The old saw about money not buying happiness is noble and all, but most of us secretly recognize it would be a relief to have more green. Enough to pay off those bills or save up for the kids’ college or finally go on a real vacation.
Laura Vanderkam takes on our perceptions about money in All the Money in the World: What the Happiest People Know About Getting and Spending. She explains right up front that it’s not about her, it’s about truisms she finds as she investigates the link between money and happiness. The book doesn’t contain any daunting charts for budgeting or figuring out just how screwed we are in retirement. Instead it asks us to consider how we’d spend a windfall of $10,000, what elements we’d include in the perfect weekend, and how we’d use 100 extra hours if we could hire someone. These and other exercises help us make happiness producing money decisions. In fact, much of what the author has to say is thought-provoking.
For example, spend more. Financial advice usually focuses on scrimping and saving, often for major life goals such as retirement accounts, as well as a bigger house or a newer car. But research shows that happiness has more to do with small, frequent pleasures than infrequent, more extravagant expenditures. The author doesn’t advise us to avoid buying a home or car, let alone skip saving for retirement. She does note that a smaller home, a cheaper used car, and more reasonable retirement savings are ways to avoid steep payments. That way we don’t have to forgo small luxuries like a child’s toy or a latte as a daily exercise of reluctant self-discipline.
She also advises that we spend differently. She asks what expenditures will amplify our values and our enjoyment. Some expenditures simply result in more positive feelings than others. For example, if you’re buying a meal for the family would you rather stop at a fast-food chain or support a locally-owned pizzeria? Such choices relate to bigger decisions as well. She writes about one couple who lived frugally after college while they worked, saved, and paid off their student loans. Rather than hang out at bars on weekends, they went hiking and kayaking. This approach gave them the funds to travel full-time for two years, seeing mountain gorillas in Uganda and climbing Mount Kilimanjaro. She also uses wedding costs as an example. The average couple spends well over five thousand on an engagement ring and the average reception is many times that expenditure, all to commemorate a marriage meant to last. But the trials faced in the early years of marriage are tough. There are conflicts over money, housework, lack of communication, and perhaps the strain of parenthood. It’s claimed that 72 percent of married women consider divorce. Vanderkam asks why not forgo the engagement ring or have a simpler wedding, spending those funds in ways that create greater marital happiness in the first few years? Unspent wedding money can pay for a weekly date night, regular gifts of flowers, even a freedom fund for career transitions. As she writes, how we spend reflects our priorities.
If we sport diamond rings but claim we don’t have money for date night, we are essentially saying that jewelry is worth more to us than spending quality time with our spouses. This hard truth continues through all of the architecture of our lives. If we say we don’t have time to hang out with our kids because we have to work to pay the mortgage, we are saying that the house is more important than our offspring. We can blow our cash on a showy car or save it to finance a transition to a dream career. Money spent on one thing is money not spent one something else, and these choices have consequences for our happiness and the happiness of those we vow to love.
But Vanderkam’s pronouncement that the book isn’t about her doesn’t ring true. Her opinions have a haughty let-the-maid-sweep-it-up tone. She writes dismissively about parents who want to scale down work hours to spend more time with children, as that negatively affects the family income. She has some scathing things to say about those who sew, preserve food, and otherwise find meaning in DIY approaches, insisting, “If you want a larger purpose, and want to contribute financially to your family, what’s wrong with getting a job that does this? You’ll make more progress on the green front running a utility than you will with your garden.”
One of the main points she makes repeatedly is that readers should make more money rather than scrimping. She also blithely recommends “picking up” side jobs, consulting, and better paying work as well as renegotiating one’s salary. It may be a privileged vantage point doesn’t allow the author to see that many people don’t have the option of giving up a daily latte, let along renegotiating a salary. The Bureau of Labor Statistics (BLS) tells us the United States is brimming with qualified people seeking work. We have 12.7 million unemployed people plus a few million more whose long-term unemployment has put them in the “discouraged workers” category. In addition, we have 7.7 million workers who have taken part-time work although they need full-time employment. If that picture looks too rosy, we should include two million college grads under 30 who are working in jobs that don’t require a degree. (Those over 30 working below their abilities isn’t known.) The toll is shame, poverty, and yes, happiness-impairment. It’s also likely to include long-term struggle. One study found the economic effect of lay-offs during a recession impaired workers even 20 years later, with pay an average of 20 percent lower.
This is an intriguing book. But any personal finance book published in 2012 needs to acknowledge the resounding effects of our recent global economic crisis. Pretending it didn’t happen is bad enough, persuading readers that a “don’t scrimp, buy more” approach works for everyone is just seems elitist.
Review copy provided.