What if we were misled by the question that we ask ourselves? What if the question was “does time buy happiness?”?
1. Experience > Materialism
In our article, 8 ways to reduce expenses, we argued that one way to reduce your spendings would be to suppress materialism. It has been proven that with limited money, we tend to prefer material goods over experiences. This is a bias because we believe that by buying possessions, the utility of purchases will last longer [Tully, S. M., Hershfield, H. E., & Meyvis, T. (2015)].
We believe that materialism is somewhat of a consequence of the need to fulfil a hole in our life. If you think about it, the “money doesn’t buy happiness” adage really strikes here. If it doesn’t tell you that you will not feel any better with all the stuff in the world, then what does it tell you? Not taking the time to fix those “empty holes” in the right manner would probably indicate a failure to truly find what makes us happy. By definition, that cannot be something materialistic.
If you’ve ever tried to switch your focus towards enjoying more of the moments we crave—the ones that truly make you happy—then you know how much better it feels than buying a new pair of shoes. That way, we learn to focus on what truly matters to us. Being less materialistic allows us to focus on our experiences, on our future plans as well as save a ton of money in the process. Are you telling me that you can enjoy life more, and make more money? Yep.
If you really have a compulsive need for buying or a long-lasting habit of relieving your stress in life through purchasing more: you might want to address the problem in a progressive manner. What about you apply the rule “one out, one in” if we plan to buy a new item? This allows you to keep a reasonable amount of stuff as well as recoup some money if you sell an old item! Win-win. After that, it’s up to us to make sure to resist the temptation of buying and stacking stuff, because we know that this summer’s friend trip will yield much more benefits. We sometimes have to prioritise in order to make the most out of life. Asking the right questions about what we want is never a bad thing. Neither is it for your wallet.
2. The new rich
In the same article, we brought forward the fact that people who choose time over money were happier [Hershfield, H. E., Mogilner, C., & Barnea, U. (2016).]. What does that even mean? To illustrate the point, we might quote Tim Ferriss’ “New Rich” as famously explained in his ‘4-hour-workweek’ bestseller. The New Rich, are the people that possess the truest richness of all: disposable time. Not disposable income they don’t have the time to spend. True richness in the sense that the rarest resource of them all—again time, not money—is almost entirely in the custody of the new rich. They are free to enjoy it how they please because they freed their time.
Tim Ferris is famous for having lived a life of minimised workload (hence the 4-hour-workweek)—notably through delegating—in order to travel the world and live his dreams, and more. Some of the best lessons there are to draw from the book are that “less is more”. It makes sense, if you want to enjoy more out of life, you need to reduce what prevents you from enjoying your time. You need to free your time. Which is without a doubt easier said than done.
Doing what you love is a good start, that is for sure, but it won’t necessarily free up time to live the experiences you seek. The 80/20 rule is a very famous concept that Ferris notably uses to prioritise as he also learned to delegate as much as possible of his workload. The rule states that you should focus on the 20% that yield 80% of the results. That way, you will free up 80% of your time but keep 80% of your production yield. Although it might sound more simple than it truly is, 80% of time freed in a 40 hour-workweek means 32 hours freed. That’s a desirable outcome. Worth thinking about it.
If you have read the book, or simply had the intuition that more time was the answer to living happily, you might be happy to learn that science has backed the hypothesis. It is perhaps no surprise that wealth is nothing if it can’t be enjoyed. Also, what do you think Warren Buffet would choose if you asked him to choose between keeping his current wealth or starting young again? Pretty sure he would choose to start all over again. It occurs to us that this is the perfect analogy.
3. Give back
Another way to surely be happy is by giving back to others. Whether or not you have the chance to witness the good things that you offer them, you will feel good for caring. It’s undeniable. Sometimes it is even better to gift anonymously, just so you ensure to expect absolutely nothing in return. It is common courtesy to ensure that you give back part of what you have been able to enjoy, even if you do not owe it to anyone. That’s actually the beauty of it. Giving is not about owing, it’s about sharing and caring. Try it, there is no doubt that it would fulfil you.
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4. The future self
Can you imagine yourself 30 years from now? How would you look? How much would you weigh? How would you feel? How would your family be? Where would you live? There is a strong chance that you fail to do so. Or at least over such a large time frame.
Rest easy: that is pretty normal. As Herschfield et. al point out, it is pretty common that people fail to identify with their future selves because of a lack of belief or imagination [Hershfield, H. E., Goldstein, D. G., Sharpe, W. F., Fox, J., Yeykelis, L., Carstensen, L. L., & Bailenson, J. N. (2011).]. Because of this, the logic by which we compound both benefits and pain in the future is biased. In other words, we misjudge the importance of today’s action over our future and how they will truly impact us going forward.
Failure to identify with our future self is perhaps more of a problem that we perceive. In a culture in which we are used to saving for our retirement—more or less active depending on where we live—it appears to be an increasingly hard task for us to do so. If we however have the good habit of putting money away for the far future, we might fail to grasp what comes in between. At financia.io, we often come to understand that our clients have a hard time grasping the realm of possibilities that sits in front of us in the next 5, 10 or 15 years. The mid-term can also be really hard to grasp depending on the person’s ability to project. Generally, however, the most distant the time frame, the most we will feel like our future self is another person.
So what conclusion should we take from this? First of all, it is good to be aware of our weaknesses in the sense that we might present a huge bias in our decision making. Secondly, it is quite important that we understand that a failure to identify happiness and pain in the future could cost us. It might be wise therefore that we plan accordingly. Some theories suggest that we spread our rewards over the present and the future evenly. This has not been proven to be the ideal way to go about it, but it would surely reduce a big discrepancy between our present and our future. The bottom line is if you want to live happily—at all times in your life—make sure to consider your future self and to try to care for him or her.
5. Pay yourself first
Have you ever heard the phrase “pay yourself first”? What does it mean exactly? Why is it so important? Paying yourself first is actually a mindset that ensures that you will be rewarded for your good efforts. It is also a mindset that will allow you to grow continuously if you were to apply the principle over your lifetime.
But how do you pay yourself first? Simple. In order to pay yourself first, you simply need to ensure that every time you receive your paycheck, you put something aside for yourself. The most important part of this is that you should do that before you resume to pay your bills, no matter how important they are. Do that before doing anything else. Please understand: paying yourself first does not mean that you should try keeping everything for yourself and refuse to pay your due. The reason why paying yourself first is important and actually makes sense is because it ensures that you grow. At any time of your life. Even when things might be harder than usual. Ideally, the money that you put away is done so in the right way. It is invested, locked for the future, for your family, for your good years to come. It is also perhaps part of your emergency fund.
There is no shame to have because you believe that you deserve the money that you earn. And you know how that money should not only help you “survive” per se, but also prosper. After all, the meaning of life is to seek a comfortable life and you might never be able to enjoy one if you do not do what is necessary to protect your wealth. And to build it first. This is what you should seek to understand. Paying yourself first might also be in another form, it can take the form of an immediate reward. However, we do encourage reasonable behaviour when it comes to spending your money wisely. Think about the bigger picture, do not forget yourself. You earned it.
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