How The Happiest People In The World Spend Their Money

People can feel trapped by their careers--whether it's because they're earning too little, are waiting for a big payout, or have grown accustomed to a certain lifestyle. Laura Vanderkam's new book, All the Money in the World: What the Happiest People Know About Getting and Spending, offers a new approach to finances for a modern, more flexible reality.

Increasingly, the stories people tell me about their work and life choices break the conventional mold:

  • A twentysomething entrepreneur starts a business while holding down another job and living on friend’s couch.  He’s trading financial insecurity today for work he feels passionate about and a distant promise of a future payoff.
  • A fortysomething father of two with a stay-at-home wife walks away from a lucrative legal career without knowing what his next step will be because he can’t tolerate the stress and relentless hours any longer.
  • A single mother of three gets laid off and decides to start a not-for-profit instead of finding another job in advertising.

Their unique journeys not only challenge the traditional wisdom about the path we “should” follow with our work and careers, but they also challenge the standard rules about money. And yet, they raise plenty of practical concerns: How is the entrepreneur who spends his 20s scraping by supposed to buy a house and two cars in his 30s? How is the fortysomething father supposed to send all of his children to private, four-year colleges and fully retire at 60 years old? How is the single mother going to afford weddings for each of her three daughters?

Work, life, and money are intertwined intimately, and yet they’re rarely addressed together. As the traditional boundaries that used to define “work” and “life” disappear, the conventional beliefs related to money must also evolve.

This is the message of Laura Vanderkam’s new book, All the Money in the World: What the Happiest People Know About Getting and Spending (Portfolio, 2012). By taking on outdated money beliefs, Vanderkam offers a new approach to finances for a modern, more flexible reality. Some of the changes she advocates include:

Be more mindful about what your money could buy. Make purchases that improve your happiness.  For many, that means spending on experiences, not things.  Using the example of the money we have traditionally paid for expensive engagement rings and weddings, Vanderkam calculates how many trips, periodic bouquets of flowers, date nights, babysitters, and hours of housecleaning that money could buy over the years.  These are services and experiences that, in the long run, could bring more enjoyment to a couple than a big ring and wedding.

The single mother who started the not-for-profit may not be able to pay for a lavish wedding for her daughters, but they will see their mother doing work she loves. This will not only set an example of happiness that will hopefully inspire the professional choices of her daughters, but help them prioritize how they want to spend their money.

Challenge the big house, big yard, two car "American dream."  Vanderkam points out that these purchases often come with a longer commute by car, more responsibilities for lawn care, and housekeeping.  Studies show that none of these activities increase happiness.

Maybe the twentysomething entrepreneur won’t buy a sprawling house with a big yard and a three-car garage.  Instead he’ll choose to buy only one car because he bought a smaller house closer to public transportation.  But he’ll be free to invest in and grow his business while having money left over for activities and experiences that have greater meaning to him like travel or eating out with friends.

Don’t just scrimp and save. Find ways to increase your earnings.  Yes, the increased flexibility in work and careers can be scary and unsettling, but it also provides new, exciting opportunities to make more money.  Vanderkam calls it the “1099 mindset.”  Even if you have a more traditional job, think about work the way freelancers or contract workers--people who get 1099s--do. If you are a teacher, tutor. If you’re interested in a topic, start a blog that you monetize. Be creative.

The fortysomething father who walked away from his lucrative legal career was approached by his firm to consult on projects. He’s now thinking of other similar channels that will allow him to make money but give him the flexibility he wants to spend time with his children and enjoy the parts of his life he had no time for previously. Also, his formerly stay-at-home wife is exploring a number of different opportunities to bring in additional income.

Rethink retirement. In other words, don’t expect to ever retire.  Instead, embrace a second or “encore” career. This is what the single mother of three is doing with her not-for-profit. She sees herself leading this effort well past traditional retirement age.

Yes, work and life have transformed over the past two decades. With All the Money in the World, Laura Vanderkam is showing us that we have to update and evolve that way we think about money as well.  In addition to the book, you can connect with Vanderkam on her blog, on Twitter, and on Facebook.

What do you think?  How have you found yourself rethinking the way to approach and manage money as your work and career have become less traditional and more flexible? 

Cali Williams Yost is the CEO and Founder of the Flex+Strategy Group / Work+Life Fit, Inc., flexible work and life strategy advisors to clients including BDO USA, LLP, Pearson, Inc., EMC, the U.S. Navy and Novo Nordisk. Yost is the author of “Work+Life: Finding the Fit That’s Right for You” (Riverhead/Penguin Group, 2005). Connect with Cali at the award-winning Work+Life Fit blog and on Twitter @caliyost.

[Image: Flickr user Pink Sherbert Photography]

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27 Comments

  • Gethappyzone

    Money does not buy you happiness, it's true. Happiness leads to success, success does not lead to happioness. We in the U.S have been operating backwards. Thank you for an exceptional article.

  • Ana - www.nrgcoaching.net

    My husband and me have been living this philosophy for 16 years.  It has paid off with big dividends!  I challenge my clients to become clear about their values so their financial life reflects them.  Great article!

  • Frances Kaplan

    Both my husband and I always believed in work-life balance and are beginning to live into this belief more and more now that we understand what it takes to do so. Money itself does not bring security and happiness; it is what you do with it that brings these things into your life. Financial freedom means never having to make choices based on time or money and living life by your own design. This is our "new approach to finances for a modern, more flexible reality!"

  • Sheena Rajan

    This is good to see. Beyond being married, I feel like my husband and I have done things out of the box compared to most. I dropped out of college, he did too to later go back in a different field. We've been married for quite a while but live in an apt and have no kids. I don't have a giant diamond on my finger, in fact it's a weird lotus and moon ring! :) We just do things and buy things that make us happy and fulfilled. I have to say, even though society says I should have a degree, a house or kids, I'm completely content without. I've noticed that many of my friends and family do things to please others or because they "should" - and I've never seen this route lead to happiness. It's refreshing to see more people finally get that there is not ONE way to do things. There is YOUR way.

  • andy_mcf

    This is really an article about sorting out one's priorities and, having done that, how to spend your _time_.   Most people stall early in the process.  Quite simply, they don't believe the change is possible.  It is. http://bit.ly/mDde82  And once you've made the change, your achievements will be more meaningful and gratifying whether in the professional, personal, or spiritual realms.  Believe, Change, Achieve!

  • pamelahawley

    Dear Cali,

    Thank you for a very thoughtful post on our current lives, and the choices we make!

    I thought I would weigh in about Experiences.   One
    of the greatest experiences, either as an individual or with family, is
    through volunteering.  It creates positive memories, bonding, learning
    opportunities.  For some people it's a way to become closer as a couple,
    educate your children, or think through a career transition.   If you
    are interested, you can find some volunteer opportunities here: http://www.universalgiving.org...

    Sincerely,

    Pamela Hawley

    Founder and CEO

    UniversalGiving™

     

    phawley@universalgiving.org

    http://www.universalgiving.org

     

    Living and Giving blog

    http://www.pamelahawley.wordpr...

  • Tash

    I'm so glad someone has finally had the guts to make this observation and speak up about it! Our society in its current state usually equates money and security with happiness, when the three things are rarely connected! All we have is who we are, and what we bring to the world; which means our relationships with people are tantamount to anything else that may exist... especially for those of us who live lives we love (like I do). Congrats Cali for raising this discussion! I hope to start raising this discussion a lot more myself :).

  • LUIZ VALDIR

    Deus nós dá 24:00hs para vivermos bem. E nestas 24:00hs nos temos que saber remir o nosso tempo sabendo dividir com o trabalho, família, devoção a Deus e lazer. Para que ter uma vida completa em paz e felicidade.Tudo isso envolve em saber administrar com sabedoria tudo aquilo que vem em nossas mãos, lembrando que somos pessoas emotivas e agimos normalmente por impulso das circunstância, fazendo com que  muitos não sabem como conviver com seu trabalho e com a vida. Pois, muitos ganham muito e não sabem administrar o que ganham,  e tem muitos que ganham pouco e vivem plenamente feliz e se contentam com o que têm. Temos que compreender o ser humano em sua totalidade. Não sei se deu para entender. Só sei que tudo que vem em nossas mãos devemos ser gratos. Dinheiro tem quer tratado com respeito, e sempre que vim em nossas mãos temos que ser agradecidos, e aprender gastar com bondade.

  • Ann

    Cali you made me think about who appears happy with all
    their wealth ie Richard Branson always has a big smile but what does he worry
    about? If you had to pick who would appear the happiest, people with lots of
    money or people who live a simpler easier life.

    We need to be aware of what happens when you either give up
    a secure job and or get fired. In todays’ society you need to have flexible
    plans. Working for yourself does not always give you more time to enjoy the
    journey, but you need to be happy and confident that you are doing what you
    enjoy.  There is still a bit of stigma
    when others want to know why you do not have a 9-5 job.

    Look forward to reading others comments, liked the article.

  • Andy Blevins

    The huge missing piece of this article is giving and generosity. Looking for ways to increase earnings, challenge the "American Dream", and have an encore career can be made far more meaningful by aiming to improve the lives of those around you with the $$ you earn. Why not set giving goals alongside of earnings goals? And when it comes to buying "experiences that will improve your happiness" aren't those experiences far richer when they are shared with relationships that are meaningful?

    I think happiness and spending are more linked to WHO you are spending your money for vs. HOW you are spending it.

  • sanjay

    I like this article not because I live it and supporting what i do, I  would like everyone to step back and see that small things in life are important.
    It is personal choice to choose happiness in what they do, try to be different from routine and you will see the difference....keep smiling and do what u like to do :)

  • Cali Williams Yost

    Thanks everyone for your great comments! My review in this post of some of the key themes in Laura Vanderkam's new book, All the Money in the World: What the Happiest People Know About Getting and Spending, really hit a chord. It's an insightful, timely book.

    There seems to be a hunger to talk specifically about the financial ramifications of our new, flexible work+life fit options.

    I could only cover a few of the topics from the book in the post, so let's all keep talking. This is an important subject that we're only starting to understand and clarify for ourselves and for our culture.   

  • Yoshimi

    This List is not something new at all - We know that buying an experience gives us something that lasts than buying a material. 
    Also Happiness must be defined individually as every one has their own definition, and each his/her own.

  • Harrison

    wow.  wholesale summary of the 4 Hour Work Week.  Fast Company shouldn't condone Yost's plagiarism, and the "credentials" of Fed Reserve NY, US Navy, etc., all belie the whole idea.  I'd guess Cali knows someone at Fast Company to get the coverage.

  • judy krings

    Great article and I liked the honesty re: "retirement". I transitioned from an over 3 decade clinical psychology practice to getting internationally certified as a professional coach. Now we are able to winter in Puerto Vallarta and enjoy the sun and life in general. Have Vonage and Skype will travel!
    Judy Krings at http:www.coachingpositivity.co...

  • Joshua McKenzie

    To sum it all up in a nut-shell. Do what you love an rest will follow.... Great Article.