SmartMoney magazine recently reported on a paper relating money and happiness published in the Journal of Consumer Psychology. The researchers discovered that many consumers do not know how to spend their money in ways that will bring them the maximum amount of happiness for the least amount of money. The authors came up with several suggestions that apply to consumers of any age:
- Focus on experiences rather than possessions. The researchers discovered that more happiness comes from doing things rather than owning things. The memories that come from activities such as travel or attending a performance or sporting event often last longer than new belongings.
- Helping others makes you feel good. Whether you are giving money or time, doing something for someone else can build your connections with other people and bring you satisfaction.
- Focus on small things. The researchers found that more frequent pleasurable experiences bring more happiness than intense experiences. In other words, having lunch with friends, playing a round of golf or taking a day trip on a regular basis can mean more than taking that once-in-a-lifetime vacation.
- Pay cash. By avoiding credit cards, you avoid getting too deeply into debt and overpaying in interest charges. The researchers also say that saving up for and anticipating an experience can make it more meaningful.
- Avoid hassles. While owning a vacation home may sound like a pleasurable experience, make sure you recognize the small (or large) responsibilities and irritations that come along with whatever you choose to do. Happiness comes with maximizing joy and limiting unpleasantness.
- Shop carefully, but not obsessively. Anyone who has read Malcolm Gladwell's "Blink" knows that sometimes the best decisions are made quickly. While a little research can be a good thing, take pleasure in buying something that matches what is most important to you.
- Listen to others. Sometimes the best way to know what will bring you pleasure is to find out what other people enjoy.
Savings suggestions
While all these suggestions for spending may be inspiring, saving money on small things can add up quickly. The less you waste on unnecessary items, the more you will have to spend on a golf outing, a day trip or a baseball game. CNNMoney.com recently published their list of the ten biggest money wasters:
- Cigarettes.
- Gourmet coffee.
- Bundled cable and phone services.
- Impulse buys from infomercials.
- Lottery tickets
- Daily Internet deals.
- Unused gym memberships.
- Brand-name groceries
- Restaurant meals
- ATM fees.
Depending on your lifestyle, you could be wasting thousands of dollars on some or all of these items. Before you immediately begin slashing spending on these items, remember the happiness factor. If a daily latte or a weekly dinner at your favorite Italian restaurant brings you pleasure, consider saving on something else and simply enjoy the frequent small joys you can afford.
Reverse mortgage options
Another money management option for senior homeowners above age 62 is a reverse mortgage. If you want to ease a tight budget, a reverse mortgage can help in several ways. You can use one to pay off your existing mortgage or other debt, or you can opt for a monthly income from the mortgage. If you simply want the peace of mind of having accessible funds, another option is to request a line-of-credit. If you never use the credit, the reverse mortgage loan will not need to be repaid.
Whether you need to save more or spend appropriately, a reverse mortgage can be a valuable tool in your financial portfolio.
Michele Lerner
Michele Lerner is a freelance writer with twenty years of experience writing articles and web content for newspapers and magazines on topics related to real estate, personal finance and business. Her clients include The Washington Times, Urban Land Magazine, NAREIT's Real Estate Portfolio, and numerous Realtor association publications. Michele's first book, "HOMEBUYING: Tough Times, First Time, Any Time" is available now at Amazon.com or from www.MicheleLerner.com.
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