Following on from our previous blog, here are some more ways to be wise with your money.
Spend on others Contrary to what we might think, if we’re going to spend money, research has shown that spending money on others makes us happier than spending it on ourselves. Individuals who give a greater percentage of their income to others or charity are happier than those who spend it on themselves (Dunn et al. 2008). Giving to others makes us feel good about ourselves and also helps strengthen our relationships both of which make us happy. We assume spending money on ourselves will make us happier but the mere mention of money has a negative effect, making us less likely to help or spend time with others and less likely to donate to charity. Ironically, doing less of these things makes us less happy so we must fight our instinct to indulge ourselves and spoil others instead.
Buy less insurance We hate loss more than we love gain and insurance providers play on this risk aversion, selling us peace of mind. Obviously, certain insurance policies are necessary, such as car or healthcare, but others may be a waste of money. In reality, things aren’t as bad as we expect them to be and we are psychologically stronger than we think, working hard to reduce the effects of negative events. Therefore if something does go wrong, we are unlikely to regret not buying insurance as much as we expect.
Avoid buyers regret It’s the small details in life that makes us happy. The problem is when we think about potential purchases we forget these. Therefore in order to avoid buyer’s remorse we need to think about what we want to buy in concrete terms. By thinking about how we will use the item or service will hopefully make us happier with our purchase.
For more advice, look out for our third and final blog on how to be a happy shopper.