The following blog is by Sophia Bera originally published in her website Gen Y Planning.
As you take stock of the past year and set some goals for next year, think about the role money plays in your life. Is it something that always seems to slip out of your grasp, leaving you feeling out of control and struggling to pay your bills? Or does it seem to come easily to you, allowing you to live a more lavish life than most of your friends? You might fall somewhere in the middle: generally getting by, but trying to figure out a few things like how to pay off debt more aggressively while saving for your other financial goals.
Goal setting is important, but sometimes we’re so focused on our goals that we don’t check in to see if they still match our values. What do you really want your life to look like? I recommend doing an exercise on journaling about your ideal day. There’s often little changes you can make right away to get you on track to living your ideal life.
As you set next year’s money goals, think about the experiences you crave as part of that financial plan. These are the kinds of things money can’t buy — the thrill of adventure that comes from travel, the deep dive into a new subject that comes from continuing your education, or the joy you get from pursuing a creative hobby.
Can You Buy Happiness?
They say that money can’t buy you happiness, but that isn’t entirely true. Studies have shown that up until the point a person earns what is considered a comfortable salary (the benchmark is $83,000 a year, but it changes based on the cost of living in different cities), every increase in income they experience brings them additional happiness. After they reach that benchmark, though, the happiness boost that comes from additional income diminishes.
Reaching that benchmark means your needs are met and you can afford to not just live, but live well. If you’re just scraping by, it’s tough to be reminded often of the fun things you can’t yet afford. Having to stick to a strict budget while your friends drop $100 on a dinner out without breaking a sweat is a bummer.
So how can money bring you happiness this year? Make more of it AND spend it on the right things!
Up That Income Level
Make this the year you earn more. Have you been thinking about asking for a raise? Increase your chances of success by doing some prep work before you have that conversation. Do research on typical salaries in your city for your role. Make a list of your work accomplishments from the past year. Were you involved in any high-impact projects? Does your hawk-like ability to catch errors save your company money? Those will help you make your case. And say yes to new challenges at work — they might pave the way for your next promotion.
I’m also fan of diversifying your income stream by taking on a side hustle. It can be anything from freelance writing, to dog walking, to selling your crafts on Etsy. A side hustle is a great way to earn more while doing something you love, and if you’re considering a career change, it’s a low-risk way to try working in different fields.
More Experiences, Less Stuff
It’s important to treat yourself once in awhile, and if you want the maximum jump in happiness for your money, opt for experiences over material things. While a new sweater may make you a bit happier at first, studies show that feeling doesn’t last for long. Meanwhile, the anticipation of a road trip with your friends, and the shared stories that come out of that trip, will make you happy for a much longer time.
So use your money wisely this year. Whatever cash you have in your budget for fun, spend on experiences — an art class, a nice dinner out, concert tickets, or a trip to see an old friend. Limit your purchases of stuff that will take up space in your home without bringing any value to your life.
Come On, Get Happy!
When it comes to focusing on your finances, it’s good to begin with building financial security: paying down debt, budgeting, and saving for retirement. But you can also use this time to make positive changes in your life in other ways, and that begins with earning more and spending your fun money more strategically. You’ll build your career, discover new hobbies and passions, and enjoy memory-building experiences with your family and friends. All these things can help you move one step closer to creating your ideal life.
About Sophia Bera: Sophia Bera, CFP® is the Founder of Gen Y Planning and is a financial planner for Millennials. She’s passionate about helping people in their 20s and 30s across the with their money. She is a contributor for AOL’s Daily Finance website and has been quoted on various websites and publications including Forbes, Business Insider, Yahoo, Money Magazine, InvestmentNews, Financial Advisor magazine, and The Huffington Post. She was named one of the “Top Financial Advisors for Millennials” by the website: www.MoneyUnder30.com. Sophia is a sought after speaker and presenter and is an active member of the Financial Planning Association. In her free time, she enjoys performing as an actor/singer and traveling the world with her husband, Jake. Follow her on Twitter @sophiabera or sign up for the Gen Y Planning Newsletter to stay up to date on financial articles geared towards Millennials.