We are looking at the research and principles in the financial planning book Happy Money: The Science of Happier Spending by Elizabeth Dunn and Michael Norton. We get plenty of tips on how to make more money (and that’s not a bad thing) but not as many tips on how to spend money in productive ways. Last week, we discussed buying experiences and treating yourself.
People say “time is money” so often that we don’t think about what that phrase means. People who say it may be talking about the need for efficiency because everything costs so much there is no time to waste. In a tip that is related to our last week’s discussion how you can be happier when you buy experiences, the book also suggests you spend money to free up time.
Buy Time. If you can afford to spend money in ways that allow you to have more time to bond with friends and family, you will be happier indeed. For example, if you would rather not do yard work, pay someone else to do it so you can do other things with the time you would have spent keeping your yard together.
But this isn’t just about tasks you would rather not do. Buying time means examining your entire lifestyle. For example, some people choose to pay more money to live closer to work so they can spend less time commuting and more time at home. When you value time and see spending it well as a goal, you think differently.
Pay Now, Consume Later. Much of the pleasure we get from planned purchases and experiences stems from the anticipation. The thought of an upcoming vacation may make you very happy. You are willing to give up some luxuries now to enjoy yourself later. On the other hand, consuming now and paying later often reduces happiness (think about getting a credit card statement—you may have been excited at the time of the purchase but later the debt may drag you down.)
Happy Money points out that you cannot use this principle of delaying consumption in all circumstances but that not only will you have the joy of anticipation if you pay earlier, you may also spend less because taking the hit to your wallet now keeps you grounded.