What role does money play in your life? How does your spending affect your well-being?
Managing your money well to create financial security is like currency toward personal well-being. While having money is certainly not an automatic key to happiness, having enough funds to cover basic needs and prevent pain and suffering where possible is a factor of well-being. For those who enjoy middle to higher incomes, financial security can also allow a flexibility in lifestyle that has shown to improve aspects of well-being. Financial security can increase short-term happiness by giving us more control over how we spend our time, whether that means a shorter commute, more time at home with family, or additional social time with friends.
The enjoyment of spending money often depends on the person who benefits. Research shows that spending on oneself does not boost well-being. However, spending money on others does -- and it appears to be as important to people's happiness as the total amount of money they make. Additionally, buying social experiences rather than things -- taking vacations or going out to dinner with friends, say, rather than making material purchases -- is investing in positive memories that last a lifetime, long after the value of items fade. Spending on others, financial charity and giving of your time and resources also create a higher sense of well-being.
Invest in your own well-being. Here are a few recommendations:3
1. Buy experiences -- such as vacations and outings with friends or loved ones.
2. Spend on others instead of solely on material possessions.
3. Establish default systems (automated payments and savings) that lessen daily worry about money.
Tools and Resources
3Rath, Tom, Harter, Jim, Harter, James K. Well Being: The Five Essential Elements, New York, NY. Gallup Press, 2010