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August 21 2014

Financial Happiness Comes From An Appreciative Mindset


Posted August 15, 2014  | 02:58 PM ET

Greenbacks don't guarantee glee. But applying them wisely can be uplifting. How to capitalize:

  • Acknowledge its worth.The surprising truth about billionaires? "They are no happier than anyone else," said Michael Norton, co-author with Elizabeth Dunn of the book "Happy Money."

He and co-author Dunn asked a group of high-net-worth individuals how much income it would take to trigger true contentment. Those strivers wanted two to three times their current net worth.

"Everyone thinks somehow the next level will be the level" that brings joy, Norton told IBD.

  • Strengthen the connection."There's lots of advice for people on how to make more money and save more money," Norton said.

With Dunn, he delved into the relationship that people have with cold cash and how to warm it up.

  • Feel it.The bliss that you get from buying something new — like a car or house — begins to decrease shortly after the purchase.

Such assets are essential. But investing in experiences like concerts and trips generates a long-term buzz. Take those memories of a dream vacation.

"You have that for the rest of your life, and that counts," Norton said.

  • Treat yourself.Gratification can become old hat.

Norton and Dunn cite the young executive who buys a pricey latte every day.

At first, it's an indulgence. After a while, it's just a daily caffeine fix.

The problem with always getting what you want? "Then we're setting ourselves up to get tired of the things we love most," Norton said.

When the coffee drinker switched to a basic brew and made that latte an occasional treat, the thrill returned.

  • Put it off.Anyone with kids knows the phenomenon of anticipation. The weeks leading up to Christmas are exhilarating.

But five hours after the wrapping's been torn away, kids are playing with the boxes the toys came in. A day later, they're bored.

In the adult world, the lead-up is sometimes as much fun as the event. So relish it. "Looking forward to things is a whole other source of happiness," Norton said.

  • Give.In another experiment, a researcher gave people envelopes of $5 or $20 and an instruction.

Half the recipients were to spend it on themselves. The other half had to buy something for someone else. Phone calls to those spenders at the end of the day revealed this: Those who treated others got a bigger lift out of the experience.

  • Get smart.Everyone can be savvier about money. So says John Hope Bryant, author of "How the Poor Can Save Capitalism: Rebuilding the Path to the Middle Class."

In 2011, the New York Stock Exchange developed the Workplace Financial Fitness Toolkit for member companies "because many employees are often ill-equipped to make basic financial decisions," Bryant said.

He also points to this hopeful trend: Some firms are rolling financial fitness into companywide health and wellness programs.