Financial happiness is mainly a mindset. It comes with a lifestyle of responsible choices, not much from the actual amount of money in your bank account. Financially happy people understand the true nature of wealth and recognize the extent to which it makes them happy.

Following are the seven habits of financially happy people which liberate them from the daily anxieties of finances, help them spend their money constructively, and attain tranquility in life.

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Start with ‘Why’

Before you plan to buy something, ask yourself: “Do I really need it?”. Give yourself some time; it’s almost certain the urge will fade away and you’ll back out most of the time. In most cases, they’ll turn out to be things without which your life isn’t stuck. If you face a product and you realize “Hey, I need this!” – you don’t. You want it. The real needs of your life would not wait for you to be standing at the aisle of a store – they’ll be in your mind 24 hours a day. Financially happy people do not indulge in impulsive buying; they question the nature of their spending even if they’re not restrained by budget constraints. For this purpose, maintaining a to-do list is highly important. It will help you keep track of your essentials and enable you to stay focused on the objectives when you go out shopping. As Epictetus, the famous Greek philosopher said

Wealth consists not in having great possessions, but in having few wants.

Epictetus

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Spend where it lasts

When it comes to spending, most people have a habit to ‘enjoy the moment’. While it may sometimes be good for your mental health, it can be equally bad for your financial health. It’s important to cut down unconstructive spending that may make you happy in the moment but doesn’t provide any real value. For example, if we aggregate the amount of money we spend on junk food at year’s end, a lot of times we would realize it’s enough to buy some high-quality clothes and really nice accessories.

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Save – sweat now, relax later

He who will not economize will have to agonize.

confucius

The biggest successes in life come as a result of a series of short-term sacrifices. While it’s hard to resist the urge to buy the things you love, it’s more important to save to achieve a more meaningful end like buying a new car, a new house, getting rid of debt, saving for marriage etc. Investing in assets would always pay you in the long-term.

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Spend within a budget

While it’s obvious, the advice is sometimes misleading. Your budget doesn’t comprise your total funds, but what’s left after the high-priority expenditures that give you the flexibility to buy the things you want.

Do not save what is left after spending, but spend what is left after saving.

Warren buffet

Now, what are ‘high-priority expenditures’? – they’re recurrent in nature and are necessary to feed the necessities of life and to maintain a healthy lifestyle, e.g. utility bills, tuition fees, maintenance expenditures, etc.

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Focus on utility

We buy things we don’t need with money we don’t have to impress people we don’t like.

will rogers

A lot of times we buy stuff based on the value attached to it by society, regardless of the utility you derive from them. We’re eager to buy the latest iPhone despite the fact that the old one works fine. We prefer to buy new shoes for the new occasion, knowing that existing ones are in good shape. Financially happy people don’t allow their expenditures to fit social trends, rather they focus on their own priorities.

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Value abstract expenditures

I categorize expenditures into two types: concrete and abstract. Concrete expenditures are definite and specific, and yield materialistic results; like paying 200 rupees and getting a coffee. But unlike concrete expenditures, abstract ones yield results that don’t have a physical shape and exist only in mind. When we spend money, we seek quantifiable results; financially happy people pursue results that provide the greatest real value and peace of mind. 5 million rupees would get you a nice car, but the same amount spent on your kid’s education has the potential to change the socio-economic status of the family in the long run.

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Befriend generosity and acknowledge karma

There are a lot of studies that conclude generous people are happier and more content with the outcome of their finances. Finest and long-lasting satisfaction comes as a result of making someone’s day better. Mathematically, such an expenditure appears to be a lost cause. But I believe nature has its ways – karma rewards those who play their part in offsetting the imbalance in the system and use their resources for the greater good. Hence, charity is equally good an investment.

Financially happy people are aware of the essence of money; it should serve us, not the other way round. In order to do that, one’s habits have to be tailored to achieve a state of calm in life. Like imposing some restrictions on your eating habits makes you more healthy; similarly, some restrictions on your spending habits would not only make you wealthier, but happier as well. It is the quality of what you spend and what end you achieve from it that matters.

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