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Livin’ La Vida Luna
Happy Easter everyone!
Spend Your Way to Happiness
Whoever said money can’t buy happiness didn’t know how to spend it.
In the book, Happy Money: The Science of Happier Spending, authors Elizabeth Dunn and Michael Norton provide 5 research-backed ways to get the most happiness out of every dollar.
Here they are in no particular order.
Leisure items include trips, movies, sporting events, gym memberships, and the like.
There are two main reasons why buying experiences is better than buying material items.
The first is hedonic adaptation.
Hedonic adaptation is our tendency to quickly return to a relatively stable level of happiness despite major recent positive or negative events or life changes.
When the pens were surrounded by “lesser” gifts, the subjects gave the pen rave reviews. When the pens were surrounded by “better” gifts, the subjects’ desire for the pen diminished.
Basically, we are happy with things, until we find out better things are available.
The second reason is experiences attach to our identities better than material items.
Memorable experiences enrich people’s life stories.
Take a minute to think about your absolute favorite memories. Are they things you bought or experiences you enjoyed?
Off the cuff, my top 5 memories (in no particular order) are:
- My high school “lunch table”*
- Pledging my fraternity the first semester of college
- The study abroad trip across Europe when I met Dia
- 6pm CrossFit + 530am CrossFit
- Our wedding weekend
*Lunch table is in quotes because that group of 6-8 guys moved in a pack. From the lunch table at school to the poker table in my parent’s basement to the dinner table at Applebees after 10 PM.
These memories are what make me who I am.
My last car cost more than all of the above (combined) and buying it probably doesn’t crack the top 50 moments of my life.
You’re likely to get the biggest bang for your buck if:
- The experience brings you together with other people, fostering a sense of social connection.
- The experience makes a memorable story that you’ll enjoy retelling for years to come.
- The experience is tightly linked to your sense of who you are or want to be.
- The experience provides a unique opportunity, eluding easy comparison with other available options.
Make it a Treat
The more we are exposed to something, the less positive of an effect it has on us.
If abundance is the enemy of appreciation, scarcity is our ally.
Here’s how I put this into practice with coffee. A few years ago, Dia and I would get a latte almost every day from either Starbucks or Dunkin’.
I’m embarrassed to admit this, but Dunkin’ used to run this gift card promotion about once per quarter: $10 for 5 medium lattes.
I used to buy $250 worth of gift cards at a time to last us the entire quarter.
Today our caffeine habit looks much different. Instead of spending $4-$8 per day on 2 lattes, we spend $8.99 (each) per month for a MyPanera Coffee+ Subscription.
Then on Saturday mornings we take Luna to a boutique coffee shop and sip on the latte we waited all week for. Making it a treat has completely transformed the experience.
Time and money are frequently interchangeable.
The sad part is most of us tend to be more protective of our money than our time, despite knowing time is the non-renewable resource of the two.
Classic examples of when exchanging time for money is a bad idea:
- Standing in a 2-hour line to get a free burrito, sandwich, or ice cream valued at $10
- Choosing a flight with 2 layovers to save $100 against a non-stop flight
- Taking local routes instead of highways to avoid tolls
The Utility Index:
Daniel Kahneman Alan B. Kruger developed a concept referred to as the U-Index. The index measures the amount of time people spend in an unpleasant mood - when their feelings of tension, depression, or irritation, outweigh their feelings of happiness.
Here’s what their study found.
People are rarely in an unpleasant mood while exercising, reading, praying, or having sex. However, unpleasant moods are common while commuting, working, shopping, or doing housework.
So how can you improve your personal U-index?
Start by solving daily hassles. Daily hassles exert a remarkable downward force on our happiness.
If you hate vacuuming every night after dinner, buy a Roomba.
If you’re annoyed by the accumulation of dust and progressive clutter, hire a housekeeper to clean up on the weekends.
If your commute is unbearable, move closer to work.
Put your new-found time to good use. If you manage to buy back an hour per day, don’t spend it watching TV.
Double down and do something that feeds your soul. Open a book you’ve been meaning to read, hit the gym, or help someone solve a problem they’re dealing with.
A quick note on television.
In a sample of over 132,000 people across 32 European countries, individuals who watched more than 30 minutes of TV per day were less satisfied with their lives than people who watched TV for less than 30 minutes per day.
Please don’t pay someone to do your chores and ultimately end up watching more TV. Netflix isn’t going anywhere.
Pay Now, Consume Later
This concept goes against everything we believe in today: I want it now, and I’ll pay for it (later) with credit.
This couldn’t be more true for me.
This past week, Dia and I decided to take our first trip in the Pandemic era. For my birthday in May, we’re going to Saratoga Springs, NY.
We were like little kids at the computer: booking our accommodations, researching which restaurants to visit, and which activities we want to do.
We even made a color-coded calendar for the weekend.
Something we want but don’t have yet is like a distant image coming into focus.
Consuming later provides time for positive expectations to develop, which in turn could out-weigh the short-comings during consumption.
When is delaying consumption most beneficial in getting the biggest happiness bang for your buck?
- When the delay provides an opportunity to seek out enticing details that will promote positive expectations about the experience, as well as excitement in the interim.
- When anticipating the purchase makes you drool, increasing the pleasure of eventual consumption. In contrast, we do not recommend delaying neutral necessities like oil changes.
- When the consumption experience itself will be fairly fleeting. In these cases, the delay provides a valuable opportunity to draw out the pleasure beyond the experience itself. i.e. Sky-diving.
A quick note on credit cards.
First, they are an ingenious method to get people to spend more money. They provide an anesthetic against the immediate pain of paying.
Second, you might think paying later and consuming now makes you happy, but just the opposite is true.
Half of US residents report worrying about being able to pay their debts. This number is getting worse in the pandemic era.
Although the relationship between income and happiness is fairly weak among Americans, the relationship between happiness and the ability to pay bills is much stronger.
What we owe is a bigger predictor of our happiness than what we make.
Invest in Others
Spending small amounts of money on others can make a significant positive change in your happiness.
Have you ever brought a box of munchkins to a social gathering? $10 will make you the life of the party.
The toddlers were then presented with the entire box of treats and a monkey puppet. The researchers had the toddlers feed the puppet from the box, and then again from their own (finite) supply of 8 treats.
Since toddlers can’t fill out a form, facial expressions were the main measurement.
They took four measurements:
- When giving the toddler 8 treats
- When introducing the monkey puppet and the box of treats
- When feeding the monkey puppet from the box of treats
- When feeding the monkey puppet from their personal supply of 8 treats
The researchers found the toddlers were happiest when feeding their new friend from their personal (finite) supply of treats.
First of all, how freaking cute! Second of all, sharing is caring.
When does giving promote the most happiness? When it’s a choice, it makes a connection and makes an impact.
Make it a choice. Think about the last time you felt obligated to donate. For example, at the checkout counter at Wawa. “Would you like to donate $1 to children who are dying of hunger?” Saying no makes you feel like an asshole. Saying yes makes you feel like you don’t have a choice.
My favorite example of “make it a choice” is the optional donation to enter some of the big-name museums in NYC. Making entrance free with an optional donation is a great strategy and compels me to contribute.
Make a connection. Pre-pandemic, I took people out to coffee and meals all the time. In exchange for their time and knowledge, I picked up a $20-$50 check. The one-to-one in-person connection far outweighed the money spent.
Make an impact. I’ve talked about it before, and I’ll talk about it again. 100% of our charitable contribution efforts go to one organization: INADcure.org.
My niece, Ariya, has an ultra-rare, terminally-ill disease and my cousins single-handedly created a non-profit organization to find a cure. Every dollar Dia and I can afford to pump into this effort makes a direct impact on everyone in my family. No one wants to lose someone they share blood with, especially at such a young age.
Some people think they’d be happier if they spent their money on themselves instead of on others. I’d encourage them to think again.
Here’s what I really liked about this book. It didn’t encourage readers to increase their income or decrease their spending. It simply nudged us to consider how we could spend our money differently to provide more of a happiness bang for our buck.
Here are the 5 ways to spend your money in happier ways again:
- Buy experiences
- Make it a treat
- Pay now, consume later
- Buy time
- Invest in others
These optimizations are not mutually exclusive. The most happiness is generated when you combine a few of these tactics into one experience.
One example I’d like to share from the pre-pandemic era is seeing Broadway shows with a few friends from the gym.
Spending money on a Broadway show is buying an experience, not a material item.
We’d often book the tickets months in advance to accommodate everyone’s busy schedules, satisfying pay now, consume later.
We would attend 2 or maybe 3 shows per year, which definitely qualifies as making it a treat.
All of us had an opportunity to invest in others.
- Matt and Meg would buy the tickets for the group and arrange logistics.
- TJ and Krissy would cover brunch in their apartment pre-show.
- Jeff and Susan would buy a round of drinks during intermission.
- Dia and I would use our car and EZ-pass to drive Matt & Meg in.
- And of course, Rich and Arlene would generously pay for dinner.
I’d try to make something up about how we bought time, but the truth is there’s no buying that kind of time. It’s priceless... and I can’t wait to be able to do it again.