COMMENTARY | According to Ben Bernanke, Chairman of the Federal Reserve, money actually can buy happiness...sort of.
In a recent speech, Bernanke talked about the role money plays in both short-term happiness and long-term "life satisfaction." While achieving a lasting sense of financial well-being depends on many factors, Bernanke acknowledged that a "transitory and subjective" feeling of happiness can be created by splurging on the "occasional treat or luxury."
For those longing to indulge their frivolous purchase cravings while stuck on budgetary diet, there's good news. A recent study has shown that "our increase in happiness isn't proportional to the money we spend." In other words, we don't have to break the bank to satisfy our shopping sweet tooth, since we can achieve the same "sugar high" with small, low-cost splurges.
More importantly, because we "adjust to our new situation very quickly each time we get something we want," the post-purchase happiness we feel is invariably short-lived, no matter how much money we spend. By opting to splurge frequently and inexpensively, we can continue to buy little bits of happiness over and over again, prolonging the effect without spending a fortune.
In my case, I'm much, much better at sticking to a budget when I allow myself a few small luxuries and the occasional "just because" purchase. When it comes to splurging, here are a few ways I try to spend smart and make the buying magic last.
Certain Things Just Hit the Spot
I don't care how allegedly-overpriced Starbucks is, because - for me - indulging in a grande drip coffee with a shot of hazelnut is buying happiness. Of course I could make an entire pot of coffee at home for less money, but the occasional cafe pilgrimage satisfies something in me and keeps me from spending more money elsewhere, like a bar or a restaurant.
Splurging and Saving Can Coexist
If I'm going to splurge on clothing or shoes or something else I want but don't really need, the sales rack is the first place I'll look. Granted, there is a big difference in making an occasional, indulgent purchase and spending too much money on unnecessary items just because they're cheap. In my case, I try to stick to my savings guns and find good deals even when I'm allowing myself a frivolous buy.
Splurges Don't Have to be Impulse Buys
While I have no qualms about splurging impulsively on a relatively inexpensive cup of coffee, I tend to wait before spending money on more expensive items. If there's something pricey that I really want - be it highlights for my hair or a pair of shoes - I put it on my (lengthy) list and make myself wait a while before I buy it.
Memories Are Money Well Spent
Of all the pedicures I've ever spent money on, I only really remember the two I got while with a group of friends. Whether it's the spa, an amusement park, or other potentially expensive activity, I try to splurge only when the day will be truly special - like with friends or family - and generate lasting memories. If I'm going to go big, I want to remember it after I've gone home.
*Note: This was written by a Yahoo! contributor. Do you have a personal finance story that you'd like to share? Sign up with the Yahoo! Contributor Network to start publishing your own finance articles.More from this Contributor:
- Banking & Budgeting
- Ben Bernanke