In these difficult times, people are spending their money more carefully than ever. I read an interesting article recently in Time Magazine (their Special Money Issue) that details how we’ve changed our spending patterns since the recession hit in 2007. The article points out that, while money can buy ‘happiness’ (broadly defined), there is a finite amount of money that works for this. Time claims that amount is $75,000. More than that does not buy additional happiness.
So, as I suspected, there are miserable multimillionaires (the 1 percenters) that are just buying stuff to keep up with the Jones! The more stuff they buy, the less ‘bang for the buck’ they get as far as how happy the purchase makes them feel. That’s one reason the higher end retail stores (Coach, Tiffanys, Nordstroms, etc.) are doing gangbuster business regardless of the economic slowdown. Most of the previously rich are still rich (maybe a little less so), but they are still buying stuff at a pretty good clip. Those shoes, handbags, high tech gadgets, and high end golf clubs are still piling up. At the same time, Walmarts and Dollar General are doing OK, too. However the ‘midde class’ stores like Macys, Target, and Marshalls are struggling a bit. So the rest of us (99 percenters) have dialed down a bit to make ends meet. But we’re still buying lots of stuff.
Time makes the point, that, unfortuately, many of us are buying ‘the wrong brand of happiness’. “We are doing things with our money that make us happy in the moment, but that’s not always the best strategy for long-term well-being.” says Harvard Business School professor Michael Norton, who researches the psychology of happiness. He points out that spending on ‘experiences’ like travel and leisure or on friends and loved ones offers longer-term bang for the buck. This is because these purchases enhance the feelings of meaning and social connection that underpin true happiness. Jen and I see this phenomenon here at The Windover Inn all the time. Guests often arrive a bit harried from the every day hustle and bustle, and leave relaxed and refreshed with memories, photos, and maybe some new friends they met here at the inn. These experiences do not deteriorate over time like most ‘stuff’ does, but rather gain in value through the reconnecting that occurs through the reliving of these experiences with significant others.
While these insights will not make it financially easier for us 99 percenters, it may help in maximizing the use of the money we still have!