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Why Money Can Buy Happiness

Why Money Can Buy Happiness

Ah, happiness – an ideal many of us chase, hoping for contentment, bliss, and joy along the way.

While it may not be lasting, studies suggest that money can actually help you buy happiness. Forbes reports that University of Michigan economists Betsey Stevenson and Justin Wolfers convincingly demonstrated that the affluent are more content with their lives than the poor; in a paradigm-shifting study, they also showed that rich countries house happier citizens than poor countries. But why is that?

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Having money allows you to do what you want to do.

Their findings are not much of a shock, if we pause to muse. Money is a tool, and we use it to purchase high-quality food, fresh water, medical and dental care, and access to gyms or fitness classes that help keep us physically healthy. It takes funds to buy books, magazine subscriptions, adventure trips, or membership in hobby clubs to keep us intellectually stimulated. Dollar bills pay for the gas, air fare, and admission fees required to see those sites our souls thirst for, such as art museums or religious locations overseas, and allow us to donate to causes we believe in.

Having money can lead to increased confidence.

Money can create emotions that lead to positive circumstances. A new outfit, for example, is commonly considered to boost confidence. Increased confidence can land you that job, date, contract or simply add some hip-loosening swagger to your step. Money can buy fresh experiences and the equipment required to pursue hobbies, over time allowing you to cultivate a better sense of self and a creatively well-balanced being. For those who crave a sense of security, there is peace in knowing that enough money is saved in a bank account to cover a car that breaks down, a medical emergency with a child, or another unforeseen circumstance that can be smoothly and easily handled with appropriate funds.

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Financial security may also secure your marriage.

Money worries literally kill unions, as Jeffrey Dew presents in a 2009 work on the various correlations between financial problems and divorce. Loneliness or lack of a partner is a keenly felt source of sadness for many, and it stands to reason that a fulfilling, supportive partnership would be a source of happiness. An outlay of funds may also help hire nannies, cleaners, property maintenance crews, and other support staff to help a home run smoothly, easily, and with less stress on the couple in the marriage, perhaps in turn improving the chance of success in their partnership.

Money can buy happiness up to a certain point.

Buying happiness may not be quite that simple, however. Princeton University expert Angus Deaton’s work with Daniel Kahneman found that while the rich report feeling more positively about their lives, there is no direct correlation between wealth and a satisfied daily emotional state. Furthermore, they found that health, care giving, loneliness, and smoking were more prominent indicators for daily emotions. In conclusion, they argue that income can buy satisfaction but not happiness, though lack of income has a negative effect on both.

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How much money does it take to reduce stress and potentially allow for greater satisfaction or happiness? Enough to take care of needs, but not more than $75,000 in the United States, argue Deaton and Kahneman. After that threshold, subjects reported no greater increase in happiness or satisfaction than they experienced at that point.

Is money earned more satisfying than money inherited? Is it possible to quantify whether expensive tastes negatively impact happiness? The relationship between money and happiness is a complex one, but it seems that dollars can buy delight. For those who can afford it, at least.

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Wondering if anything presented here applies to you? Check out these 50 Money Quotes by Famous People that Can Change your Attitude Toward Money.

Featured photo credit: M.C. Chavez via flickr.com

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Last Updated on March 4, 2019

How to Use Credit Cards While Staying Out of Debt

How to Use Credit Cards While Staying Out of Debt

Many people will suggest that the best thing to do with your credit cards during these tough economic times is to cut them up with a pair of scissors. Indeed, if you are already in huge debt, you probably should stop using them and begin a payback strategy immediately. However, if you are not currently in trouble with your credit cards, there are wise ways to use them.

I happen to really love my credit cards so I will share with you my approach to how I use mine without getting into deep financial trouble.

Ever since about 1983 when I got my first Visa card, I continue to charge as many of my purchases as possible on credit. Everything from gas, groceries and monthly payments for services like my cable and home security monitoring are charged on credit. Despite my heavy usage, I have maintained the joy of never paying any interest fees at all on any of my credit cards.

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Here are some tips on how best to use your credit cards without falling into the trap of paying those nasty double-digit interest fees.

Do Not Treat Credit Cards as Your Funding Sources

Too many people treat their credit cards as funding sources for major purchases. Do not do this if you want to stay out of trouble. I use my credit cards as convenient financial instruments so I do not have to carry around much cash. In fact, I hate carrying cash, especially coins. When you buy things on credit, the purchases are clean and you will not get annoying coins back as change.

I do not rely on my Visa, MasterCard or American Express to fund any of my purchases, large or small. This brings me to my golden rule when it comes to whether I will pull out any of my credit cards either at a retail or online store.

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I never purchase anything with my credit cards if I do not have the actual cash on hand in my bank account.

If I really cannot pay for the item or service with cash that I already have at the bank, then I simply will not make the purchase. Remember, my credit cards are not used as funding sources. They are just convenient alternatives to actual cash in my pocket.

Make Sure to Always Pay Off Balances in Full Each Month

The next very important part of my overall strategy is to make absolutely sure that I pay the balances in full each and every month no matter how large they are. This should never be a problem if the cash has been budgeted for my purchases and secured in the bank. I have always paid my full balances each month ever since my very first credit card and this is why I never pay interest charges.

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Using Credit Cards with Rewards

Most of my credit cards are of the “no annual fees” type, including one MasterCard on a separate account I keep at home as a spare in case I lose my wallet or incur any fraudulent charges. However, I do use a main Visa card which does have an annual fee because all purchases on that card reward me with airline frequent flyer points. For me, the annual fee is worth it since I do travel and I get enough points to redeem many free flights.

You have to decide for yourself if you will charge enough purchases on credit each year without paying interest charges to warrant a credit card that rewards you with airline points (or other rewards). In my case, the answer is “yes” but that might not be the case for you.

I occasionally use a MasterCard or American Express card on small purchases just to keep those accounts active. Also, I have been to the odd retailer that accepted only a certain type of credit card, so I find that having one from each major company is quite handy. Aside from my main Visa card which earns the airline points, the rest of my cards are of the “no annual fees” variety.

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So this is how I use my credit cards without getting into any financial trouble with them. This strategy is recommended only if you are not in debt, of course. In fact, it is worth keeping in mind once you’re out of debt so that you can keep your credit cards active and treat them responsibly.

What are your credit card usage strategies? Let me know in the comments — I’d love to hear what methods you use.

Featured photo credit: Artem Bali via unsplash.com

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