Blogging about books – Happy Money : The New Science of Smarter Spending by Elizabeth Dunn and Michael Norton

I’m not sure anyone ever reads this bit of the blog but I said I was going to do book reviews so it’s up to you.

I don’t really know why I bought Happy Money – obviously something about it appealed to me but I can’t remember what.  It’s quite a short book that basically tries to persuade us to change the way we spend our money in order to increase our happiness.

It’s a fairly well-established fact that once we have enough money to comfortably meet our needs, the impact of more disposable impact on our happiness is much lower than we would expect.  We might think a top of the range Mercedes would make us happier, but if we can get from A to B in an old Fiat Panda that added expenditure probably isn’t going to make a huge difference.  And if we’ve got one top of the range Mercedes is another one really going to make us happier?

This book suggests that money can buy increased happiness if we follow these five principles :-

  1. Buy experiences – good seats at a concert by your favourite band won’t last as long as a designer shirt but may well give you more pleasure.  Sometimes the reasoning behind a purchase determines whether it is a possession of an experience – for example, a book is an experience if bought to enjoy reading it, but a possession if it looks good on your shelves.
  2. Make it a treat – if you drink the finest champagne every day it just becomes routine.  Drink it on special occasions only and you’ll enjoy it more.
  3. Buy time – spend your money on paying someone else to do the cleaning, the ironing or any other job you hate.  That way you get time to do the things you enjoy.
  4. Pay now, consume later – the reverse of our “buy now, pay later” culture.   When you pay for something in advance, like you usually do for a holiday, it almost seems like it’s free when you actually come to enjoy it.
  5. Invest in others – it really is better to give than to receive.

These principles all make sense to me, and for anyone with more money than they need to be comfortable they seem like a good basis on which to make spending decisions.  The book is less convincing, however, when it attempts to apply the same principles to expenditure by governments.

Overall, the premise behind Happy Money is an interesting one, but the material is stretched too thinly.  There is a good magazine article here but it doesn’t quite work as a book.

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