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What is the secret to financial happiness?

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by Paul Kindzia in Happiness, Personal Finance
March 11, 2022

If you never figure out how much of your hard earned money to spend and what to spend it on, all the financial planning and happiness exercises in the world aren’t going to make a difference.  We all live in a consumer based society.  Every day of every week, you are inundated with advertising, marketing, and influences to get you to part with your money.  These expenditures are supposed to make you happy, that’s what the “Forces of Evil” tell you and want you to believe.  But why is it that in the wealthiest nations, the level of happiness is so incredibly low?

“Annual income twenty pounds, annual expenditure nineteen six, result happiness.  Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery.” – Charles Dickens in the classic story David Copperfield written in 1850

There were many times in my life where I thought I would just be happier if I made more money allowing me to spend even more.  Don’t get me wrong, increased income can make a substantial difference at the lower ends of the earnings curve.  When we barely have enough to cover basic necessities, it’s easy to feel as though life is just one big struggle with no end in sight.  It makes you feel like life is nothing but sacrifice and hardship, always wondering why others have things that we just can’t obtain.

Working in accounting and finance over the past few decades allowed me to make some interesting observations.  Generally, the more money people make, the more they want.  I’ve never had a client say to me, “You know, this is really starting to get annoying.  I work hard to spend, spend, spend all that money.  But then in two weeks another direct deposit hits my checking account and I have to start all over again.  It’s exhausting.”

Behavioral finance studies indicate that when asked about how much wealth would make a person feel secure and happy, they state a number that is twice what their current net worth is.  That goes right up the scale.  A person who has $250k socked away wants $500k.  A person with a million in the bank wants $2 million.  It appears to never end.

Unless you can figure out a way to become a billionaire (and if you do, make sure you remember my birthday) increasing income will be part of your ongoing desires for most of your adulthood.  It’s not until we approach the last few seasons of life that most people shift their focuses beyond earning more and more money.

Knowing this reality of human behavior should help you understand that happiness shouldn’t be tied to the pursuit of never-ending increasing income.  There should be tremendous focus and attention on spending.  To add another observation, what is more controllable in your life, your immediate income potential or your spending behaviors?

I’ll always have people try and tell me that they can’t reduce spending below their income.  That they can’t save money.  That they will do much better if their income was another 10%, or 25% or 100% higher.  But the reality is, no matter how much they are making, there are millions (if not billions) of people around the world that make less than them.  So somehow, others are living on less.

Learning how to “control your spending” will be essential if you have any interest in building wealth and financial happiness.

It’s not what you make, it’s what you save.

Your happiness also depends on this concept.  It’s very hard to be happy when you are constantly stressed and anxious about money.  It’s hard to be happy if you are loaded up on debt, drowning in minimum payments, and feeling like there is no way out.

If you have money problems, it will be extremely difficult to be happy, fulfilled and at peace with yourself.  You could do all the yoga you want.  You can light scented candles, meditate, keep a journal, tell yourself jokes, or pray about it.  Those things won’t fix your money problems caused by spending issues.

“Too many people spend money they haven’t earned, to buy things they don’t want, to impress people they don’t like.” – Will Rogers

Money problems often lead to depression issues.  Money problems often become triggers for anxiety that motivate people to search for short term escapes from.  Those triggers can lead to binge eating, drinking, doing drugs, and other harmful behaviors.  It’s not hard to imagine how these items can lead into relationship problems with others.

Here are three specific items that you could implement right now to help you control your spending;

  1. Use positive affirmations– Affirmations are positive, specific statements that help you to overcome self-sabotaging behaviors. Tell yourself, “I do not need to spend money on this item right now to be happy.  I am happier when my finances are under control. I am going to reach my debt free goal.”
  2. Put time constraints on larger purchases– Impulsive purchases are something that everybody is guilty of. Give yourself concrete rules to follow such as never buying anything unplanned over $250.00 without giving yourself a few weeks to pass.  You will be amazed at how often the time goes by and not only do you not want the item after a few weeks pass but you are so happy you didn’t buy it.
  3. Only use cash or funds in a savings account for discretionary spending– Build yourself a spending stash. Put extra cash into a jar, or a box, or a savings account that is targeted towards discretionary spending.  If you don’t have the cash to buy what you want right now, don’t do it with credit cards.  Hold off on making the purchase.

Your greatest investment is YOU!  It’s not anything that you can buy.  It’s not a ROTH IRA.  It’s not a piece of real estate.  It’s YOU!

“You cannot keep out of trouble by spending more than your income.” – Abraham Lincoln

Do I think that you could learn to control your spending better?  Yes, I believe in you.  Do you know deep down that you are capable of pulling more out of yourself?  Yes, you know you can give a little bit more and dig in.  You can achieve success and move the ball forward as long as you are taking steps in the right direction making progress bit by bit.  Your goal today is to improve upon who you were yesterday.  If you do that, there’s no telling how far you can go.

Good habits lead to good behaviors.  Good behaviors lead to good decisions.  Good decisions lead to a good life.  Live by principles and choose wisely.

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