Happy Go Money

It’s not easy to make personal finance entertaining, but Melissa Leong succeeds in her book Happy Go Money: Spend Smart, Save Right & Enjoy Life. Some books slip in a couple of jokes near the beginning to lighten the material, but Leong’s writing is lively and fun throughout. Another thing that sets this book apart is its focus on the connections between money and happiness, often referring to scientific studies of happiness.

I don’t often laugh out loud while reading, but I did a few times with this book. Leong isn’t afraid to use some suggestive material to keep things interesting. Her discussion of compounding involves “horny rabbits” where “one rabbit bones another rabbit to make 10 more.” When her friend starts talking about insurance, “my eyes cross as I achieve boregasm.” The last chapter is called “Happy Endings.”

If you think you can’t be happy without more money, it might help to realize that many of the things that make you happy have little to do with money. “If you’re relying on something (or someone) to make you happy, you’re wasting your time and energy.”

“Stop playing the lottery. Now.” My father used to say that buying a few lottery tickets is harmless dreaming. But I suspected he was using lottery dreams to delay taking concrete steps to improve his life. He didn’t need to work harder at his business as long as a lottery win was a possibility.

Even though we know little about other people’s situations, “based on our limited information, we compare, we covet and we compete.” It’s hard to turn off our desire to keep up with the Joneses, but it may help to recognize this tendency to help keep us from competitive overspending.

Social media is a source of unhappiness as we compare our lives to what we see of others. But, “We curate our lives for social media. We filter the crap out of photos. We filter our whole lives. We crop out the unsavoury parts of our vacations. We live-tweet the music festival but not the moment when the credit card is declined at the grocery store a month later.” I do a public service in my neighbourhood by having the worst lawn. Maybe I could do something similar on social media.

We crave expensive things like cars, but Leong says the categories of spending that bring happiness are experiences, time savers, and anticipation. On time savers, the idea seems to be to factor in the value of your time whenever making financial choices.

“A report in the 2006 American Journal of Psychiatry estimates that roughly 5.8% of the U.S. population suffers from compulsive buying disorder.” I’ve always had the vague feeling that most retailers are competing to attract compulsive shoppers, and the rest of us who need a new shirt every year or two just don’t matter.

Among some exercises aimed at increasing happiness, one I found interesting was “Using your strengths in a new way.” I can see where it would feel great to find new contexts where your talents are useful.

No personal finance book can avoid the topic of budgeting. To most people, “a budget looks like restriction,” but it can give “Freedom to spend without guilt. Freedom from debating every little purchase.” When you’ve automated necessities like retirement saving, paying the mortgage, and other bills, you can spend the rest without worries.

On the subject of automated savings, I liked the analogy comparing your income to a bowl of chips. If you don’t set some aside at the beginning, “Ten minutes later, I’m daubing at crumbs with a moistened index finger.” Waiting until the end of the month to save whatever money is left won’t end well.

Lest I start to seem like a cheerleader for this book, I had to find something to criticize. “Switch to compact fluorescent light bulbs.” Fluorescents are passé; LEDs are in. “I calculate our net worth twice a year. And I like to see this number climb every time.” This is possible while your savings are small compared to new contributions. But once you’ve got substantial savings invested in stocks, you can’t smooth the ups and downs of the stock market with new contributions. It’s better to focus on the size of your new savings and debt repayment rather than what someone else will pay for your house and stocks.

The book does a decent job of explaining mutual fund costs, but the author says that if fees are high, “your fund has to perform better than average to be a worthwhile commitment of your cash.” This misleads readers into thinking the goal is to find a mutual fund that will outperform. This isn’t possible. The mutual fund industry makes a killing marketing funds that outperformed in the past by luck. But fund returns rarely look as good in subsequent years.

“When it comes to money and happiness, ... the biggest happiness killer is debt.” I couldn’t agree more. When it comes to borrowing to invest, “Make sure you understand the worst-case scenarios. What if interest rates go up on your loan? What if you lost your job or something happened where you needed the money? What if your investment tanks?” Considering the potential downside of leverage is vital, even though we’d rather focus on pretty charts showing how much money we might make.

Overall, I highly recommend this book to anyone who struggles with aspects of personal finance, which is probably 80% of us. It’s an entertaining read and can help improve both your finances and your happiness.