How can you enjoy life and save for your future at the same time?
Choosing where to spend your money is harder than ever. With so many technological advances, it’s tough to not want every gadget that comes out.
Take the high-tech doorbell, for instance. Not only does it ring, but you can monitor it on your phone to see who is there and talk with them from wherever you are.
Traeger, a smoker grill, has disrupted the barbeque industry. The problem with a smoker is it takes hours to cook, and you need to be close by to monitor it. Traeger solved that problem by using wood pellets on a belt that is controlled by your phone so you can make adjustments on the go.
In the world of beauty, we have hair and eyelash extensions, fillers, teeth whitening, and eyebrow blading techniques to enhance your already great looks. All of them are expensive.
We could go on and on with technological improvements in every area of our lives. The result is that we are bombarded with choices of appealing things to spend our money on. So the question is, how do we make those choices when need to save up for planned expenses, pad an emergency fund, and invest for retirement?
Consider what makes you happy
There is a difference, however, between pleasure (immediate gratification with a dopamine high) and happiness (contentment and bliss). Understanding the difference between pleasure and happiness and spending your money where your happiness lies could be the key.
Entrepreneur and thought leader Seth Godin wrote in an article titled “The Pleasure/ Happiness Gap” that there is a distinct difference between pleasure and happiness. “Pleasure is short-term, addictive and selfish. It’s taken, not given. It works on dopamine,” he wrote. “Happiness is long-term, additive and generous. It’s giving, not taking. It works on serotonin.”
Godin goes on to say, “Marketers usually sell pleasure … On the other hand, happiness is something that’s difficult to purchase. It requires more patience, more planning, and more confidence. It’s possible to find happiness in the unhurried child’s view of the world, but we’re more likely to find it with a mature, mindful series of choices, most of which have to do with seeking out connection and generosity and avoiding the short-term dopamine hits of marketed pleasure.”
This struck a chord with me because I don’t believe many people distinguish between pleasure and happiness when it comes to their money. Understanding the difference and putting our money where our happiness truly is can make or break our retirement planning — or determine whether we can retire at all.
Over our lifetime, millions of dollars flow through our households
Yet it’s challenging to siphon off those funds into investment accounts when so many things grab our attention.
In fact, Mark Zuckerberg, CEO and founder of Facebook, shared in his congressional testimony in April 2018 that ads on Facebook allow the service to be free of cost to all the users, and as the company develops new models, he vows there will always be a free version.
If you are a social media user, you’ve seen posts come through that say “sponsored.” Have you seen ads on social media that specifically target things you like? Sometimes it feels like someone is reading your mind.
A sponsored ad for some outdoor pants for cross-country skiing, snowshoeing, or hiking came across my Facebook feed. They seemed perfect for me and were a reasonable price. I purchased them, even though I really didn’t need another pair.
My neighbor, who is about my age and an avid hiker and skier noticed my pants and mentioned she saw them on Facebook, too. Since I post quite a few pictures of outdoor adventures, they must have pegged both of us as the right demographic for their product. Though I do like the pants and have worn them many times, I feel “marketed to” and “sold.”
This type of marketing results in a parting of ways between you and your hard-earned money for short-term pleasure. If you are a late starter in saving for retirement or had a few financial setbacks and aren’t on track for retirement, you need to be saving your money for long-term happiness.
A higher and better use of your money would be investing rather than spending. If you need to catch up, wasting money isn’t an option for you. Your long-term happiness is at stake.
You may not think 50 bucks here or there makes a difference, but it does. It all adds up.
Here’s how to find out where your money is really going
Track your spending for one month to see where your money is going. Use an app or a little notebook. Account for every dollar like a nutritionist asks you to track every single thing you eat or drink in a food tracker — you have to account for even a ketchup packet.
Then analyze your spending to see if your money is going where your happiness lies or just toward a quick dopamine boost. Before you make a knee-jerk purchase, consider whether it is something you need or something you have carefully considered and really want. If so, save up for it and fit the purchase into your overall financial plan.
In my case, the cross-country ski pants are a reminder of something I like (they are really stylish) but absolutely didn’t need. Because I realize that, I’m going to make sure I get a ton of use out of them. Going forward, I will be a more wary shopper.
What about you? What marketer has your number? Before you make a purchase, what questions are you going to ask yourself?
Nancy Anderson writes about living your richest life while transitioning to retirement, working in retirement and personal finance. She firmly believes that we can have it all – a rewarding career and fulfilling personal life while planning for retirement.
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