5 Questions to Ask Before You Spend Money
How you spend your money matters more than how much you spend. That’s the big idea behind researcher Daniel Pink’s work on money and happiness, and it’s worth a few minutes of your time.
Before your next purchase, take a few seconds to answer these five questions for yourself.
1. Is This Buying Me Time or Stealing It?
Studies consistently show that people who spend money on time-saving services; housecleaning, lawn care, grocery delivery end up reporting higher life satisfaction than those who spend on material goods. Think about it this way: is the cheaper option actually costing you something more valuable? A long layover might save $80 but cost you three hours of your Saturday. A house that’s bigger than you need might mean more weekends spent on just maintaining that house instead of doing what you love.
2. Is This a Story or Just an Item?
Experiences consistently outperform possessions when it comes to lasting happiness. Why? Because experiences become part of your identity, they’re hard to compare to someone else’s, and they actually get better in memory over time. Ask yourself: six months from now, will you still be thinking about that Amazon order or will it be tucked away in the closet? The concert, the trip, the cooking class? Those become stories you tell and pass on. The umpteenth gadget? Not so much.
3. Does This Bring Me Closer to Other People?
This one surprises people: spending money on others makes us happier than spending on ourselves. The research is solid. The sweet spot for charitable giving is when you choose freely where your money goes, you know the people benefiting, and you can see the difference it makes. That said, there’s nothing wrong with treating yourself. Just know that a donation to your local hot meals program or food bank will likely bring you more joy than spending that same amount on yourself.
4. Can I Make This a Treat Instead of a Baseline?
Welcome to the hedonic treadmill, also known as our tendency to quickly adapt to new things and return to our happiness baseline. The luxury hotel that thrilled you on your first stay barely registers by the fourth. The solution isn’t to spend less, necessarily; it’s to spend with more intention. One nice restaurant a month instead of every week. One splurge vacation a year instead of running up tabs on every trip. As the research puts it: “Frequency kills enjoyment. Scarcity restores it. If everything is special, nothing is.”
5. Can I Pay Now and Enjoy Later?
There’s something genuinely powerful about paying for a vacation months in advance: anticipation. The weeks of looking forward to a trip are part of the experience itself and those are free. Front-loading the cost also means you arrive without the financial weight hanging over you. You’ve already booked and planned it, now it’s time to actually enjoy the trip.
The Bottom Line
None of this means you need to overthink every cup of coffee. But for the bigger decisions, the ones where real money is on the line? I find that these five questions are a pretty good filter.
Does it buy time? Is it an experience? Does it connect you to others? Can you make it a treat? Can you pay early and savor the wait?
Spend well.