In my previous blog entry (If you’ve not already read it you can find it here) I started to explore the link between money and happiness.

Interestingly many people see the link between the two but normally do one of two things…

Some of us overestimate the importance of money (If you’ve ever said “When I win the lottery…” followed by a list of things you’ll do that you’ll enjoy it’s likely you sit in this camp)

and

Some of us underestimate the importance of money (If you’ve repeated the quote “Money doesn’t make you happy” you probably sit more in this camp)

The reality of the connection between happiness and money sits in between the two extremes.

Money provides us with a number of freedoms and eases the pain of worry however research has shown that once we reach a “comfortable” level of income we are in a position where the benefits of additional income is shown to taper off.

The rational thing to do is to ensure that we are in a position where we build our own wealth from it’s current position to a position where we are assured of a “comfortable” level of income for the rest of our lives.

However as humans we’re not always particular rational.

Every time I go into my local supermarket and pass the chocolate bar counter it’s not rational that I feel tempted into potentially buying chocolate every single time!

It’s no surprise that near the till there are rows of Yorkies, Kit Kats and Maltesers. Next to them are Wispas, Mars Bars and Snickers (although they will always be called “Marathon” in my mind….

….and, even the frankly rubbish Turkish Delight gets pride of place on the shelves. Seriously? It doesn’t even deserve to be on the same shelf! I mean what is that stuff inside? Ok, rant over….back to the subject.

So we know it’s irrational to want a chocolate bar (apart from the Turkish Delight) every time we visit the shop. However we also the irrational, emotional side of all of us means that we have a tendency to make decisions which are counter productive to both our pockets.

However what impact do this purchases make to our happiness?

To explain this question let’s go back my regular trip to Tesco (other supermarkets are available) as an example…

It’s no surprise that most supermarkets puts chocolate bars near the tills and also no surprise that for most people these purchase are not planned but an impulse….

…and it makes sense that these purchases make us slightly less wealthy.

But could these impulse purchases make us less happy if we do them too regularly?

Also, and using my chocolate analogy, would I be happier buying a chocolate bar every single day or instead resisting daily temptation but treating my chocolate purchase as a treat and buying a chocolate bar once a month, or once every 6 weeks?

The book “Happy Money” discusses this issue and the results, based on extensive research, were surprising..

To be happier you should make things you enjoy a treat.

Elizabeth Norton and Richard Dunn (the authors of the book) found during a number of studies found that any purchase made regularly enough  stopped becoming a treat.

However the change wasn’t  only  the way we saw this purchase, but also how happy these purchases made the participants of the studies conducted by the authors of “Happy Money” feel.

They found that the anticipation of a ‘treat’ actually had a positive impact on happiness and also meant that this delay also made the ‘treat’ taste sweeter once consumed.

So….that’s good news right!?

The studies say that to enjoy something we like we should buy it more sparingly as more sparing consumption has the potential to allow us to make us happier (due to the anticipation of the ‘treat’) as well as well as giving the additional advantage of saving the money you would have spent on the treat in the first place.

The challenge we all face with this is that our ‘chimp’ (the emotional, instinctive irrational part of our brains) tells us a different story.

It tells us we should do the things we enjoy with more frequency.

It wants the positive feeling of consumption straight away even though it might be a good move to delay gratification both to your happiness and your pocket.

As ever the challenge is helping find strategies to controlling our ‘financial chimp’ and making decisions designed to make us lead happier, healthier and wealthier lives.