Money Won’t Make You Happy

In a recent article, Josh Becker of Becoming Minimalist claimed there were 9 Stress Reducing Truths about Money.  The First Truth was “We need less than we think”.  The second was “Money won’t make you happy.”  In my last blog I addressed habits we can form if we can agree with the First Truth, which I do. Today, I want to dig into decisions and habits related to his Second Truth. 

I believe most people would push back on that statement.  It is akin to the country song by Chris Janson titled “Buy Me A Boat”.  In this song, the lyrics lament the theory that money can’t buy happiness but yet it can “Buy Me a Boat”.  If you haven’t heard it or don’t know the lyrics, check it out.  They are clever and, in all honesty, drive home the message that money alone will not make you happy.

Back to Josh Becker, in his article, he goes on to say, “It is simply an illusion that money will bring you happiness—study after study confirms it, so does experience. Some of the most joyful people I know are far from wealthy and some of the wealthiest people I know are far from joy. Now, certainly, there is a measure of stability and security that arises from having our most basic financial needs met. But we need so much less than we think we need. And the sooner we stop assuming more money will make us happy tomorrow, the sooner we can start finding happiness today.” 

I’m a Personal Financial Coach and Financial Education Consultant.  My working thoughts are all about money.  I coach and educate my clients to take care of their money.  Given that, one might expect I disagree with all this money can’t make you happiness banter and claim money can you make you happy.  Folks, let me be clear.  Money will not make you happy.  What will increase your happiness level will be managing your money in support of the life you are living or dream to live. 

When we are making good decisions, building strong habits and setting goals that use our money in the most effective way possible, we begin to feel happiness at a deeper level.  What are some of those good financial decisions and money related habits that allow for happiness?  I believe there are 3 key decisions and supporting habits to get us there.

Good Decision #1:  Get out and stay out of debt.  Motley Fool conducted a study in 2019 on the impacts of debt and happiness.  One of their observations was that 97% of people with debt believe they’d be happier if they were out of debt, alluding to “notable mental and emotional costs of debt”. Make the decision to get out of debt and then get into habits like budgeting, living within your income and finding someone who can speak honesty into your life when you are tempted to put a purchase on a credit card.  Once you have removed the shackles of debt from your life, you will begin to see debt, especially consumer debt like credit cards and auto loans, as undesirable and hinderances to your happiness.  For me, now that I am almost 6 years without car payments or credit cards to worry about, I can attest to the freedom I now have.  It took work and sacrifice to get out of debt initially but becoming debt free has had a liberating impact on my life. And I never want to go back to life in shackles. 

Good Decision #2: Save and vow to be patient. In today’s world of online shopping, it is so easy to want something, hit “proceed to check out” and know that in as little as 24 hours that “thing” you wanted will arrive at your doorstep.  Yet, the adrenaline rush we get from that sort of buying experience quickly wears off and we find ourselves with too many “things” and potentially debt or at the very least, less cash in our bank account afterward.  We’ve lost the art of saving up for purchases and can easily find ourselves on the path of never really being satisfied.  This is sometimes referred to as the “hedonic treadmill”.  It means we run the risk of becoming addicted to the rapid fire buying we can all experience and if we’re not careful, never be able to get off the darn thing. And, for me, being on that treadmill was exhausting! Instead, make the decision to save something. To begin with it doesn’t matter how much you save.  It can be $10 a week or $100 a week.  But simply begin to make that a habit.  If you are eyeing a particular “thing” first ask yourself the question “what happens if I don’t buy it” and then based, on your decision, if you still believe you need it, save for it.  As you are saving you may see your answer to that question change and may find yourself being able to avoid that purchase and keep your savings account growing.  Remember that with any habit making it visible, attractive, easy and satisfying is key.  So, when it comes to saving and being patient, remind yourself why you are saving, have money automatically put in your savings account from your checking account each month by your bank and watch the savings grow by checking your balance often. 

Good Decision #3: Stay and/or become educated on money matters. First, we all need to understand basic money and financial principles.  It is not as though some of us need it and others do not. We all must live and plan a life where money has some level of impact.  How in the world do you do that if you do not know or understand the most basic principles of money?  And, heck, we don’t learn about personal financial matters in school or from our parents generally.  We wait until we are adults and then begin to slowly be introduced to money matters as life goes on. For some of us, as we learn we are making some huge mistakes that take us years to correct. Let’s think of it this way: If you were hired to do a job, let’s say, Air Traffic Controller and started your job with little to no knowledge of the control tower electronics or how to help a pilot land a plane, you would not last long, correct? That may be an extreme example, but I use it to prove a point.  Money is a basic necessity of life, and we all need at least some level of how money works and how best to manage our own money in order to be successful.  So, make the decision to learn.  There are many resources online or in print to help you do so.  Just search for Financial Literacy or Financial Education and you’ll find many ways to learn.  How do you make this a habit?  Set yourself up with a goal that increases your knowledge or keeps you current.  Then, use that goal as a guide to put the proper steps in place.  Find yourself a good financial coach or financial advisor who has your best interest at heart (as opposed to their commission report).  Maybe find a group of like-minded individuals in your community to book club on money matters with regularity.  There are many other ideas to increase your learnings; you just need to seek them out.    

Next time we’ll explore Josh’s Third Truth – “Money is not the greatest goal of your work.” Say What?  Yep, tune in next week to see why that is a truth and how we can develop habits to address it.