My wife and I were talking to our children recently about how to spend money for maximum impact, fulfillment, and happiness. After researching the issue further, this is what I came up with:
- Experiences over things. It’s a fact: people remember experiences more than things, so it’s a great idea to buy experiences with people you like over things for yourself or family. Of course, buy actives that you enjoy over ones you might feel obligated to attend.
- Things you’ll use often. Research shows that if you buy things you like but hardly lose, this can actually cause regret and bad feelings. Instead, focus on buying things that can enhance the activities you already love and spend a lot of time on. For example, it’s worth spending extra for a mattress you sleep on eight hours a night, a car you drive everyday, or a nice roof over your head if you’re a homebody. If not, you can skimp on these items, or maybe even avoid them altogether in some cases.
- Rewards for finishing something. If you want something, don’t just buy it. Tie it to the completion of a personal goal you have. In my case, I’ve done this with small purchases like dinner at a nice restaurant, a $60 watch, or even s simple treat like my favorite candy. I’ve also done this with big purchases like a new car and house. Doing this is not only motivating, but it makes the things you buy more rewarding, special, and memorable.
- Gifts for others. Spending money on others will almost always make you feel better than spending money on yourself, especially when it comes to buying things for people you care about. So look for ways to treat others, in both big and small ways, and you’ll feel fantastic!
- Time for yourself. If you absolutely hate doing something, hire it out. In my case, I hate car work, so I’m happy to hire out all but the easiest things like changing out a turn signal or air filter in five minutes or less. For everything else, I spend money on a mechanic to avoid the frustration of doing it myself to save a buck.
- Things within your means. Whatever you buy, make sure it won’t come back to haunt you later plus interest! That usually means you’ll need to pay cash and compromise on things you’ll need to buy from number two on this list. But you’ll feel greater peace and security while living within your means and falling in love with the little things that are usually free.
- Anything that helps you avoid lifestyle inflation. If and when you do start making more money, don’t fall into the classic trap of buying too much stuff, which adds to stress and mental clutter and worrying and managing all that stuff. Getting rid of something old (or that you no longer use) before bringing something new into your life is a great way to avoid this, as is investing in your future as opposed to shiny, fleeting things.