How spending and saving impact happiness

In a world hyper-focused on saving money (which is important, of course), I think we need something more meaningful. Perhaps we can start by exploring how we can spend our money in ways that foster genuine joy and happiness in our lives. While saving is crucial, it’s not the only solution. If you’re frustrated by the “don’t spend” part of saving money, consider this perspective: what we buy can actually make us happier — and ultimately save money.

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What do saving and spending have to do with happiness? A lot

Aristotle said, “Happiness is the meaning and purpose of life, the ultimate goal of human existence.” This challenges the belief that true contentment is only achieved through hard work and saving enough money. It prioritizes happiness and bringing meaning to work. We don’t need to find a groundbreaking solution or accomplish extraordinary feats to find fulfillment and meaning in our careers. By approaching what we do for a living with clarity and a fresh take on dedication, we can have meaning and purpose. Extending the conversation to our finances, integrating happiness into our financial plans gives us a sense of direction, helping us save for meaningful financial goals. All this while embracing joy along the way.

What is intentional spending? 

Intentional spending means aligning choices with values, priorities and the activities that bring you genuine joy. It’s a good way to better spend money. Rather than mindlessly consuming (think downloading apps or buying lunch every day) or succumbing to societal pressures (like useless subscriptions, uncomfortable trendy shoes, tech gadgets with empty promises or overpriced kitchen appliances everyone seems to have), consider how purchases can contribute to happiness and fulfillment. This very deliberate approach can lead to a more fulfilling and balanced life, where financial decisions support our pursuit of happiness and overall well-being. And hey, think of all the extra space you’ll regain on your phone and on your kitchen counter.

What is the PERMA model? 

PERMA, created by psychologist and professor Dr. Martin Seligman, stands for positive emotions, engagement, relationships, meaning and accomplishment. When examined, these factors — drawn from the science of positive psychology — can reveal how we spend our money in relation to positive feelings. Here’s the breakdown of how you can use PERMA as a money psychology tool: 

  1. Positive emotions: Focus on experiencing positive emotions, like joy, happiness and gratitude, in your daily life. For instance, set aside money for things that help you do that, such as concerts or quality time with loved ones.
  2. Engagement: Be fully engaged in activities that provide enjoyment. Consider “investing” in purchases that help you engage and find a sense of purpose, such as taking a course, or buying supplies for a hobby.
  3. Relationships: Nurture meaningful relationships, foster connections and build yourself a sense of belonging. Allocate funds for experiences or gifts that strengthen your relationships, such as outings with friends or family trips.
  4. Meaning: Find purpose and meaning in life by aligning your purchases with your values and contributing to something larger than yourself. Make purchases that resonate with your beliefs and contribute to a greater purpose, like supporting a local business.
  5. Accomplishment: Set and achieve your financial goals, so you can experience a sense of accomplishment. Regularly allocate funds to achieve your goal(s), whether it’s saving for a big purchase, like a down payment on a home, or investing in personal development.

While it may seem like aligning spending with happiness can lead to constant and expensive indulgences, the reality is more nuanced. Using the PERMA model in our spending isn’t about prioritizing immediate gratification over long-term stability or neglecting responsibilities. It’s about intentional choices that enhance overall well-being and align with our values.

PERMA in action 

To show how PERMA can work for improving money decisions, let’s look at Peter and Chelsea. They demonstrate that integrating the model can transform their approach to spending. Ultimately, it made them happier.

  • Positive emotions: Recognizing the benefits of positive emotions, the couple consciously invested in small moments of joy, like waking up slightly earlier to walk their kids to school and savouring their favourite local coffee beans during their morning routine. This shift in mindset fostered their connection with each other and nature, and it involved spending money on valued experiences and a high-quality local product.
  • Positive relationships: The couple organized casual monthly pot-luck dinners with friends and created more time to bond with neighbourhood families at the park. This allowed them to nurture meaningful relationships, spend time outdoors, utilize free spaces and keep dining costs down.
  • Engagement: Chelsea received feedback that she wasn’t very engaged at work. After discussing it with her boss, she sought out new projects that aligned with her interests and brought back her sense of engagement. Her boss noticed, and she was rewarded with a raise during her next performance review. Additionally, she pursued her long-time desire to learn roller skating, an affordable activity that sparked her engagement and social interactions.
  • Meaning: Peter and Chelsea chose to look at what parenthood meant for them. They realized Peter’s business was overshadowing the joy that their family should bring them. They introduced “Family Adventure Thursdays,” spending money on inexpensive activities (capped at $20) that brought them closer to their kids and created cherished memories.
  • Accomplishment: Peter and Chelsea recognized that external influences had previously impacted their spending habits. They shifted their goals away from being influenced by external factors, like societal expectations of upgrading their vehicle or upsizing their house. They set new intentions that aligned with their values. For example, Chelsea pursued learning new skills at work, while Peter started a swimming camp to earn extra money, combining his love for swimming and teaching. Financially, they established a retirement savings fund (15% of their income) and a travel fund (5%). In applying the PERMA model to their financial decisions, they became happier with their choices. 

And by using PERMA, Peter and Chelsea discovered a deeper sense of fulfillment with how they spent money. They made changes to their budget so that it better aligned with their well-being and financial goals.

Should you use PERMA?

You can use the PERMA model as a guiding framework to improve your spending habits. Before creating a budget or financial plan, assess how the five PERMA factors can significantly boost your happiness levels while supporting your future savings.

By integrating positive emotions, engagement, relationships, meaning and accomplishments into our financial decisions, we can allocate our resources in ways that enhance our overall well-being and happiness, and achieve our goals. It’s important to note that this approach does not diminish the significance of saving; rather, it encourages us to consider the holistic impact of our financial choices. By shifting our focus from solely saving money to spending it with intention, we can create a rich life, deeply rooted in happiness, joy and fulfillment.

This article was written by Shaun Maslyk and Cfp from MoneySense and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to

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