Laura Vanderkam has some surprising advice for you: go ahead and buy that latte. Unlike the legions of naysayers who counseled people to abandon their Starbucks habit during the recession to save a few bucks a day, Vanderkam contends in her new book All the Money in the World: What the Happiest People Know About Getting and Spending that it’s the small pleasures that matter the most, and giving them up is a mistake.
“My book is about using money to have happiness in your life,” said Vanderkam in a recent podcast interview, “and the thing about happiness is that small, repeated…pleasures are the bread and butter of human happiness. Things like dinners out with friends, parties, enjoying a nice cup of coffee – all of these things are a key component of happiness, and they make us happy over and over again, so cutting them out is very painful because it requires self-discipline every single day.”
Of course that’s possible, says Vanderkam. But is it desirable? “The question is whether you want to be exercising self-discipline every morning as you pass by Starbucks or if you’d like to use it for something more important in life – for instance, in your job or in your interactions with your family.”
So if you do want to save money, where should you cut? Vanderkam says it’s the expensive status symbols – the big house, the fancy car – that should go on the chopping block. (Psychology research shows that people quickly become used to their new, fancy purchases – the so-called “hedonic treadmill” – and therefore derive diminishing enjoyment from them over time; the secret is to give yourself small but frequent jolts of joy.)
“If you want to use your money to buy happiness,” she says, “you’re better off spending less on the big ticket items – less on your house or less on transportation – and using the money that you’re not devoting to those big things to give yourself lots of small little pleasures.”
To get the maximum “happiness bang” for the buck, Vanderkam also suggests focusing on where you spend your money: are you supporting companies that share your values? “Our money is powerful because it can help create a community in which we would want to live,” she says. For instance, you may want to consider spending more of your money at independent retailers: “If you’re interested in creating more jobs within your community and having a warm spot where you can conduct interviews with clients and have meetings, or just get out of your house for a while, you’re better off using your money at an independent coffee store…because you’re helping to create a place that will be supportive for you.”
Finally – with the Internet making entrepreneurship opportunities available to almost everyone – Vanderkam suggests coupon-clipping has become obsolete: instead of thinking of ways to save, think of ways to earn more. Even if it’s just a small side business on Etsy, the extra income you earn may be enough to make a demonstrable difference in your happiness – paying for a special vacation or your daily coffee run with your friends at work. “If you think like an entrepreneur,” she says, “you’re always looking for ways to solve problems for people in a way that they’ll be willing to pay for. So make a long list of the talents you and other household members may have, and ways you could translate that into extra income.”
But most important, says Vanderkam, is to be clear on your priorities. What really does make you happy, and how can you best achieve that? Because, she says, “whatever life you want, it’s probably not dollar signs that stand in the way of that.”
What are your secrets for using money to make life happier and more fulfilling?
This post originally appeared on the Forbes website.
Dorie Clark is CEO of Clark Strategic Communications and the author of Reinventing You: Define Your Brand, Imagine Your Future (Harvard Business Review Press, 2013). She is a strategy consultant who has worked with clients including Google, Yale University, and the Ford Foundation. Listen to her podcasts or follow her on Twitter.