Are You Maxing Out On Happiness By Maxing Out Your Credit Card?

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Money as it’s related to overall satisfaction is a hot topic and one that’s continually making the rounds in the headlines. The connection between the two has even created enough conversation to prompt the coining of the word “affluenza” – a term describing the symptoms of overspending and over-consumption. With so much put into the study of financially-driven happiness, are we getting closer to the answer?

A recent Wall Street Journal article titled “Why You Are Spending More and Enjoying It Less,” focused on the complicated relationships that Americans have with their personal spending. The piece also highlighted some of the more emotional responses that arise when an increased purchasing power is exercised. In the article, reporter Veronica Dagher interviewed several individuals who were overspending for various reasons. But though they came from different backgrounds and financial circumstances they seemed to have at least one thing in common: Their purchasing habits weren’t exactly resulting in more positive or happier reactions. In fact, much of their overspending resulted in a financial tension/stress that directly impacted their future financial security. More spending, it seems, isn’t the way to inner peace and happiness.

If we’re not buying happiness, what are we buying?

According to the article, much more than we need. We often associate spending power with a certain level of success and overall life satisfaction but the ease with which we can use a credit card to buy more has made overspending a common trend. When we buy something that adds long term value, we can appreciate the return on our investment. But everyday expenses that add only temporary value to our lives begin to act as markers of our financial insecurity or moments of weakness when we spend beyond what we’ve budgeted. The result is a much less fulfilling kind of consumerism and yet more and more these purchases are taking over a large part of our budget. So what can be done to take back financial power?

Evaluation is key to successful spending…

One of the main points made by Dagher is that no matter your spending personality, taking the time to evaluate your spending triggers is a critical part of making positive changes. Without understanding what’s really behind your spending motivation you might very well feel trapped in a purchasing pattern that seems never ending. She also suggests stepping back and looking at the “hot buttons” that tempt you to spend. Once you know the why of your spending habits, you’re more likely to understand how to go about changing them.

… and taking action is, too

After you’ve tuned in to your financial habits and assessed what triggers your spending, you’re in the perfect position to begin taking action. We’re complex creatures which means that it’s easy find yourself overwhelmed by the hows and whys of our money habits and reactions. But one thing’s for sure: while analyzing these things is obviously incredibly important, so is taking action to adjust and experiment with new ways to pursue happiness that aren’t dependent on spending highs.

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Small changes matter

One of our favorite personal finance bloggers, Stefanie from the Broke and Beautiful Life, was quoted in the WSJ article and we were thrilled to read about her budgeting strategy for funding an upcoming trip. Through based on a small spending adjustment, the change has allowed her to redirect her cash flow into a longer-term goal. It’s a testament to the impact of small steps on larger financial goals. Further, it shows how satisfying it can be to work for our goals, and independently achieve a goal that we’ve set.

Swap for experience-based purchases

In addition to making changes to your current spending habits, you might also benefit from reconsidering what constitutes a valuable purchase. Though you might think it’s that shiny red corvette you’ve had your eye on, it could in actuality be the resulting road trip instead. A few studies have focused in on how spending money on experiences compares emotionally to spending on physical items. The overwhelming consensus is that we draw a great pleasure from experience-based purchases regardless of whether they consist of a physical item. If you’re feeling burdened by the spending cycle that leaves you with a full closet but a strained bank account at the end of the month then you might actually be one experience away from a happier spending habit.

So how about you, do you find yourself struggling with your spending or challenged in a particular financial area?

Image Credit: MarkKoeber

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  • http://moneystepper.com/ moneystepper

    I’ve never been particularly materialistic, but in the last two or three years I’ve thought more and more about how much I value experiences over “stuff”. I now list all the stuff I buy as a separate category in my budget and absolutely ensure I minimize this. However, for experiences, I give myself a much higher (and lenient) budget.

    • Claire Murdough

      Thanks for such a thoughtful comment! I love that you categorize your budget like that and think it’s a great way to approach spending. I’m inspired to revisit my budget and try out your technique!

  • http://thebrokeandbeautifullife.com/ Stefanie @ brokeandbeau

    Thanks for the shout out! I agree that evaluating your spending triggers is key. Is it habit? depression? boredom? etc. When you recognize those things, you bring mindfulness to your spending, which can make you rethink things in a “big picture” kind of way, rather than a “right now” kind of way.

    • Claire Murdough

      We were so excited to see you mentioned! And YES – mindfulness as relates to your finances is so, so (sosososo) important. Great tips!