Is it me, or do you think at the end of 2020 we need a double dose of “to inspire”?! What a year. Insert your own personal recap here ______________! I’m confident you have a story; we all do.
At The Joseph Group we talk about money being only a tool to help us all live great lives. This year may not have been our best life, but let’s pause and think about how we used our money this past year. Here’s a great question to ask: “What one thing this year did I use money for that brought me the most happiness?” What did you buy or build? Who did you give to or invest in? There has to be something.
Several years ago, I read a book called Happy Money by Elizabeth Dunn and Michael Norton which I summarized for an issue of our Harvest Magazine. In the book, the authors draw upon their extensive research to show which spending decisions make us the happiest, and they identified five key principles. Let’s revisit through the lens of 2020:
- Buy experiences – Material goods provide less long-term happiness than experiential purchases. For an experience to have the biggest impact, it should bring people together, make for a memorable story to be retold, be linked to who you are as a person, or provide a unique opportunity. Experiences in 2020 may have been few and far between, but the ones that were created were definitely unique and memorable!
- Make it a treat – Did you “treat yourself” a little more in 2020? It was only natural and therapeutic. A few years ago, I shared “our tendency is to have less appreciation over time the more we have or do something…distance makes the heart grow fonder.” What didn’t you get to do in 2020 that you look forward to doing in 2021? At some point this next year, everything is going to feel like a treat!
- Buy time –Time is definitely a valuable resource. As the authors note, “when something is valuable, it is typically perceived to be scarce.” I would imagine there is a full spectrum of people who feel they have more time or less time than they did pre-pandemic. Regardless, there have been ways we bought time in 2020. Did you save yourself time by shopping online? Did you buy yourself time by ordering carryout more often? There’s no reason we can’t continue using our resources to buy us more time post pandemic.
- Pay now, consume later – We are happiest with a purchase when we can separate the pain of paying with the reward of consumption. Consuming now and paying later is counterproductive to happiness. In 2020, was one of your favorite purchases something fully paid for that you will enjoy for years to come? Maybe a new toy or a home improvement?
- Invest in others – Spending money on others produces more happiness than spending money on ourselves. The research on this is overwhelming. Giving our money away not only can make us happier, it can actually make us physically healthier and even make us feel wealthier. Nick Boyden wrote an excellent WealthNotes article last month on “The Law(s) of the Gift.” 2020 has shown us all so much need in our families, with our friends, and in our communities. There’s been no better year to invest in others.
Now think about it again: “What one thing this year did I use money for that brought me the most happiness?” I’ll bet you checked a lot of the boxes above with that purchase. As we look to next year, let’s commit to Happy Money again in 2021.
Happy New Year! Have those three words ever sounded so good?!
This WealthNotes Inform was written by Todd Walter, Partner and Chief Wealth Planning Officer