[font=arial,]If spending less than you earned was all there was to personal finance, it’s hard to imagine that there would be over 2,000 personal finance blogs, talk shows, and hundreds of books written on the subject.
There is something else, something bigger, something more complex than this simple advice of spending less than your earn. If there wasn’t, all we'd have to do is control an impulse and we would all be debt-free and on our way to early retirement.
The reason over 2,000 personal finance bloggers can exist in this world, is that money is a daily struggle.
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[b]What Does Everyone Have in Common?[/b][/color]
Everyone reading this post, no matter the income, gender, marriage status, has one thing in common; we’re all trying to get the most out of every dollar spent
You can even give this concept its own equation: Output/Input.
Your goal is to maximize the output, or what money brings to you, and minimize the input, or the dollars you spend. If you can find away to maximize the equation, money will no longer have to be a daily struggle. Instead, you can use money as a source of happiness.
[b][color=#ff6600]Expenses that Increase Happiness[/color][/b]
For the first time in history, there is a wealth of research on the correlation between money and happiness. In other words, we now know what expenses bring the most value to maximize our output.
One recent article in Psychology Today discusses a study that tracked the expenses and corresponding happiness of over 5,000 households. The researchers were able to draw two conclusions from their effort.
First, happiness increased when money was spent on creating positive experiences. Second, which I found somewhat surprising, was that, “The best way to increase happiness, though, was to make a series of smaller purchases rather than one big one.” says Art Markman PHD.
[b][color=#ff6600]Why Smaller Purchases?[/color][/b]
Why is it that the greater number of smaller purchases are better for your happiness than one big one? I struggled for this question for a good two hours. I was always one to think that taking one dream vacation which costs $5,000, was better than taking 5 smaller vacations which cost $1,000 each.
The whole time, I was missing the point, and that is that life is meant to be shared. Happiness has nothing to do with how much a new experience costs. It has everything to do with being there, in the moment, with the people you want to be with. It has to do with shutting down your job and focusing on [i]you[/i].
The more times you can create a new experience for yourself, means the greater amount of time you’re spending with close friends and family. This is more time you’re with people who you care about and care about you. A true recipe for happiness.
[b][color=#ff6600]Your Homework Assignment[/color][/b]
[b]Spending less doesn’t necessarily mean experiencing less[/b]. The goal is to get maximum output, for minimum input.
Make a list of what you can experience with others today. I find it helpful to give yourself a small budget, of say $20. Brainstorm a list of 20 new experiences that can be had for $20 or less. Plan at least one of those activities for this weekend.[/font]
