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May 2007
U.S. $18.95 / $24.95 CAN
ISBN 978-0-7679-2278-4

Tommy Semosh

How to Invest in Happiness
"Never keep up with the Joneses. Drag them down to your level. It's cheaper."
Quentin Crisp

While it's true that you can't go to K-Mart, plunk down your Visa and get a lifetime supply of contentment-or good health, true love or even a nice day-that doesn't mean the old cliché that "money can't buy happiness" is true. We're so obsessed with the material goods money can buy that we've lost track of the fact that happiness is one of the most powerful things money can buy. And that's what this book is about.

First and foremost, I'd like you to see this as an investment book. Instead of focusing on bonds and mutual funds, I'm going to show you how to invest your time, energy and above all your money into your own long-term, tax-free, high-yield happiness.

For centuries, economists based their theories on the premise that man was a "rational actor" who could be counted on to make economic decisions in his own best interests at all times. (I know, I laughed when I learned that too.)

As anyone who has put an overpriced vacation on Visa—or spent part of their rent money on clothes—can attest, neither man nor woman is terribly rational when it comes to making economic decisions. You know what you want-yet you go ahead and spend your money on something else. Just look at all the data on retirement: Repeated surveys have found that people aren't saving enough for retirement; moreover, people know that they aren't saving enough for retirement; yet what are people most worried about? Not having enough money in retirement!

These inconsistencies don't affect just how well we plan ahead; they seem to be a flaw in the way human beings were designed to think and act financially, as you saw above. That's why it's important to be aware of your own mixed impulses as you think about using your money to make you happier. Let's do a short, fun exercise so you can see what I mean regarding some of your own quality-of-life choices thus far.


This exercise works like the old "Mad Libs", but it's a little more free-form. Just fill in the blanks with adjectives, verbs, nouns, whatever. Add words where you need to, improvise if you feel like it-have fun, be honest and see what emerges. Time required: About two minutes, if that.

  1. I earn a living by _________________; I consider my job to be _________________________________________________.
  2. My dream job or career would be ________________________ _________________________________________________.
  3. My home is ____________________ and a realtor would describe the location as __________________________and _________________________________________________.
  4. After work I usually _____________________________ and _________________________________________________.
  5. On the weekend I typically__________________________ and _____________________________.
  6. The top three things I spend money on are ________________, ___________________ and _______________________.
  7. I'd describe my friends as ________________________; when we see each other we usually _____________________.
  8. My family is ____________________ and I sometimes wish I could ___________________________________________.
  9. The main things that keep me up at night are ______________ ________________________________________________.
  10. The three areas where my time is most committed are ___________, __________________ and _______________.
  11. My spiritual life consists of ________________________ and I feel ____________________________ about that.
  12. Sometimes I feel like my life is missing _______________ _________________________________________________.
  13. When I have a free hour or two, I usually _____________ _________________ or _____________________________.
  14. My last vacation was _______________________ and it was _______________________.
  15. If I could change three things about my life, they would be _____________, ________________ and _______________.
  16. When I'm 80, I hope to look back on a life that was _____________, ________________ and _______________.

Ideally, this exercise should make you feel somewhat surprised or even uncomfortable. Or it might provoke a moment of clarity. When my husband did a test run of this exercise for me, he put down his pen and said, "Well, I've just figured out that I hate my job." He knew that already, but these questions do have a way of giving you a fly-on-the-wall perspective so you can see how various lifestyle choices interconnect-and whether those choices are in synch with what's most important or valuable to you.

What's money? A man is a success if he gets up in the morning and goes to bed at night and in between does what he wants to do.Bob Dylan

Now, as you begin to think like a happiness investor, here are some questions to ask yourself (you don't have to write anything down here, but do take a couple of minutes to consider your answers):

  • What surprised you about some of the answers you gave?
  • Did you notice any discrepancies between where your resources go, and what you find most satisfying in life?
  • What are some ways that you're using your money, time or energy that yield the biggest payoff in terms of your own happiness?
  • What are some of the ways you're using your money, time or energy for paltry gains?
  • If you could change one thing this week, maybe even today, that might be a better investment in your own happiness, what would it be?


It may seem strange to equate your personal well-being with an investment portfolio, but it's a pretty useful metaphor. It reminds you, the stockholder, so to say, that you have a fair amount of control over where you invest and why. And just as every financial investor has very different stakes in his or her portfolio, it's the same with happiness. Savvy money managers may know to put a certain amount of capital into something solid like bonds, blue chip stocks or large-cap mutual funds, but the precise investments they choose are up to each individual. Likewise, how you decide to balance your assets in order to enhance your own happiness is ultimately up to you.

After all, how people define happiness is an extremely subjective matter, not to say downright idiosyncratic at times. It's pretty amazing to imagine the myriad types of joy, pleasure, contentment and elation each person can have-even within a single day:

  • There's the deliciousness of your first sip of coffee in the morning...
  • the thrill of overcoming a challenge...
  • the bliss of lying in the sun...
  • the physical rush of exercise...
  • the peace you feel while watching a child sleep...
  • the fun of fall-off-your-chair laughter with friends...
  • the satisfaction of doing your best...
  • the joy when you hold someone you love...
  • the tingly relief of a hot shower after a sweaty workout...
  • the excitement when you've landed a new job...
  • the ordinary happiness of knowing, thank God, it's Friday.

You could add dozens of items to this list, and so could I, but the bigger question is, How do you decide which type of happiness to invest in? Are some better investments than others?

Yes, as it turns out, some are. Eons of human experience, plus dozens of scientific studies, have left a fairly thick trail of breadcrumbs that show where the path to happiness lies. And as your official happiness advisor, those are the stocks that I'm going to recommend you put at the heart of your portfolio. I've outlined them below and will explore them in detail in the coming chapters.

After a time, you may find that having is not so pleasing a thing, after all, as wanting. It is not logical, but it is often true.Mr. Spock


People talk about how much time they spend doing this or that, but how often do you think about the "spending" part of the equation? Yet how you spend or save or waste your time has just as much of an impact on your quality of life as the way you choose to spend your cash. Chapter 3 is about the tradeoffs you can make to reclaim your time-and invest in a happier life.


When talking about happiness, Aristotle used the Greek word "eudaimonia"-which doesn't refer to the upbeat outlook we moderns associate with being happy, but rather to the life well-lived: the inner satisfaction you gain when you live up to your strengths and make the most of your talents. Today the field of positive psychology has generated numerous studies about the immense benefit of being engaged in activities that stretch the envelope of who you are-and that by being more active and positive in your approach to your own life and goals it is possible to up your happiness quotient. Investing in your self is what Chapter 4 is all about.


Most people think of health as a good thing on its own. Investing in your health as a means of increasing your total well-being is still a relatively new idea, even though science supports the rather obvious conclusion that healthier people are happier. Chapter 6 shows how small but steady investments in your physical plant are key to the overall performance of your portfolio. (Besides, shoring up your physical well-being will save you money in the long run-dividends that you can use to further invest in your quality of life as well.)


For many people, worrying about money has become a way of life-and scientists are now connecting persistent financial angst with a flotilla of mental and physical ailments. Small wonder that learning better money management skills in order to invest in your own, ongoing financial sanity is so important. In Chapters 3, 7, 8 and 9, I'll show you how to master bad money habits, vanquish debt, buy yourself greater peace of mind—and take control of your future. If you feel euphoric at the very thought of a stress-free, well-ordered financial life-you know what a vital part of your portfolio this will be.


You don't need me to sell you on the importance of developing a strong fun strategy. (And you don't need to see The Shining to know that "all work and no play" really doesn't work out well for anyone in the end.) In Chapter 10 we'll tackle the all-important fun sector, and the countless ways it can boost your portfolio's overall performance. I'll also reveal the groundbreaking results of my Highly Unscientific National Fun Survey.


Scientists squabble about whether happier people tend to have more active social lives-or having vibrant connections to others makes you happier. It's possible to see the issue either way, but one thing seems indisputable: We are people who need people, as the schmaltzy old song goes. The correlation between having friends, being part of a community and/or close to your family—and being happy is a strong one. The data on the long-term benefits of marriage are also striking.

That doesn't mean you have to win a popularity contest, or leap into a romantic relationship to be happier. But investing more in the people who are most important to you is essential to having a life that's fulfilling. More on that in Chapter 11.


Donating your time and money to help others has always seemed like the "right" thing to do. The fact that it made you feel good, too, was largely ignored as a minor fringe benefit. Now researchers are finding that the act of giving bestows numerous gifts on the giver as well: it supports and strengthens social bonds, enriches your life, enhances your health and even boosts longevity. It's like discovering that eating a can of spinach really will turn you into a hero. Although I promise Chapter 12 makes no mention of eating your vegetables.


There's absolutely nothing surprising on this list, nothing new-except the radical idea that these aren't philosophical choices, but financial ones.

For that reason I've devoted certain sections of the book to helping you strengthen your basic personal finance skills. If I've learned one thing during the years I've been writing about money-specifically about people's financial quirks, faux pas, failings and blindspots-it's that creating financial sanity is the bedrock of living a happy life.

So although a large part of this book is about understanding what makes for happiness, the rest is about cultivating the financial habits that support those efforts.

First I'll address where your money goes and why, and then we'll tackle more stress-inducing topics like how to get out of debt and save for a secure future—all of which are essential your ultimate happiness.

As you gradually invest your resources in a more rewarding way of life, it will become clear that when used wisely—you bet money can buy happiness.

Soes this mean you must invest in this little lineup of so-called happiness stocks or risk a life of low returns? Nope. These are just some of the areas that scientists have found which contribute to personal satisfaction and quality of life. Only you can decide how you want to invest this portfolio of yours. In the financial world people use different methods to determine their asset allocation-and the same seems to be true of well-being.

In early 2006, I attended a symposium on Economics and Happiness at the University of Southern California. There I met Mariano Rojas, an economist at the Universidad de las Americas in Puebla, Mexico, whose research supports the idea that happiness is a mix, you might say, of different stocks.

Rojas surveyed 579 people in five districts in Mexico about their overall well-being, and then asked how satisfied they were in various areas of life-work and career, family and community, health and so on. He found that some arenas have a greater impact on people's contentment with life-for example, a rewarding family life was a key ingredient in their overall life satisfaction, whereas work tended not to have as big an impact.

He also found that it's possible to increase your individual happiness by investing more in the areas that will have the most impact for you—and less in those that don't. "Hence a person who is very unsatisfied in her family domain and satisfied in her economic domains may benefit the most from an increase in family rather than [increasing] economic satisfaction," Rojas writes.

His point isn't that we all need to invest in the same things, but rather that the way people choose to invest in their happiness is "contingent on a person's own circumstances." If you're in good health and have a happy home life, you don't need to invest more in those domains. Rather, like any savvy investor, you're better off paying more attention to the sectors of your portfolio that aren't delivering the returns you'd like to see. Perhaps you need to have more fun, to reduce stress, spend more time with friends or find more time for yourself.

The essential thing to remember as you go through this book is that "joy" and "satisfaction" and "happiness" aren't just pleasant, abstract notions; investing in a happier way of life requires making new decisions about how you spend your money and time. Next I'll show you how.