It’s never too late to cultivate better spending habits. Being frugal helps protect your future, but what about days you just want to spend?
In a 2011 study, scholars from institutions including Harvard University wrote a paper titled “If Money Doesn’t Make You Happy Then You Probably Aren’t Spending It Right”. It offered eight suggestions on how to spend in a way that maximises joy.
Here’s a summary of what they recommended.
Buy more experiences and fewer material goods
The top advice given by the scholars was to spend more on experiences than tangible items. Experiences make us happier for a longer period of time, and they’re often more memorable.
Things we buy quickly diminish in value once we get our hands on them, especially with today’s consumer culture.
We are always clamouring after new phones, clothes, and knick-knacks. E-commerce sites have made it easy to buy them nowadays. More than a quarter of Singaporeans shop online at least once a week and more than half of them shop online at least once a month, a survey by Visa found.
Practice living a minimalist lifestyle so you get used to living with less things.
On the other hand, experiences are often shared with other people. This makes them even more enjoyable.
Spend on others, not yourself
Spending on others or giving to charity is known to make us happier than spending on ourselves.
When the researchers gave people up to $20 in cash and told them either to spend it on themselves or to spend it on others, the ones that spent on others generally reported being happier.
Spending on others helps to create social interactions. People tend to cherish relationships more than goods.
Say goodbye to warranties
Consumers are more afraid of losing $5 than happy to gain the same amount. This has led sellers to often bundle expensive warranties together with their items.
But in fact, warranties do not make us any happier with our purchases. A 2002 experiment found that participants who were given a choice to exchange a poster were not any happier than those who were not given an exchange option. Being “stuck” with something helps us to appreciate it more.
That said, insurance on big-ticket items like your home, vehicle, or health is still important.
Buy many small pleasures, not few large ones
We often think of a grand day out or a year-end holiday will hit the sweet spot.
But researchers say pacing ourselves brings us more joy. This way, we prolong feelings of satiation and happiness, and we spend less.
For example, rather than going on one long holiday, split it into two.
And treat yourself often to your favourite dessert or a massage, rather than pouring money into expensive items like front-row concert tickets or branded handbags.
Buy now, pay now
Rather than tap on instalment plans, we should pay for our purchases upfront, all at once.
In fact, the researchers encourage us to pay in advance if possible. This makes us feel even more satisfied when the item or experience we bought arrives.
Also, do not give in to your cravings. If we give ourselves more time to choose what we buy, we tend to select items that have more long-term and lasting benefits.
How does your purchase affect your daily life?
Getting a large house or a pet might seem like a good idea, but think about how you plan to maintain it after that.
Studies have shown our propensity to overlook the impact of owning something on our daily lives.
We alss frequently overestimate the emotional impact of milestones like marriages and birthdays. Feelings of happiness tend to accumulate over a day rather than come all at once at a single event.
Not every deal is a good deal
Many shoppers like to compare the price and details of a product before buying it. They tend to trawl through review websites and multiple retail stores over weeks and days.
This can disappoint us, since we spent so much time and energy looking for an item, only to realise later we do not use it that often, or the deal we got is not as good as we thought.
This problem can often crop up given that stores are often offering discounts and bundle deals that make the item seem like such a good deal, we are losing out if we do not buy it.
But it is best if we step back and calmly consider that item is really necessary.
Checks the reviews
You may want to trust your gut before buying an item or experience. But often, a better indicator of whether you are getting your money’s worth is by looking at reviews.
Reviews are usually objective and an indicator of whether you will like the product.
Of course, with scams becoming more common nowadays, not every review can be trusted. Sometimes, reviewers are paid to give a good rating, or they are out to discredit the company for personal reasons. Read through the reviews and find the ones that seem the most legitimate and objective to make your decision.
Fixing your spending habits can make life a lot more enjoyable. You can easily keep track of your expenditure by using apps like Planner Bee. If you need more financial advice, we are always available at firstname.lastname@example.org.