Rethinking Your Relationship To Money
We’re all too familiar with the adage, “Money can’t buy happiness.” But according to author Laura Vanderkam, in her empowering and thoughtful book All The Money in the World: What the Happiest People Know About Getting and Spending, “If money can’t buy happiness, perhaps we aren’t spending it right.”
Vanderkam encourages us to rethink how we view money.
Rather than money being “evil or soulless” or a point of comparison, she suggests we start seeing it as a tool for “acquiring, doing, and taking care of things that bring us joy.”
Let’s find out how.
Vanderkam explains that people who are happiest about money seem to adopt these three principles about wealth, which she says, “has less to do with quantity than outlook.”
1. “I have enough. There are some people in this world who have more, but also plenty with less.”
2. “If I want more than I have now to achieve big goals, I can figure out a way to get it.”
3. “Every dollar is a choice. How I earn it and spend it are up to me.”
Rethinking Societal Norms
You might be surprised to learn – or maybe not so much – that in 2010 couples spent an average of $5,392 on an engagement ring, according to TheKnot.com’s annual Real Weddings survey. That’s a whole lot to spend prior to getting married, especially considering the potential hardships of maintaining a happy relationship and eventually having kids.
That money could go toward other expenses that would actually ease these challenges. According to Vanderkam, that same amount could pay a babysitter $50 a night for 107 nights. Couples could take that time to go on dates or enjoy their own activities.
The Knot also reported that a couple spends an average of $12,124 on their wedding reception venue. This “…could cover a $100 housecleaning service, twice a month, for the entire five years many two-kid couples spend in that sticky stage when children spill milk just to see what will happen.”
That doesn’t mean that you can’t have nice things or enjoy a fun event. One man bought his fiancé a beautiful and “pretty sizeable” sapphire engagement ring for $267. That same couple had a sundae bar at their reception for $100 instead of an elaborate cake, which no doubt would’ve cost them triple (at the very least).
Today, it’s normal — and expected — for people to splurge on one-time events like weddings. As Vanderkam writes, many people will spend four figures on wedding flowers but wouldn’t spend that amount on flowers for their spouse for the rest of their lives. Interestingly, happiness research shows that “small, frequent gestures have a greater impact on our overall well-being than bigger, infrequent events.”
Of course you might’ve already spent this money on rings, your wedding or another big event. Either way, what Vanderkam is underscoring is the importance of using money mindfully, instead of blindly following today’s version of the “American Dream.”
Examining Your Expenditures
Vanderkam includes a valuable exercise in All the Money in the World that helps readers figure out whether we’re using our money in ways that make us happy and reflects our priorities.
Vanderkam suggests reviewing your bills and receipts over a month. Write these down, and rate how you felt about each one based on a 5 point-scale: 1 = mad; 2 = annoyed; 3 = neutral; 4 = happy; 5 = thrilled.
Then ask yourself, “What are you happiest to spend money on? What does this tell you about your values?”
Vanderkam also notes that often it doesn’t make sense to slim down on the small things that make us happy, even though this is what we tend to hear from financial experts. As she writes, “Food and entertainment expenses may be easy to trim, but the hours we spend eating, doing leisure activities, and socializing are often the most pleasant of our days.”
Plus, the money you’d save wouldn’t even be that much, anyway. It would take years to save toward a 20 percent down payment for a home. And you might be pretty miserable along the way. (Instead, she suggests considering how you can increase your earnings.)
Whether you agree with these specific suggestions or not, Vanderkam’s premise is invaluable: Be thoughtful about how you use money, and view it as a resource for realizing your priorities.
Tartakovsky, M. (2013). Rethinking Your Relationship To Money. Psych Central. Retrieved on May 5, 2015, from http://psychcentral.com/blog/archives/2013/02/06/rethinking-your-relationship-to-money/