Do you have any regrettable purchases? Analyze your spending to determine which type of expenses bring you joy and which don’t.
What was I thinking?
Everyone has asked themselves this at one point or another while gazing regretfully at a neon pink windsurfing board or ultra-deluxe karaoke machine with songs in 78 languages.
On the other hand, most people have looked with utter delight upon a purchase that conventional wisdom might see as questionable.
Is it possible to know which expenses will ultimately bring joy ahead of time? Or if acquiring things can create lasting happiness at all? You’re about to find out.
Before we get started, it’s important to keep in mind that your situation is yours alone. There are always bits of wisdom that can be gleaned from different sources, but ultimately, you’re your greatest source of insight into what works best for you. For example, a purchase that gives another person unbridled elation might leave you feeling empty.
Your greatest tool for aligning your expenditures with your best life is to put in the time and effort to determine where your money is going. However, it’s common to get into spending patterns that become part of a routine: you always stop for a doughnut on the way to work; you keep your subscription to that streaming service because they might add something you want to see, etc.
As you digest the techniques below, try not to be too hard on yourself. Inevitably, you’ll come across some purchases you don’t feel great about in hindsight – that’s OK! Try to think of these as opportunities for learning and growth as you create the greatest possible happiness return on your investment.
Analyzing Your Spending
Create Your Happy List
Starting with a blank page, begin listing the things you do or the places you go when you feel the best. For example, it can help to think about what makes you smile the most, when you laugh the loudest, or when you feel most at peace. The purpose of making this list isn’t to put any limits on where your money goes, but instead to get you thinking about what adds the most value to your quality of life.
Experiences vs. Stuff
Odds are you enjoy things from both of the categories above. But do you tend to get more joy from fun activities or from acquiring things? This is just one question to ask yourself, but it’s an important one to lend context to some of the other decisions you’ll be making. There’re no wrong answers here, so don’t feel pressured to restrict yourself to one or the other.
Lookout For “Supposed To” Expenditures
Not a single person is out there making perfectly rational decisions on every financial matter. There’s baggage of one kind or another with any money choice. Sometimes the baggage is good, like accumulated knowledge that helps us navigate complex situations. But other times, less helpful motivations might creep into the calculation.
For example, suppose you’re using your money to buy certain luxury goods because you think that’s what success is supposed to look like. In that case, this is an excellent opportunity to examine whether those items contribute to the real measure of success: your happiness.
Record Your Expenses
Now that you’ve started thinking about the motivation behind your purchases and their effect on your mental state, it’s time to apply this perspective to your actual budgetary line items. Use your phone or in a journal to track your expenses. To get a fuller picture of where your money is going, try to do at least three months of tracking.
For purchases that aren’t immediately recognizable – for example, those made with an online retailer – log in to your account with that retailer to see precisely what each separate item was.
When itemizing transportation costs, it might only sometimes be possible to break down these expenses in extreme detail but try to pull out any trips you took for pleasure during the time period in question and include those as separate items.
Separate Needs From Wants
You probably don’t derive much unadulterated joy from paying your utilities. For the purposes of this exercise, it makes sense to separate out the necessities of life, like rent, medicines, and groceries. Instead, concentrate your analysis on discretionary spending like subscriptions, splurge shopping, or nights out on the town.
It’s time to get down to it! Give each expense you’ve tracked a rating from 1 to 5. Items rated a one either created no lasting positive feelings or caused you to regret letting go of the money. Items rated a 5 put a smile on your face days, weeks, or even months after you shelled out the cash. Anything rated a 3 was just so-so.
Think Closely About Assets
When you separated your needs and wants earlier, you likely included larger assets like your home and vehicle, for good reason. You need a place to stay and, most likely, a way to get around. But this is an excellent opportunity to think about whether the way you’re checking those boxes is creating bliss or adding a burden.
It can make sense to buy a larger home than you need if you’re considering it as an investment, but you do need to live there if it’s going to be your primary residence. Consider housing as part of your larger financial plan, of course, but also ask yourself if being in your home makes you feel good. Similarly, if you rewarded yourself for all your hard work by buying your dream car, ask yourself if the cost of owning it is worth what you get out of it. Could you get just as much pleasure from a less expensive vehicle?
No part of this analysis is meant to make you feel ashamed about wanting or having nice things – nor is it meant to deprive you of anything you genuinely enjoy. Rather, it’s designed to help you ensure your labor is transformed into your greatest possible pleasure.
Take Inventory & Declutter
The next step is to take a look at your physical possessions. This might not take long if your approach veers more toward the minimalist end of the spectrum. But if you have a jam-packed garage, attic, or storage locker, take this chance to free yourself from any items you aren’t likely to use or that no longer hold meaning for you.
It’s especially important during this process to identify and rid yourself of unwanted items – doing so can help you understand some of your past unhappy buying decisions. As you create your pile to donate or throw away, keep a list of the type of goods you purchased that quickly went into storage and never provided you with much utility or good times.
Also, pay special attention to any collections you have, like art, rare books, Beanie Babies, or antique shrimp forks. Hunting down additions to your collection can be exhilarating, but the allure may fade with time. Do you still have these collectible goods out of a feeling of compulsion, or do they still add pleasure to your life? If you decide to liquidate a collection, add that category of goods to your list of purchases to forego.
Refine Your Happy/Sad List
Now’s the point in the journey when it’s time to accumulate all the data points you’ve gathered into a comprehensive, easy-to-use format. On the left-hand side of your list, include all the expenses you’ve identified that you can say without a doubt contributed positively to your enjoyment of life. On the right, include all the expenses you pinpointed that didn’t deliver good vibes.
You may find after completing this exercise that there aren’t a lot of physical possessions bringing you glee. If that’s the case, keep your happy list in a prominent, obvious place to remind you of the activities you can substitute for buying more stuff. Also, feel free to continually add activities that didn’t appear in your initial assessment, like going for a walk, talking with friends, or meditating.
Make Your Future Happy Too
So far, there’s been a lot of in-the-moment thinking going on, and that’s terrific. But this is also a great time to consider your future joy. For example, are there unsecured debts, like credit cards or personal loans, currently creating persistent low-level stress? If so, prioritizing and eliminating those debts can give you a significant emotional boost.
Also, consider your goals for the years ahead. Think about when you’d like to retire and what that might look like. Even if retirement is a long way off, knowing you’re contributing robustly to your golden years can create wonderful peace of mind. In the same vein, if you have a goal to buy a home or buy a more reliable vehicle, chances are it’ll feel good to know you’ve lassoed that dream and are pulling it closer and closer to you.
In advertising and other media, there’s a big emphasis on acquiring and consuming things to find happiness. It’s easy to get caught up in the mindset of shopping as a way to de-stress or distract. Gifting yourself the time to measure what truly brings you elation can make all the difference in building your ultimate joy.