By Jean Chatzky

Did you ever wonder what, exactly, goes into your personal happiness?  Is it your health, your reflection in the mirror, your network of friends?

According to Sonja Lyubomirsky, a professor of psychology at the University of California Riverside and author of “The How of Happiness,” there’s actually a science behind what makes us happy.  For starters, about 50% of our happiness is genetic.  You can’t control that portion, obviously - you’re either born a gloom and doomer or you’re not. 

Lyubomirsky says another 10% is, in fact, dependant on circumstances like the ones mentioned above, and the remaining 40% is to be determined by you.  Yes, you have the power to make yourself happy. 

So what does all this have to do with money?  A lot, actually.  It was proven a long time ago that beyond a certain level of comfort, money doesn’t make us happy.  It stands to reason, then, that a new car, television or house won’t boost our mood, either – at least not in the long-term.

And yet we still engage in retail therapy, we continue to put our dreams on the back burner to stay in well-paying jobs that we hate, and we very often blow a raise or big bonus in a matter of weeks.  Here’s how to stop these vicious cycles:

• Stop the retail therapy.  You have to start by finding your triggers.  We all have a few vices, things that we can count on to make us happy or redeem a bad day.  Some of them are healthy – say, a trip to the gym - and others, like an impromptu shopping spree, are not.  Fast-forward to the next day to tell the difference:  Chances are you’ll still look back on that exercise with a smile, but the unnecessary spending will bring on feelings of guilt. The idea is to stick to things that will make you happy in the long-term, not give you a short-term high.  I spend time with my kids, go for a run, or get together with a girlfriend.  All of these things are guilt-free ways to boost my mood, and they don’t cost a dime.

• Be satisfied.  No doubt about it, we live in a culture of consumerism.  We are constantly coaxed into coughing over our paychecks for bigger televisions, newer cars, and the season’s trendiest clothes.  Marketers know that they can keep us spending by launching the same products year after year with just a few tweaks and updates.  Avoiding these temptations is hard work, but Sonja says that none of these material things are worth it when it comes to your happiness.  “Sure, we have that burst of happiness when we buy the new dress or the new bag, or when we move into a new house, but we then get used to it and need to buy something else.”  That’s why those boots that you absolutely had to have last winter just aren’t doing it for you this year. You’d have been better off putting that money in the bank.

• Take the leap.  Your work is a huge factor in determining your happiness, and if you hate your job, you’re going to have a hard time walking in every day with a smile on your face. I’ve always said that I think everyone should have a job they love, and if you feel your calling lies elsewhere – maybe you want to start your own business or switch to the non-profit sector – then make a change, even if that means taking a pay cut. Just be sure to take the time to plan carefully beforehand. 

Start by going over your expenses with a fine-tooth comb and looking at where you can start making some cuts.  “After you very honestly figure out how little you can live on, then look at how much you have in cash that can supplement your income during a transition,” says Drew Tignanelli, a financial planner in Maryland.  That may mean sticking with your current 9 to 5 for a bit longer while you save up some money, but I guarantee that the piles on your desk will be easier to swallow when you have a bigger goal in mind. 

• Ignore your next raise.  The same goes for a bonus, your tax return, and those rebate checks that should be going out in a few months as part of the government’s economic stimulus plan.  Research has shown that when we get extra money, no matter what the source is, we adjust to it in much the same way that we adjust to our new big-screen TV.  Suddenly, after a few months, that extra couple hundred in every paycheck doesn’t feel like extra at all – in fact, you can’t remember how you ever lived on less. 

“When you get a raise, instead of figuring out how to spend it, take a large chunk of it and put it into your 401(k), a savings account, or your IRA.  Then act as if you didn’t get a raise at all – after a year or two, you’ll be amazed at what you’ve accumulated through interest,” says Tignanelli.  You can easily opt to have your bank transfer a set amount from your checking account each pay period, so no extra work is involved on your part and your money is saved before it’s spent.  Looking forward to a secure retirement, or knowing that you’re covered in case of an emergency, is cause for happiness indeed. 

Thanks Jean!

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