Investing in Happiness: Smarter Spending
Tracy L Davis, MD, PhD
Pathologist | Dermatopathologist | Life Coach (ICF-ACC, ELI-MP) | Physician Leader | Author | Passionate about Personalized Medicine
As physicians, we dedicate our lives to helping others but it’s important to focus on our own happiness too.? One way to achieve greater happiness is strategically choosing how we spend our hard-earned money.? This week’s article is inspired by the book, Happy Money: The Science of Smarter Spending by Elizabeth Dunn.? We’ll discuss the correlation between smarter spending and increased happiness, examine the five principles to consider when spending money, and offer practical tips to optimize your happiness to spending ratio.
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Our career paths often resemble the scenic route, like hiking the Pacific Crest Trail and then for funsies, deciding to add on the Appalachian Trail afterward. As we begin our first "real" jobs, we often struggle with a strong desire to play catch-up, especially if we're already dealing with school debt. Despite spending lots of money, we find ourselves yearning for something more.
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Spoiler alert:
It’s not about how much money you spend.? It’s about using your money in the most optimal way to bring joy and happiness to your life.
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Smarter Spending Choices
?In 2010, a pivotal study was published by Daniel Kahneman and Angus Deaton at Princeton University which found that, up to a certain extent, an increase in annual income was associated with an increase in emotional wellbeing, but that this correlation plateaus at around $75,000/year.
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So, as it turns out, money can buy you happiness, at least up to a certain point.
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The relationship between money and happiness is subjective and varies greatly among individuals. Core values, priorities, and circumstances play a significant role in both how we spend our money and how it impacts our happiness. Intangible things such as quality of relationships, sense of purpose, health, and work-life balance have greater influence over our long-term happiness and fulfillment.
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The science of using your money in a way that optimizes happiness involves recognizing first that happiness and fulfilment are often related to experiences that resonate with your values. ?Instead of keeping up with the Jones’s and accumulating more material possessions, consider spending your money on experiences that enrich your life—the kind that create lasting memories and cultivate personal growth.? In choosing to spend your money more intentionally to create a life brimming with purpose and satisfaction, each expenditure can be viewed as a deliberate step towards a more meaningful existence.
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While buying the latest and greatest gizmo may bring a quick burst of happiness - that joy tends to fade over time (kind of like a sugar rush).? On the other hand, spending money on an experience such as a vacation or a hobby that allows you to connect with others, will have a longer-lasting impact on your well-being.? That experience may create personal growth and memories (or funny stories) that will contribute to your long-term happiness.?
Just ask me sometime about how I managed to accidentally order 6 full-sized pizzas and a huge calzone while I was in Italy – I’m not sure the boxes alone would have fit into my ridiculously tiny hotel room!
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Stuff is more likely to clutter your space.
Experiences are more likely to enrich your life.
Life is less about what you have and more about what you've done and experienced.
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Five Key Principles?
Happy Money puts forth the following five key principles of smarter spending.?
1.???? Buy Experiences, Not Things
2.???? Make it a Treat
3.???? Buy Time
4.???? Pay Now, Consume Later
5.???? Invest in Others
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These five principles are rooted in scientific research and can significantly influence the relationship between how we choose to spend our money and our overall happiness. Let’s dive into more detail! ?
1. Buy Experiences, Not Things
Consider this first principle to be your happiness compass.? The key for this principle is to focus on increasing the interesting experiences in life, rather than accumulating material possessions. Although the latest and greatest gizmo might dazzle momentarily, its sparkle tends to fade more quickly than the magic of experience and memories.? As physicians it is easy to get bogged down with being overscheduled, both at work and at home.? Consciously choosing to invest our time in experiences can help create more happiness in our lives.
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For example, spending money on adventure travel has enriched my life with many memories of wonderful experiences.?
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I could go on and on with stories like this - and they definitely make me happy when I think of them.?
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These are the moment that enrich our lives, leaving us with a treasure trove of fun memories and happiness.
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2. Making it a Treat
The second principle of Happy Money is all about invoking the psychology idea of scarcity.? The idea that time, money, or opportunities are limited resources can increase the value of the experience. By restricting a regular indulgence, you can make the purchase or activity feel like a special treat and therefore you will experience more joy and value from it.?
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For example, if you get a massage every week, you may not appreciate the experience as much as you would if you had one once a month.? By making the experience less common, it allows the brain to savor the experience to a greater extent.?
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3. Buying Time
This principle is all about the idea of spending money on time-saving conveniences as a way to achieve greater happiness.
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Time is valuable and it often seems to be in short supply due to our demanding schedules and full calendars. Using money to create more time in the day – and make life a little less hectic, allows you to spend that time on something more important, such as spending time with loved ones, or self-care, or relaxation time.
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Time is one resource that cannot be replenished, so this third principle emphasizes that pursuing happiness isn’t about acquiring more things, but also about being strategic in how we spend the time that we have.?
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This is one of my favorite principles, for over the years I’ve frequently asked myself:
Which do I currently have more of - Time or Money?
Maybe this means hiring an assistant at the office or hiring someone at home to take care of the house cleaning on a regular basis.? What would you do if you had a few extra hours each week??
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4. Pay Now, Consume Later
This principle capitalizes on the idea of delayed gratification (something we physicians are quite familiar with), as a means to increase the happiness associated with an event.? Take for example, instead of impulsively spending on immediate comforts, you pre-pay for a dream trip to the Fiji islands.? The planning and anticipation of the upcoming trip extends the joy associated with the trip itself. ?
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Our brains experience the thoughts associated with an upcoming event in pretty much the same manner as experiencing the actual event itself.?
(Brains have difficulty distinguishing between thoughts and reality. To them it’s all the same!)?
With the idea of intentionally planning an event in advance, the “pay now, consume later” approach allows for the extended experience of anticipating and planning for the event which ultimately results in increased joy and happiness from the full experience.
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5. Investing in Others
Research shows that volunteering is associated with greater happiness and life satisfaction.? Helping to improve the wellbeing of others can result in a “helper’s high” due to the release of dopamine and endorphins.? Giving back to others, be it time or charitable donation, allows you to tap into a powerful source of joy by making a meaningful impact on others which in turn creates a greater sense of self-purpose.? The community and shared purpose associated with volunteering, as well as the social connection, can also increase long-term happiness.?
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Practical Tips for Smarter Spending:
Start by identifying your values and priorities. What really lights your soul on fire?
Is it travel, learning something new, time with loved ones, personal growth, a special hobby, spending time outdoors, contributing to a cause, or something else?
Consider what types of experiences align with your values and priorities.
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Strategically spend money on activities and items that contribute to your long-term happiness.
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Consider the following practical tips:
·????? Create a budget and determine your level of desired discretionary spending.
·????? Consciously prioritize experiences over material possessions.
·????? Consider invoking the idea of scarcity to make an indulgence feel more like a special treat.
·????? Spend money to create more time by hiring and delegating tasks.
·????? Enrich your life by investing in others with your time and energy or charitable donations.
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Picture using your money as a tool for designing a life that aligns with your values and brings you greater happiness.
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How you choose to spend your money can significantly increase happiness and fulfillment in your life.? What will add more meaning to your life?
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My goal is to help inspire a happier world.
Cheers,
Tracy Davis
Founder, The Happy Physician
I help physicians (and non-physicians) who feel stuck in their careers to create a clear vision for their future, so that they can achieve greater happiness and a more fulfilling life.??I am an expert in burnout and career transitions.?
Ready to see what coaching could do for you? ?Send me a message and let me know you’d like to set up a free discovery call. For more information, visit my website.
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Additional Resources
"Happy Money: The Science of Smarter Spending" by Elizabeth Dunn and Michael Norton is available on Amazon.com and other bookstores.