Picture this: you’re trying to pay down your debt, or you’re trying to save money for Financial Independence, or you just don’t want to spend any money because of so and so. You’ve been doing so good the past couple of days and then bam!
A trigger point: a bad day at work, you fought with your significant other, you feel like you lost the will to live, you’re bored of your routine – and what do you immediately do? You look for something to make you feel happy – you seek comfort, nostalgia, or just something that makes you feel better about your life.
More often than not we end up spending money just trying to feel ‘better’. And so, we introduce:
The Happiness Fund
They say that money does not buy happiness – but what if it does, if only for a little while? What if you’re at your wit’s end and you just want something to take you out of your small spiral of sadness? A little bit of comfort, a little bit of sanity? Does it justify spending money?
By all means, do so. Apparently when you buy something or pay for services you normally don’t pay for (cleaning service for your house, a meal out, a babysitter to help you take a ‘break’), there’s a small part of your brain that makes you feel happy after every purchase. Kind of like a trigger that says, yes! I got what I wanted, this makes me feel good! And so, you get out of your small sad spiral even for a bit (or maybe lift yourself up completely).
However, we turned that into a habit. One small snag in your daily life becomes a routine. “Oh, I’m sad.” Why? “Because work turned out to be so boring. Let me just go out for a drink or a meal.” And we do it again and again and again. “Oh, I had a small fight with my significant other. Let me buy him or her something so we can make up.” And pretty soon our little comfort treats don’t end up being treats anymore – it just becomes normal: a part of your spending pattern, and we end up overspending beyond our means, which is bad.
Why? Because it actually feels good to spend money. In fact, it is actually so much easier to spend your money than it is trying to save or invest it. It’s like a drug within your brain that lights up every time you spend your hard earned money: Yay! A new toy/happy meal! Yay! A new diamond ring, Yay! Another meal out!
Then the happiness and the novelty of spending that hard earned money gets old, and you don’t feel as happy anymore, and you go on to newer and better things.
My point is – money is there to be enjoyed, with moderation. Sure, if you’re having such a bad day, you can treat yourself and buy that thing you’ve always wanted (with moderation). You want to eat out? Sure, do so, but… always set limits.
Set your limits for your happiness fund
Because it is so easy to spend money trying to perk us up, it is better if you have a discretional allowance in your budget that can allow for spending on stuff or services you don’t normally pay for.
For example, I was feeling a bit stressed at work and didn’t go out until 8:15pm one night. My friends were having dinner at a dim sum place near my house. I normally don’t go out for dinner, but I just said yes and went out with them. I ended up paying $15 for me and a takeaway for Peter and didn’t think twice about it.
The day after, Peter wanted to eat in a fast casual joint called Bento, and we did. It cost us $29 for our meal. The day after, we just stayed at home and cooked our food. However, the week after, I had another sad day, and what did I do? I ended up going to the mall to browse for a few things, and ended up buying something from Amazon online to perk me up (toys from my childhood) which cost $15.
See a small pattern there? None of our small pleasures as a perk-me-up cost more than $20 per person. If you put in a maximum amount for your happiness/sanity budget, then you end up not overspending on little perks.
Sure it may cost an additional $100 in your bottom line budget, which is $1,200 per year, which could have been invested earning an average of 5% per year, and you end up with roughly $60 more in your bank account a year, which translates to $5 a month.
Seriously? Would your mental health, happiness and deprivation factor be worth an extra $105 a month? But wait, you could set your happiness fund even lower – say $10 or $15 a week! Would you feel the ‘pain’ of spending your happiness fund then?
You don’t even have to spend the whole amount every week! If you don’t need a happiness day/time out, then you just don’t spend the money and just save it and invest it, or add it to a week where you might need that little perk me up. It just takes a little time for you to get to know yourself when your trigger points are. For me, my trigger points come and go, but I can normally quell them at least once every few weeks and sometimes it just does not come at all, which leads to even more savings.
No more guilt!
You know when you buy something you shouldn’t have or spent on something you really didn’t intend to then you end up feeling guilty after? If you have a dedicated happiness fund, then you won’t feel guilty at all for spending that money because it’s already been budgeted for! It’s part of your happiness fund!
Money is so easy to spend – and some people who are trying to become financially independent sometimes just go crazy and refuse to spend any money. And then what?
They become so deprived and miserly sometimes they become grouchy and just want to stay up holed inside their homes eating rice, beans, and potatoes which becomes the poster child of ‘cheap’ or ‘frugal’. These type of people give the term ‘frugal’ a bad name. Yes, we can all be frugal, while still enjoying the comforts of life because of conscious spending!
Advocating the Happiness Fund
And so, my friends in the personal finance world: do not be afraid of the happiness fund. You may call it a different thing like discretionary spending, or a sanity fund, or whatnot. You can even call it the shit happens fund, where you just go meh when you spend that extra few dollars buying a stuffed animal because you want something to cuddle.
But wait, you don’t even have to spend on yourself! You can even treat somebody who you feel needs to have a little perk me up. A $20 treat for somebody who really needs it can perk you and that person up, which can spread even more happiness all around! See? The world can be a happier, optimistic place after all!
If you have the means to do it, then enjoy the happiness fund! You don’t have to go in debt just trying to make yourself (or other people) happy. After all, life is meant to be enjoyed, so why not just spend that extra few dollars trying to buy *gasp* happiness!
Who says money can’t buy you happiness? Obviously it can!
Have you had any experience with the happiness fund? Did it make your life better for the day or the week? Care to comment on your experiences below so we can help make other people know that yes, money can buy happiness, and it’s called the happiness fund!