Can money buy happiness? Kate Campbell from Australian Finance Podcast

Bryce: [00:00:26] Welcome back to another episode of Get Started Investing, a podcast where we attempt to answer the most common money and investing questions from our community. If you have joined us for the very first time, a massive welcome, we do strongly recommend that you scroll up and start episode one. Now, while we are licensed, we're not aware of your financial circumstances, so any information on this show is for education and entertainment purposes only. Any advice is general. And as always, I'm joined by my equity buddy, Ren.

Alec: [00:00:53] How are you? I'm very good, Bryce. Good to be here. In your introduction, you say we answer some of the most common money and investing questions. And in this episode, we're going to answer perhaps the most common one. Can money buy happiness? 

Bryce: [00:01:09] Yeah. Is it or is.

Alec: [00:01:11] That's just this.

Bryce: [00:01:11] Isn't it? Which broker can I use?

Alec: [00:01:14] How do I invest for my kids? Yeah. Yeah.

Bryce: [00:01:17] The hardest one to answer

Alec: [00:01:19] Chess sponsorship matter? Yeah. 

Bryce: [00:01:20] Does it matter? The hardest one to answer, I think, and the most probably one of the most hotly debated is does money buy happiness? Yes. And we're fortunate that we're going to be speaking today with Kate Campbell, who's written a book on this subject. Kate is the host of the Australian Finance Podcast with Owen Raszkiewicz, and her book is called Buying Happiness Learn to Invest Your Time and Money Better. So we're going to give her a call. She's down in Melbourne and we're going to hopefully answer. Can money buy happiness? Kate, welcome to get started investing. 

Kate: [00:01:59] Thank you for having me.

Bryce: [00:02:00] So to kick it off, you've just written a book. Congratulations.

Kate: [00:02:05] Thank you very much. Fellow authors. 

Bryce: [00:02:06] Fellow authors, Yes. It's called Buying Happiness Learn to Invest your time and money better. Let's start with a bit about the book. Why? Why write it? And and what have you learnt about the writing process? 

Kate: [00:02:20] Well, basically, I think we often get very focussed on the numbers of investing, the budgeting, the all the nitty gritty stuff. And I think sometimes we forget why we're actually doing it, why we building wealth, what is the point of it all? Because if we don't really figure out why we're doing it, it can feel very hard to invest for a long period of time because if we're putting money away for the future us that we could be using to go and have a fun experience today. It's a trade off that we're having to make all the time. So actually knowing, well, why? Why am I investing? Why am I building wealth? Do I want more time with my family? Do I want more choices? Do I want to retire early? Whatever it is, having a better understanding of that and how money interacts with the way you experience life and the way you are satisfied and happy with your life, I think is really important. So it was actually a paper I read a couple of years ago from some US researchers that says if money doesn't make you happy, you're probably not spending it right. And that pulled together 50 different research studies from across the US about how money and happiness interact. And I just went down a complete rabbit hole and that kind of was the very start of the book. So pulling together a lot of research in that area as well as all the stuff I've done with the podcast and the discussions I've had with our community over the last seven years, sort of all came together and created Buying Happiness. I found the writing wasn't too hard, but it was the editing process that I found the most difficult. I'm not sure if it was the same with you, but I finally got a lot of feedback on something because often in my brain you jump from A to C and you don't explain B, And so I think it really helped me articulate what I wanted to say a lot better, having a really good editor just going through everything with a fine tooth comb and saying, Well, you need to explain how you got here, or that just doesn't make sense to the person that doesn't have a personal finance and investing hat on. 

Alec: [00:04:15] I found the same the editing process. I guess we're just not used to it. Like digital media has such a quick publishing cycle and then, you know, months of editing back and forth. It was a new experience for us, but it makes you clarify your thinking, I guess, a little bit more. But, Kate, my parents always told me that money can't buy happiness. That was, you know, money's not everything. Money can't buy happiness. So are you telling me that my parents steered me wrong?

Kate: [00:04:42] Well, I think you and I would both agree we can't go and buy happiness from Woolworths. But there are a lot of things we can do with our money to increase our chances of being happy. So firstly, money covers a lot of our baseline needs. It covers our rent, it covers our bills, it covers our food. So that's it. Really important baseline needs are getting fulfilled with money, so that gives us a better chance at happiness. And then we can also use our money to do things we enjoy. So we can use money to boost our happiness by buying experiences, by spending more time with friends and family. Because maybe we have enough money that we can take holidays and we can take extra days off to spend more time with friends and family. Maybe we can use our money to add anticipation into our lives, which adds happiness as well. So instead of buying something immediately while we can buy something that we're not going to experience for six months, then we get to anticipate that experience over the next six months. And we also get the happiness boost from the experience itself. So while money and happiness just can't be purchased directly, there's a lot of ways we can use our money just a little bit differently to get a bigger happiness boost in our lives. 

Bryce: [00:05:57] So, Kate, you listed a lot of things there that can make us happy. How do we know? How do you suggest that we figure out what actually makes us happy? Because I'm sure if Wren and I are buying the same things out, our end happiness is not going to be the same. 

Kate: [00:06:13] It is definitely very personal. And I think one of the exercises that's really helpful, we call it the ten things activity is just writing out the ten things that you spend the most money on and then the ten things that bring you the most value that might take some time to work out and seeing if there's any alignment there, because often we're spending a lot of money on things. Yes, there's things that we have to spend money on, like rent and bills, but maybe we can reduce them a little bit. But they might also be other things we're spending money on just on autopilot because we think we should, because maybe our parents told us that we should be spending money on X, Y, Z, and it's not really something we value or not value any more. So if you can just take some time each year to just go through maybe the last month of your bank statement and the last month of your calendar, because I think time something we often we often forget about and actually go, Well, have I allocated my time and my money over the past month and then thinking, well, does that reflect the person I want to be? And are there some small changes I can make over the next month to better align who I am and my values with where I'm spending my time and money because we only get so much of it each month. We only get so much income from our job. We only get so much time that we're not sleeping or at work. So how are we using that? A little bit better. And that can be really hard to do. And I don't want you to try and microbial life overnight, but even just do that activity and think of one thing you can do next month where you can spend maybe $50 in a slightly different way to add more value to your life. So maybe you cut costs in one area that's not really bringing you any happiness and actually spend that money on something you enjoy. And same with your time. Maybe you actually want to spend more time going for walks with friends, but you're spending most of your time watching Netflix. Well, is there just one hour that you can swap out? And it's just those small changes over time, like investing on a regular basis over time that really add up and make a huge difference? 

Alec: [00:08:10] I think a lot of people would understand the concepts at an abstract level. The idea of, you know, I guess a lot of it is like being really intentional and considered with your money and understanding the trade-offs you're making and I guess trying to build a life that maximises your happiness conceptually all makes sense. But where most of us and I'm definitely going to put my hand up here where most of us fall down, is taking those ideas and then putting them into practice. And instead I live a life where I have to put up with Bryce most every day. 

Bryce: [00:08:42] How to get rid of me when you could pay me. I know. 

Alec: [00:08:45] Right? I don't think I got the money, so I'd love to. I'm sure you've done plenty of interviews. You've explained those concepts. I wanna, I guess, put the foot the table, not foot the table. 

Bryce: [00:08:57] But the skirt. 

Alec: [00:08:58] I want to put the spotlight on you and ask. I want to unpack some of these things and I guess how you've approached them personally. And I think that'll help us take some of these concepts that we're talking about and actually make them a lot more actionable. So I mean, let's start at the beginning and take us through, I guess, the process that you outline in the book and how you've applied some of those lessons. I guess, first of all, in figuring out what you want to prioritise and then how you've actually gone about prioritising them. 

Kate: [00:09:25] So one exercise that I've used and I did include that in the book as well, is actually just thinking about, well, what does my ideal Tuesday look like? And so writing down what my current Tuesday looks like, it doesn't need to be to the minute, but just sort of roughly half an hour, one hour blocks. So what am I doing when I wake up? What am I doing during the day? What am I doing when I come home from work? So that's probably generally you're living that on autopilot at the moment. Maybe you're spending some time with friends and family. You might be cooking, you might be ordering out. And then you also think about, well, what would I like my ideal Tuesday? Made to look like and been realistic, you're probably still going to have to do some form of work. So your Tuesdays are realistic Tuesday, but also once you've written those two things out, then actually saying, well, how much overlap is there and is there a small change I can make? So when I did that, I realise, well, I'm saying that I want to spend more time outside and I want to spend more time with friends and family. But actually what's happening on Tuesday is I'm getting home and spending 3 hours or 4 hours watching Netflix. So what is one change I can make to more closely align how I'm spending my time currently and how I want to spend my time? And that can just be a really small change. It's not something that's going to take any more time. You're just reallocating an hour you already have. It's not going to cost you any more money, but that can more closely align who you are right now and who you really want to be, because often we discount all of that time. We think, okay, there's time for that later. But really I think we need to embrace the present moment more because we only have so many hours. And one of the challenges with all the finance and investing conversations we have is there's always that tension between enjoying today and securing our future. And it's always a it's a trade-off, but it's also a reprioritisation because I might say, okay, I'm happy sacrificing maybe half of my weekend every weekend for five years because I want to do this course. So that's what I'm doing right now. But I know that it's going to have benefits for future me, and I'm also enjoying the process. So it's a constantly going through how you're spending your time and money and going, But am I happy with the trade offs I'm making? Because at the end of the day, you do want to make some decisions that are going to help future you. And I like to frame it is how are you being kind to your future self? Because we don't necessarily want to put lots of money aside for our future. We don't necessarily want to put money into our super for retirement. But if you think about yourself in 30 years time, which I know is very, very hard to do, but going what are some small decisions I can make today that are kind to my future self and that will give my future self more choices and options. Because although I don't know who I'm going to be in 30 years time, I know that I'm probably going to want more time and I'm going to want to have choices. And I know that money will give me more options. So that's one way of framing it. 

Alec: [00:12:20] Yeah. Now I'm just thinking about what my ideal Tuesday would be. 

Bryce: [00:12:24] We had some friends who, like they're paying to get back time, but just something simply like they were like, we are just going to we're not going to go to the shops anymore. We're just going to get. Woollies delivered an hour and a half on a Sunday traffic, you know, paying the extra $9 for their hour and a half back in time is something that they decided was the thing to do. 

Alec: [00:12:48] This is going down a rabbit hole. But I also reckon you probably would save money on a lot of it, probably. 

Kate: [00:12:53] More than $9.

Alec: [00:12:55] True. 

Bryce: [00:12:55] Trade.

Alec: [00:12:55] Impulse check out. 

Bryce: [00:12:57] Yeah, but does the impulse purchase make you happy? 

Alec: [00:13:01] Short term, yes. But once that sugar wears off. No. 

Bryce: [00:13:04] No. 

Alec: [00:13:06] I think like the classic example for me that when you talk about like the different trade offs between time and money was before we could add jobs to the equity markets full time. We were both working full time jobs and I negotiated with my employer to go down to four days a week. So one day a week I could work purely on equity nights, and that was like a classic trade off of less money coming in from the salary, but designing, I guess, a better life. 

Kate: [00:13:35] Creating more opportunities for yourself potentially in the future. 

Alec: [00:13:38] Yeah, yeah, yeah. And just like I think there was a lot of fulfilment that came from, like, building this ourselves. So, like, obviously, like it'd be great if there was a financial result from equity markets, but I think just like the learning and fulfilment and certainly something I was more passionate about, not that I didn't enjoy my job anyway, it's not about me. 

Kate: [00:13:58] So let's there's a lot to that I like because often we get the most happiness from the process, the results usually. I mean, it's probably different in your case of building a business, but for a lot of us we're striving like maybe we want $10,000 in our bank account, but we'll have $10,000 in our bank account for a second for, well, maybe a day or two before we have some more money in our bank account and we get a quick happiness boost from that. But it's usually the happiness of the process and the habits we learn along the way, in the fulfilment. We know that we can put money aside for ourselves. So I think sometimes we get really caught up on the goals, especially with our finances, but also we start to discount that the process actually has a lot of value in making us happy and fulfilled and satisfied along the way.

Alec: [00:14:43] I guess the other thing, I mean, there's so much, there's so many aspects to happiness. It's such a big concept. But when when we're talking about this, there's often the trade offs between like short term happiness and long term happiness. And, you know, Bryce gave the. Classic example of, you know, the impulse purchase makes you happy for a second and then makes you sad once you realise how much money you spent or how much sugar you've just eaten. But I guess, you know, even things like taking maybe a step back from work, taking a less stressful job, not chasing a promotion because then you can have a lifestyle that you want. In the shorter term versus building the life that you might want in the longer term, that might need a little bit more money. Like, how do you how do you think about the trade offs between the short term and the long term? 

Kate: [00:15:31] I try to balance between the two knowing that I'm never going to make a perfect balance and I have to just keep re-evaluating on a yearly basis because my financial plan is written down on paper. It's loose though, because what I want one year is very different to what I want the next year. And you're probably familiar with this the end of time illusion, where we think that we've changed a lot over the past ten years. We think a lot's happened in our lives, but then when we think about what's going to happen over the next ten years, we don't think will change that much. We don't think that there'll be any big major events in our lives. And I think we need to remind ourselves that the chances are lots of things are going to change over our lives. We might meet someone, we might travel overseas, we might start a family. We might want to sell a house or buy a house. And our financial plan just can't have every one of those events written down. And so having a financial plan that serves you, but it's also loose enough to be malleable when all these changes come up is something that is really important to me when trying to deal with those changes that life's going to throw at you. So I'm thinking with when I'm writing my financial plan and setting goals each year, I'm thinking about, well, how am I using some of my resources, my time and money to really enjoy the present moment and to make the most of the life I have in front of me right now, but also can I make some small changes? And the earlier start, the smaller these changes have to be to set my future self up. So for me that's putting a little bit of extra money into my superannuation each month because that is giving Kate in 50 years time a lot more choice and option with what she does with their time, she'll have more choices. And so that's one way that I balance that trade off, that's constantly tugging at either side of me of how am I enjoying my resources today, but also putting some resources aside for my future self. Because at the end of the day it's the same person, but we can feel so disconnected that it feels very hard to be in contact with our super and our future goals. So I think that's one way that I find it a little bit easier to manage. But then there's always constantly that trade off because I'm like, Oh, I'm going to Europe again. Next year might sound fun, but that would also would make me have to push back a lot of other financial goals I have. So it's always weighing up what are the pros and cons in any year. But I think you just have to know that things will keep changing and that is okay and it's a part of life. 

Bryce: [00:17:58] All right, Kate, we're going to just take a very quick break. And on the other side, we're going to understand what are some key actions that the community can take to start prioritising and buying that happiness. We're back with Kate Campbell, co-host of the Australian Finance podcast and author of Buying Happiness. So, Kate, to close out, aside from buying the book and will include a link to all reputable bookstores in the shownotes, what are some things that our audience, the community can put in place to, I think, start considering their financial plan and what are the buckets they need to be thinking about, but then also to start thinking about what are the priorities around the happiness? What are some simple steps or actions that they can start doing? 

Kate: [00:18:53] Yes. So I think the biggest one is just experimenting with these things. So there's a lot of research that shows all these different things that boost our happiness, whether it's adding a bit of anticipation to our next purchase, whether it's giving money away to your friends and family and charity that gives us a happiness boost, whether it's your example before buying your time back by having your groceries delivered. But these are always average. They're like on a whole, this group said this, so they're not all going to work for you and they're not going to all work in the same circumstances. So finding small ways that you have already experienced happiness boosts. And so you might go, Well, I really feel a bit of a happiness boost when I have a coffee with a friend on the weekend and we walk around the park. So how can you take that and add more of that to your to a routine? Because you're going to have to experiment like personal finance isn't one size fits all? Yes, there are some generally good ways to do things that have worked for lots of people, but at the end of the day, it is personal. And so finding different ways to experiment and just make a small change here. So this weekend you might want to try adding a bit more novelty. So instead of going to exactly the same place for coffee, you try a new place and you see, Well, does that add any value to my life? Does that make me happier or do I really like just going to the same place? Because I've got a great rapport with the staff at that coffee shop. So just try an experiment when it comes to your finances and not just going on autopilot. That's probably my biggest tip for people to take away.

Bryce: [00:20:23] Love it. It's fun. I can think of one thing we've done here at the office is no meeting Mondays. 

Kate: [00:20:28] How's that working?

Bryce: [00:20:29] Get that time back in the diary to just do stuff which has been super valuable. And I think it gives us a much better feeling to start the week knowing that we can get on top of everything and head into the week strong rather than coming into a monday feeling crunched and then playing catch up. So we're happy.

Kate: [00:20:46] Good. But then you can experiment. Like maybe it's better to have no meeting Friday or no meeting Wednesday, like experiment with those things and see what adds the most value.

Alec: [00:20:55] No. How about no work?

Bryce: [00:20:57] No work Friday, No meeting Monday, half day, Tuesday, Wednesday, Thursday.

Kate: [00:21:03] I mean, variability adds a happiness boost as well. So you got to mix things up and keep things exciting as well.

Alec: [00:21:10] I think your book is a good addition to the number of personal finance books that have come out recently. Plenty of books have spoken about building wealth. Far fewer have spoken about what we should do with that wealth. So as everyone listening, hopefully slowly chips away at their financial goals, they can also, I guess, interrogate what those goals are. So congratulations on the book. We know how much work goes into it. So congratulations. And as I said, we'll include the link in our show notes. So good luck with it and I'm sure we'll speak again.

Kate: [00:21:42] Thank you very much, both.