For many of us, fall is a chance to reset, to take a look at where we are. In financial terms this can mean fine tuning plans and budgets, but we might also take a broader view and question whether our lives are where we want them to be. While there is no question that money plays a role in our life’s path, I’ve observed from working with hundreds of clients over the years that a person’s earnings or accumulated wealth has little to do with his or her joy and fulfillment.
According to research, it’s not money that makes us happier, but our perception of money and what it allows us to do. Once we are past the poverty point, increasing our wealth will not necessarily increase our happiness or well-being. For women especially, challenging and fulfilling work is a larger contributor to life satisfaction than how much we make. And being able to have meaningful connections and experiences is more important than the amount of money we have to spend. Those who believe their money can help them create change and live meaningful lives are more likely to feel fulfilled.
The way we actually spend our money has a greater impact than how much we are able to spend. For instance, research, including a recent study at Cornell University, has shown that giving money to others creates a greater sense of fulfillment than spending it on oneself. And when people do spend on themselves, they receive considerably more joy from experiences, like travel, than from material goods. Experiences, it seems, satisfy more of our underlying psychological needs. Typically shared with other people, experiences create greater connection and sense of identity, along with memories that last well beyond the life of material items.
The spending behaviors with the highest correlation to happiness and satisfaction are:
• Activities with children and loved ones
• Travel and learning
• Giving to loved ones or those in need
• Buying time that is then spent with loved ones
• Paying off debt and living with less
Buying time can take the form of anything from downsizing and simplifying your home to hiring a service to do routine time intensive tasks. Elizabeth Dunn, author of “Happy Money,” provided this powerful illustration, “Use money to buy yourself better time,” she says. “Don’t buy a slightly fancier car so that you have heated seats during your two-hour commute. Buy a place close to work, so that you can use that final hour of daylight to kick a ball around in the park with your kids.”
So this fall, instead of thinking in terms of budget and investments, think about how much satisfaction and joy each dollar you spend is creating and what changes will lead to a more meaningful life.
Lyn Dippel, JD, CFP®, president of FAI Wealth Management, provides financial planning and investment management for transitions such as retirement, career changes, sale of a business, relocation and inheritance.