“Money can’t buy you happiness”—it’s a well-worn saying. But Vicki Robin, author of Your Money or Your Life, says the reason why money doesn’t buy happiness is because money doesn’t actually guarantee financial freedom.
In this video from Big Think, Robin says everyone gets caught up in consumer culture, and that paying attention to how we spend creates happiness.
“Financial freedom is like freeing your mind,” Robin says. “It is understanding that I’m me, and there’s an economy out there and I have a relationship with it, but it doesn’t run my life.”
Here are three tips Robin gives to halt the race to accumulate stuff and create a money mastery plan based on real well-being:
Three Steps to Break Free From Bad Money Habits
1. Take control of knee-jerk spending habits
Without recognizing why, many of us crave material possessions: from small items like wall art, to larger purchases like expensive electronics or designer shoes. The first step to financial freedom is stepping away from the impulsive spending habits that have been ingrained in us over time.
“There’s so many presumptions that drive us into wage slavery, debt,” Robin says. “And it doesn’t matter if you are at the low end or the high end. If you are engaged in that anxious process of more, more, more, you are not free.”
The next time you feel the need to hit the mall, try a body scan practice to help understand the your motivation to buy non-essential items. For example, your compulsive desire for more office clothing could have less to do with an actual need for pantsuits, and more to do with your anxiety about an upcoming presentation.
2. Cut down debt by considering bigger picture opportunities
You will never be fully financially independent until you get yourself out of debt. And while some debt may feel insurmountable, the first step to paying off debt is to stop spending money.
Unfortunately, that’s a bit easier said than done. To truly motivate yourself to stop spending (and start tackling bills you owe), Robin recommends changing your perspective to consider what you can gain in the long-term if you forgo purchasing something in the moment.
What can you gain if you forgo purchasing something in the moment?
“Mastery over your own time, ability to write your novel or play with your grandkids, whatever it is that you want more than you want stuff, that’s the kind of link that you get people to make,” Robin says. “Something in the future is more important than the immediate pleasure of buying one more tchotchke you’re never going to use.”
3. Save for a rainy day
Taking control of your spending and to a place where you feel financially independent is a huge task, and one you don’t want undermined by a sudden cost that sends you spiralling back into debt.
That’s why Robin recommends you create an emergency savings fund, which you can rely upon in the case of something unexpected—like a job loss or an extreme medical bill.
“You want to get out of the zone of precariousness,” she says.
Try This Practice to Align Your Money Habits With Your Values
To truly understand whether the money you spend aligns with your values and goals, Robin recommends tracking your daily expenses.
- First, check in on your spending. On a regular basis, maybe once a month, review your debit and credit card records, sorting purchases into categories. For example, depending on your lifestyle you may have categories such as groceries, gas, and shoes.
- Then, compare your expenses to your earnings. Robin recommends calculating how much you spend on each category in comparison to your hourly wage, to see what your time goes toward. For example, she says: “I’ve spent 10 hours of my life on shoes—is this worth it to me? Did it make me happy? Would I spend more on it, would I spend less on it?”
- Finally, see if your overall spending habits align with your goals and values. The answers to those questions can reveal how your money habits impact your day-to-day life.“You just look at that and you tell yourself the truth of whether spending your life energy in that way makes a difference. That process gives you a sense …of precisely how much money it costs you to have a happy life,” she says.