Can money buy you happiness? As someone who lives in the world of money management and estate planning, certainly wealth building for the future is something I help clients with every day. But a recent article in the Wall Street Journal highlighted recent research that indicates that wealth alone doesn’t provide a guarantee of a good life. The research showed that what matters more is how people spend it.
Buying more material things looks like a great way to be happier on the surface. Certainly spending more money on that more expensive handbag, jewelry or flashiest car with all the bells and whistles on it will make your drive to and from work every day more tolerable and give you a short-lived thrill. But after a while, you come to take these items for granted, and they mean less as time goes on.
Studies show that people who spend their money doing something more eventful, like taking that dream vacation, is more satisfying in the long run, because the memories will last a lifetime. That expensive handbag, jewelry or car won’t! And the build up to that vacation is another bonus, because part of the pleasure is the anticipation of a major event.
Serious golfers are often known to feed the craze towards the latest golf equipment, and showing up on the tee with that brand new driver and technologically advanced irons can provide a short term thrill, not to mention bragging rights amongst their buddies. But contrast that to the golfer who tells you tales about his to trip to the British Open or that jaunt to play Pebble Beach. Both will be outrageously expensive compared to playing some of the high-end courses in your area, but the memory will last forever, as will the stories.
While spending your hard-earned money on trips or other events to create lifelong memories, for many people, giving money away to their favorite charity makes them happier than buying more “stuff.” The same can be said when it comes to gifts for family and friends. If you are a parent, there is something special about giving a recently married child the down payment for their first home. Or as a grandparent, establishing a trust to fund a grandchild’s college education as a high school graduation present can bring far more joy then buying them the latest technology gadget that will be forgotten (or broken) within the year.
I have had many clients who want to donate some of their assets to fund a scholarship program at their alma mater, fund an addition at their church or synagogue, or provide the funds needed to keep struggling charity afloat. The satisfaction they get from knowing they helped someone or some needy organization is far more important to them than going out and buying more “stuff.”
This whole idea of how you spend money also takes on even more significance as we are in the midst of the holiday gift-giving season. Lots of people spend hours and hours shopping for the “perfect” gifts for family and friends, but often spending the same amount of money on something more eventful will truly be perfect.
I was fortunate enough to experience this last year. With two of our daughters residing in the New York area, it is a tradition for us to celebrate the New Year in NYC. But last year, our daughters decided to get us reservations for a special New Year’s Eve show featuring jazz singer Steve Tyrell. Now they could have spent all that money buying us the perfect “gifts”, but I can tell you that of all the New Year’s Eves my wife and I have celebrated, this was by far our best. That is a great example of spending your money to create lasting memories. And whether you spend it on yourself, or on someone else, the feeling you get is, as the Mastercard commercial says, “Priceless.”