5 Smart Ways to Spend Money and Live Happier

2018-08-15T00:13:27+08:00By |Lifestyle, Personal Finances, Spending|

Money can buy happiness! No, it’s not about making good investment choices. Yes, your road to financial freedom is still on track. How is it possible when we are supposed to save more, invest wisely, and spend less? Read on.

We have heard a lot of advice on saving, adopting a cost-conscious habit, spending only on needs and not wants, planning your finances for retirement, practicing delayed gratification, being frugal, and the list goes on and on. All these project an image that spending is EVIL! Whatever is left is just enough to cover daily basic needs for survival such as food, housing, and clothes. Then the next month, we repeat this process all over again.

Sounds depressing right?! I am not suggesting ignoring the above wisdom on saving for the future. But can we predict the future? We may not even reach our retirement years if something unexpected happens to you tomorrow. And yet, we are here now and today!

We work hard to earn money. Shouldn’t we enjoy and be happy spending our hard-earned money? Yes, we should take care of our future financial needs but we should also live in the present moment! Spend your money to make you happier!

Money CAN buy happiness!

How do you spend money to buy happiness? Hint: It starts in a boring way – prepare a smart budget.

1. Smart Budgeting: Spend for Maximum Enjoyment

Spend some time thinking while drafting your budget. Focus on spending less while spending smartly. Allocate your expenses towards things and activities that give you joy and improve your well-being. Spend more on those that offer the most bang for their buck.


Many of you already know fixed expenses and variable expenses are the two primary categories of a budget. But, there is another way of looking at a budget. Instead of fixed versus variable, you can separate the expenses into your Wants and Needs. If these two ways are combined, the expenses can be then separated into four categories:

  • Fixed Needs
  • Fixed Wants
  • Variable Needs
  • Variable Wants

“Variable Wants” are happiness-boosting activities and where you should spend your money for increased happiness.

Place priority on spending that brings positive meaning or experiences to your life and your welfare.

The aim is to reduce spending and free up funds from the first three categories. Then to use the freed up funds to increase the spending on the “happiness-boosting” Variable Wants.

What are these “happiness-boosting” Variable Wants?


2. Buy Experiences and Memories Over More Stuff

After establishing your smart budget, plan the details of your happiness-boosting Variable Wants.

Research shows that experiences provides greater satisfaction than material things. For example, you excitedly look forward to your excursion coming up in two weeks’ time. You are picturing that getaway (while sitting at your work desk) fantasizing walking along the beautiful shoreline in two weeks. Those two weeks of expectation and anticipation for that experience is a huge supply of energy.

Compare it against spending the money on purchasing an idiot box TV. You are unlikely to get excited over the TV purchase, and the buzz will not last. Memories of your wonderful travel experience with your loved ones are far more enjoyable than staring at a box. The thought of sharing unforgettable moments whether at the beach, mountains or a new city with someone you love is exhilarating! And after the excursion, looking back at the pictures taken and reminiscing those moments will bring you joy again.

Another way to increase happiness is spending money on other people.


3. Spend Money on (the Right) People

Try being nice to other people. I’ll bet my signed dollar you will feel great after that.

If asked to choose spending money on oneself or other people, we are happier spending on other people. For example, buy many meaningful things on an overseas trip. Out of ten things, keep only one for yourself. Enjoy the pleasure of giving and seeing the faces and reactions of people receiving gifts from you.

“Gratitude is happiness doubled by wonder.” ~G K Chesterton

The art of living is by giving. We are truly happy to see other people happy especially loved ones and dear friends. Spending your money to put and see a smile on another person is truly extraordinary compared to spending it on possessions. Giving happiness to others, and getting happiness in return is happiness doubled!

Simple giving can be done and be a part of your daily life. For example:

  • Take a friend to lunch.
  • Treat your loved one to a spa.
  • Get coffee or something baked and delicious for your colleagues en route to work.
  • Buy one extra to give your best friend whom you know would love too.
  • Give a packet of food to a homeless person.

There’s no way like giving a smile to someone; you never know how much that person may require one.

Doing these meaningful things for other people increases your happiness.

In contrast, do you have things you have to do but hate to do? This is where the next best way to spend your money comes, buying time.


4. Trading “Unhappy” Time for “Happy” Time

[Editor: no we don’t mean that kind of happy time…]

Do you have things you absolutely hate to spend time doing? Would you be happier if you could afford to pay someone to do it? Of course! You will be a lot happier freeing the valuable time to concentrate on doing things you enjoy that also move you towards your goals.

What is important for you is what you are doing with the fixed limited time you have in life. If you have a lot of money and stuff, but have to spend 99% of your time doing things that you hate, your general happiness level is probably pretty shitty.

That familiar axiom, “money can’t buy happiness” may really be somewhat deceptive. Buying yourself out of doing something you dislike enables you to have time to do things that you love and make you happy. Isn’t that a good deal?

Spend money to enable you to focus on who and what you love.

“Happiness is not something you postpone for the future; it is something you design for the present.” ~Jim Rohn

Another good deal in getting your money’s  worth and bring happiness is “buying” companionship.


5. “Buying” Companionship

[Editor: again it’s not what you’re thinking…]

Picture your life without any friends. That would be a sad, lonely, forlorn, and depressing life!

Humans need friends. Having all the money in the world and possessing the most expensive branded goods is meaningless if we don’t have friends to share life with. Companionship is essential for your well-being. Having great company with stimulating conversation are both relaxing and comfortable. It’s good for the mind too.

Instead of eating alone, invite a friend for a meal. It does not need to be in Michelin Star restaurant. You can have it at your house with simple home cooked dishes paired with a glass of your favorite beverage of choice. Your friends will appreciate this and reciprocate by doing the same thing for the next get-together. Remember this. The best thing in life is friendship. Value your friendships!

“The greatest gift of life is friendship, and I have received it.” ~Hubert Humphrey

On another note, companionship can come in the form of a pet. Instead of buying that branded watch, spend it on getting a pet from a pet shop, or even better by adopting a pet from an animal shelter for stray and abandoned animals. Imagine coming home from a hard day’s work to be greeted by your loving fluffy friend putting a smile on your face. It’s great instantaneous stress relief!



Endeavor to direct your spending on things that increase your well-being over the long term. Focus on things that have a positive meaning for yourself, your family, and friends, while reducing expenses that don’t brighten your day. Over the long term, you will spend less but have a happier and better life. It all starts with having a smart budget that fits who you are.


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How does spending money make you happy? Make us happy too by sharing this article! 🙂

About the Author:

Eric Kiang
Eric is a qualified chartered accountant since 1992 and a member of Malaysian Institute of Accountants (MIA). He received his Diploma in Financial Accounting from TAR College and subsequently professional accountancy from ACCA.He has 25 years working experience in different finance-related jobs. He is now a consultant, and personal finance and business writer. His main goal is to help and educate non-finance professionals to understand and solve their personal finances problems. He believes everyone should be financially literate because everything we do has money implications! Eric currently resides in Kuala Lumpur, Malaysia with his wife and two young children.

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