needs”, giving you four categories:
- Fixed needs
- Fixed wants
- Variable needs
- Variable wants: Happiness-boosting activities where spending money increases your happiness.
The aim is to reduce spending and free-up funds from the first three categories. Then to use the freed-up funds to increase spending on the “happiness-boosting” Variable Wants.
2. Buy experiences and memories
After establishing your smart budget, plan the details of your happiness-boosting Variable Wants.
Research shows that experiences provides greater satisfaction than material things.
For example, you are looking forward to an upcoming excursion. You picture that getaway and fantasise walking along the beautiful shoreline. The expectation and anticipation for this experience is a huge supply of energy.
Compare it against spending the money on purchasing a TV – the buzz will not last. Memories of your wonderful travel experience with your loved ones are far more enjoyable than staring at a box.
The thought of sharing unforgettable moments whether at the beach, mountains or a new city with someone you love is exhilarating. And after the excursion, looking back at the pictures taken and reminiscing those moments will bring you joy again.
3. Spend money on others
Try being nice to other people – you will feel great afterwards.
If asked to choose between spending money on oneself or others, you will often find you’re happier spending on others.
For example, out of the ten meaningful items you buy on an overseas trip, keep only one for yourself. Enjoy the pleasure of giving and seeing the reaction of those receiving the gifts from you.
The art of living is by giving. Spending your money to see a smile on another’s face is truly extraordinary compared to spending it on possessions. Giving happiness to others, and getting happiness in return is happiness doubled.
For example:
- Take a friend to lunch
- Treat a loved one to a day at the spa
- Give food to a homeless person.
4. Trade ‘unhappy’ times for ‘happy’ times
Do you have things you absolutely hate to spend time doing? Would you be happier if you could afford to pay someone to do it?
You will be happier using that time to focus on doing things you enjoy that also move you towards your goals.
What is important for you is what you are doing with the limited time you have in life.
If you have lots of money but spend 99% of your time doing things you hate, you won’t be happy.
Spend money to enable you to focus on who and what you love.
5. ‘Buy’ companionship
Picture your life without friends. That would be sad. Having all the money in the world and possessing the most expensive branded goods is meaningless if you don’t have friends to share life with.
Companionship is essential for your well-being. Having great company with stimulating conversation is both relaxing and mentally stimulating.
Instead of eating alone, invite a friend to a home-cooked meal. Your friend will appreciate this and reciprocate by doing the same for the next get-together.
Remember this – the best thing in life is friendship. So value your friendships!
Companionship can also come in the form of a pet. Instead of buying a branded watch, spend it on adopting a pet from an animal shelter.
Imagine coming home from a hard day’s work to a loving, fluffy friend who will put a smile on your face. It’s an instantaneous stress reliever.
This article first appeared in MyPF. Follow MyPF to simplify and grow your personal finances on Facebook and Instagram.