Does Money Buy Happiness?

• They make decent or comfortable salaries.
• They have lovely homes, stable marriages, and wonderful families.

But they can also feel stressed or dissatisfied:

• Some have jobs that give them little personal satisfaction or not enough family time.
• They're concerned they won't ever have enough resources for their own or their children's futures.

When we examine their spending habits, we often make some crucial discoveries. Some spend more money than they should on things they don't need. When they realize this, we make significant progress toward reducing their concerns.
This is not to suggest that we should give away our belongings and live in the mountains. And not all purchases are bad: we all have hobbies and interests that give us sustained and long-lasting pleasure and make us well-rounded and interesting people. But some careful consideration of our spending may pay off in greater levels of personal happiness and financial security.

Think before you buy
With all the online shopping, shopping malls, shopping channels, and catalog shopping, it's not surprising that Americans are carrying a record level of credit card debt. We often forget that what we can pay for and what we can afford can be two separate, very different, things.

Here is a challenge: for two weeks, pause before you buy anything that's not related to a true human need like food, health care, or shelter. It can have a great impact on your personal finances.

There are a number of creative ways to face this challenge:

• Make a list of what you want and wait a month before buying it.
• Freeze your credit cards in a bowl of water and buy things only when the ice melts.
• Leave the store immediately to think, giving yourself time to let the urge to splurge cool off.

Next time you have an impulse to purchase, ask yourself a few questions:

• Does the item you crave fulfill a want or a need?
• If you carry a credit card balance, how many months of additional minimum payments will purchasing this item obligate you to?
• Does this purchase get you closer to accomplishing the most cherished dreams you have for your life?

Don't buy more things, buy more experiences According to the National Association of Home Builders, the average American home size has increased by 40 percent since 1970. We have more closets, bathrooms, and kitchen cupboards than ever before. But the size of the average American family has decreased.

What happens with all that extra space?

• We fill it with possessions. We upgrade or trade in many of these items far before they outlive their usefulness.
• We charge purchases. We may still be paying for them long after we've gotten rid of them.
• We have too much house. We may be tied to more mortgage, utility, and upkeep payments than necessary.

All of these can add to our stress level and our worries about financial security. So instead of putting a flat-screen TV in your mud room, for instance, take a family vacation you'll have photographs and memories you'll treasure far longer.

Better yet, buy your freedom
Our retirement years are supposed to be our golden years the reward we finally earn after working hard for decades. It's our time to call the shots and live our life the way we want. But is golden really good enough in this age of platinum and titanium credit cards?

Unfortunately, many of us put our desire for instant gratification ahead of our need to live a financially secure life. We don't pay enough attention to funding our retirement until it manages to sneak up on us. And then we get worried.

Many of us work to maintain a lifestyle, not a life. When we know the difference between the two, we can make sounder financial choices that reduce worry.

If you do well, spend some money on doing good
We're lucky to live in a great country, but there are people across the globe or even across the street who are not so blessed. Helping the less fortunate can give our personal wealth and the sacrifices we make for it greater meaning. And, in many cases, charitable giving can help you reap tax benefits, too.

Be happy with what you have
Some experts suggest making a list of all of the things that make us truly happy, paying specific attention to those things you can buy like the love of our families and our good health. When we refer to that list regularly, it helps us stay focused on what's really important.