Smart spending

There is a lot of advice available on making, saving and investing money but little on how to spend money. So, I was interested to find a book based on scientific research.

The book “Happy Money: The Science of Smarter Spending” explains why we should shift our focus from earning more to spending differently.

There are five key principles to spend smarter to be happier. The great thing is that you could end up being happier with less and this could fundamentally effect your business strategy.

Remember, your business is there to serve your life so if you change your life you should review your strategy. Perhaps you could afford to part-company with high hassle clients/customers? Perhaps you don’t need the volume of business and can stop giving discounts to win new business.

Here are the five principles…all are common sense but not always common practice.

Buy experiences
Material things (from big houses, boats and flash cars actually give less happiness than experiential purchases (like holidays, concerts and meals out).

Make it a treat
Limiting consumption of the things we enjoy may help increase our appreciation and enjoyment from them.

If you have your favourite bottle of wine once a week, limit it to once a month or even once a quarter.

Buy time
Allow yourself to pay other to deal with the dreaded tasks you hate.

This can apply to domestic tasks like cleaning and ironing and to bookkeeping. Remember, you will be spending less on “thing” and need to the time to enjoy “experiences”.

Pay now, consume later
Delaying your consumption enables you to enjoy the anticipation.

This may mean not booking things last minute. Instead, book a table for dinner weeks in advance and a holiday 6-12 months early.

Invest in others
New research shows that spending money on others gives you more happiness than spending money on yourself.  This can be people you know or charity which fits with our giving with B1G1.

The really cleaver thing is you can combine the principles and they have a cumulative effect. So, the more principles you use to any spend the more happiness you will enjoy.