“Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.”
* Wilkins Micawber in Charles Dickens’ ‘David Copperfield’
Mr Micawber has it about right. Failing to pay money owed, the fictional Micawber spent time in a debtors’ prison. Dickens drew on his family’s experience – his father spent three months in Marchelsea Debtors’ Prison, with his mother and four of their children joining him for month.
These days it’s maxed-out credit cards, unpaid bills and bailiffs.
Of course, not all personal debt is through wasteful and unnecessary spending. The last few years have been a very difficult time for many. But as the world economy struggles back to health, will we spend what we do earn differently? And is there any point?
According to ‘Happy Money‘ by Elizabeth Dunn and Michael Norton, the answer seems to be ‘yes’. Subtitled ‘The New Science of Smarter Spending’, the book sets out five key principles of ‘happy money’.
This is not a flaky self-help book. Dunn and Norton are academics. Each principle is backed up with well-referenced research, drawing on insights from both economics and psychology.
Nor is it an impenetrable academic tome. The writing is both witty and wise as they cover things that both seem obvious and ignored. Experiences count more than things. Giving to others is more rewarding than spending on ourselves, especially if we get to enjoy the time along with them. Delaying makes us appreciate things more – especially if we’ve had to save to buy outright.
These issues are not just ones for us individually. Governments, too, are more and more interested in measuring the wellbeing of citizens, rather than just national economic output.
Soon it will be another new year, a time for making new resolutions. Buy ‘Happy Money’ for someone this Christmas – and hope they buy it for you! As the Economist put it, it will be “money well spent”.