Why You Spend the Way You Do?

When it comes to money, the old adage that money can’t buy happiness is absolutely true. Believe it or not, how much or how little money you have is not actually a good indicator of happiness or contentment in life. What is a far better indicator of happiness, however is how you spend your money. Generally speaking, there is something that makes everyone happy, but what that something is will change from one person to the next. If you try and spend your money on things that make other people happy, you are most likely going to end up being miserable.

Too often in life, people have no idea what it is that makes them happy. They don’t know where to focus their time, money and attention, so they end up scattered and miserable. When you don’t know what makes you happy, you will be far more susceptible to advertising and sales tactics aimed at getting you to buy something with a vague promise that it will somehow make you happier. When you find the something that makes you happy and start spending your money on that, you stop spending money on things that don’t.

For instance, some people may be just as happy drinking black coffee as an expensive latte, but they buy the expensive latte every day because it’s what everyone else does or it’s just a habit or routine. They never take the time to stop and evaluate whether they are really getting more enjoyment from the latte than from the plain black coffee. On the other hand, they may love to travel and feel like they are most alive when they are traveling. However, they may feel like they never have the money to travel as much as they’d like, but they spend $5-$7 on a latte every day without thinking about it. If they skipped the latte and just brewed themselves a pot of plain, black coffee at home every day, they might save as much as $200 per month, or $1,200 in 6 months that they could spend on traveling instead of a latte every day that they don’t even enjoy.

Essentially, there are 5 basic things that people spend money on – or 5 basic things that make people happy. These 5 things are:

  • Travel
  • Health / fitness
  • Freedom
  • Relationships
  • Self-improvement

These 5 things are called Money Dials. The problem for most people is that they don’t know what makes them happy. They end up spending money on things that don’t make them happy, because they don’t understand what does. When traveling is not what makes you happy but it’s what you spend your money on, that is most likely going to lead to unhappiness. Conversely, however, if spending time with your family makes you happy, then you will personally be far happier by cutting down on travel to spend more time with your family.

When you identify what makes you happy and start investing in that, you will be far less susceptible to pressure from others to invest in things that don’t make you happy. In order to invest in what makes you happy, however, you must determine what that is. When you find your Money Dials and funnel your resources into them, your happiness level is most likely to improve, even if your finances don’t increase. Conversely, however, when you stop spending money on things that don’t even make you happy and only spend it on what does, you might be shocked at just how much your finances improve.

We invite you to share your Money Dials on this post, and what finance related new years resolutions you have made. BMG Money offers short term loans to assist with difficult financial situations (our loans for federal employees program is #1 in the country), and we are committed to the overall improvement of your financial wellness.

Keep checking the blog for more finance tips!