We all have happiness exchange rates. For many of us, ours is wildly inefficient, for others its as close as you can get to optimal. Spending our money wisely as well as finding long-lasting happiness and fulfillment requires that we take more control over our happiness exchange rate and apply more thoughtfulness to it.
Internal and External Wealth
Imagine a Buddhist monk or a spiritual teacher, one who practices total non-attachment to anything physical or material. This spiritual teacher attempts to find high degrees of happiness, freedom, and wholeness purely for the sake of being alive. This teacher has a high level of internal wealth. But if this monk had loved ones who were financially struggling or there was a charity that the monk deeply admired, he’d be unable to offer any monetary support, because he lacks external wealth.
Now imagine a billionaire who suffers from feelings of inadequacy, insecurity, and believes he must earn even more money to feel happy. This person has enormous external wealth, but is completely devoid of internal wealth. Both individuals are rich in one form of wealth, but impoverished in the other.
At a fundamental level, the reason we strive to make money and to succeed financially is because we believe that external wealth can be converted to internal wealth. And it can, but doing so efficiently requires a deep understanding of how to be happy and what we truly want out of life.
People essentially have economists in their brain, or an internal wealth finance department, and this internal wealth economist measures the account balances of the various types of experiences we want most and evaluates the debits and credits of every choice on each account. So, for example, when you are deciding on buying a car and you have a handful of choices in mind, you may have an internal wealth account for “social status,” “feeling cool,” “freedom,” “comfort,” and many others. As you are deliberating your choice, your internal economist imagines the purchase, and if it can exchange your money (external wealth) for enough increases in the numerous different internal wealth accounts, then you will make the purchase.
This measurement of exchanging external wealth for internal wealth is your “happiness exchange rate.” It’s called this because when you add up all the balances from all the internal wealth accounts, the sum total is a decent approximation of your general “happiness,” which is what you’re exchanging your external wealth for.
The problem is that we as humans are incredibly incompetent at predicting which purchases will actually have the intended effect on our internal wealth. We waste tons of money on purchases that we think will make us happier, but they end up not doing so. If you were to go look at your bank statements from the last year and look at every purchase you made, chances are a significant portion of them didn’t provide an increase in internal wealth that was worth the external wealth expense.
The difference between a person with an efficient happiness exchange and a person with an inefficient one is that the second person will accumulate many possessions and spend tons of money, and yet remain unhappy, unfulfilled, and unsure of why. The first person will not spend nearly as much money, but when he does, it will work to systematically support his deepest desires and needs. His money will efficiently go to making his life better and to bringing him a sense of fulfillment.
Now the question is, how do we develop an efficient happiness exchange rate?
Improving Your Happiness Exchange Rate
1. Learn What Makes You Happy
Think of your purchase as serving two functions: 1) providing whatever benefit you’re directly seeking; 2) serving as an experiment about how happy that purchase makes you and how happy similar purchases in the future will make you.
So start paying attention to the end results of your spending. Are you ending up regretting the decision? Were you as satisfied as you thought you’d be? Keep these in mind going forward. Over time you’ll start to notice which purchases really pay off and which ones weren’t worthwhile.
2. Get Present to the Moment
Start enjoying the experiences you’re already having. We often go through life with our mind wandering off in one direction while we’re doing something. Instead get present, pay attention, be centered and grounded. Appreciate what is directly in front of you and fully engage with the experiences you’re currently having, whether that be dinner with a significant other, playing with your kids, or whatever else. Be present.
3. Face Your Negative Feelings Head On
When you numb yourself to avoid feeling bad, you also numb your capacity for joy. Attempting to escape your discomfort and feelings of inadequacy can be quite expensive. Whether it’s retail therapy, going out for drinks, or buying things to fill a void, none of them will ever work. All you will create is a black hole of attempting to make yourself complete through buying things or experiences, and you’ll lose a lot of money in the process. Instead allow yourself to fully feel those negative emotions and allow yourself to work through them. Even consider investing in therapy or coaching. After all, psychotherapy is cheaper than retail therapy.