Demos Kyprianou graduated with a master’s in occupational psychology as the global financial crisis was just beginning, which made him think.
“I wanted to try to understand why this happened. How does money work?” says the 34-year-old Cypriot.
His interest was piqued again a couple of years later when he left a job in London to return home to Cyprus. His country then experienced its own financial crisis, forcing him to move on again to start a new life in Dubai.
“The reason I left the UK and Cyprus was because of the crisis and the difficulty of keeping work as a result of that,” he says. “So having lived through scenarios where I saw thousands of people out of work and wondering where are they going to find money, I thought what are they going to do?”
It prompted him to consider how to financially protect himself and his wife; he turned to books and forums where discussions were taking place about how people use money.
His reading included Taming the Pound: Making Money Your Servant, Not Your Master, written by Kim Stephenson, an author and organisational psychologist whose research explores the relationship between money and happiness.
So does money buy happiness?
“There is a lot of research about what makes people happy. There has been about 50 years of research on it,” says Stephenson. “The research says that basically money has very little to do with being happy.”
All you need is shelter and food. People may think they need a fourth car and a big house and even their own yacht, but they don’t, he says.
“Material goods are linked to greater anxiety and lower happiness,” he adds. “There are material goods that, in the right situation, will help certain people be happy, but generally they don’t.”
Mr Kyprianou, a Dubai resident for the past three years, certainly buys into this philosophy. When he read Stephenson’s book, he noticed how it touched on aspects such as how to use money as a means to an end and encouraging readers to consider what they want from life, what they want to use money for.
Stephenson spent 12 years working as a financial adviser in the UK before abandoning the career in his early 30s after becoming bored.
“Money is very easy because it doesn’t make any decisions. It doesn’t get emotional. It just sits there. If you have a pound it is the same as someone else’s pound,” says the 58 year-old Briton, who retrained to become an organisational psychologist.
“What I liked was the clients. Some people can have masses and masses of money and be really anxious and whatever you did for them they weren’t happy. If you have the money to buy everything you want, why are you worried?”
To help people better understand the relationship between their desire for material things and what they actually need, Stephenson recommends reading Enough by John Naish. He says the more “stuff” you have, the more you worry it will be taken away, and the more it becomes necessary to insure it and protect it. In other words, the more you have, the more that money and financial value, not your own real, internal values, becomes the thing you worship.
What makes people happy, he says, are relationships, doing things for others, giving to others, and experiences – something that money can buy.
“Think about it,” says Stephenson. “You’re sharing with people generally – if you have a holiday, you’re meeting new people. When you buy a new car, you meet a salesperson but is that a relationship in the same sense as your holiday friends that you keep in touch with on Facebook? And you can actually enjoy, mindfully, the experiences. You can simply savour the experience of a sunset. It’s harder to do that with loads of ‘things’,” he adds.
Not all experts agree on this point though.
Wealth and wellness planner Rasheda Khatun Khan, the founder of Design Your Life and a member of The National’s Debt Panel, argues that money can, in fact, buy happiness.
“Of course happiness comes from within yourself; you choose what makes you happy. But having money gives you the power to say ‘yes’ if you are spending on things that make you happy,” she says.
“For example, if a mother wanted to stop work to spend time with her child to be happy, then she would need enough money to give her that time. Even if it’s time you wanted, money can buy you time,” adds Ms Khatun Khan.
But if you are always unhappy, no matter how much money you have, you will remain that way because that’s the relationship you have with yourself, she says.
“Money amplifies who you already are. If you are an absolute so and so, more money will make you more of a so and so. But if you are a giving, loving person, the more money you have, the more giving and the more loving you will be able to be,” says Ms Khatun Khan.
And it is OK to want more, she insists.
“People say they only want what they need. Why? Why do they not want more than they need to survive?” she says.
While it is subjective as to whether or not money can buy happiness, the experts agree that money can cause sadness.
“Money can cause unhappiness because it creates stress and tension and fear,” says Patricia O’Sullivan, the managing director of Protraining, which runs personal finance training courses for corporates.
Michael Routledge knows all about financial stress. He built up £50,000 (Dh235,104) of debt which took him 10 years to pay off. He now runs a website, savememoney.ae, to help people ease themselves out of chronic debt.
“Being a spender put me in a lot of debt, which means that banks were calling me and chasing me for money. That was kind of stressful and not much fun,” he says.
He admits he is a lot happier now that he has stopped spending as much and become more of a saver. So does that mean the spenders among us should strive to become savers?
Not necessarily, says Ms Khatun Khan.
“We can have a tendency on either or, but we need to be both,” she says. “They are actually the same thing. For example, when you are saving you are saving for something so you can spend on something. So what I get people to do is to understand, all you are saving to do is to spend.”
Mr Routledge is still a spender at heart. He is just careful with some things and less careful with others.
“I guess I learnt to control it,” he says.
Now, if his car breaks down or his washing machine needs replacing, he can dip into his savings to pay for it, rather than pay using a credit card.
And everybody needs some savings, because you never know what is around the corner, says Ms O’Sullivan.
“For that reason it is good to have a habit of saving regardless of how much you spend outside of that,” she says.
People tend to ask “how”: how they make money, how they invest, how they get a good job, says Mr Stephenson. But the real question we should be asking ourselves is “why?”
“Why do you want the money, what is it for, how important is it to you so you build the motivation to change your habits to get what you need?”
It is something Mr Kyprianou has spent a lot of time thinking about.
When he first became interested in the subject he did not have much money set aside and was just making ends meet. Now, he says he has worked out what is important in life and knows how much to save and spend.
And what he spends on are experiences, he says.
“My wife and I enjoy travelling, so instead of splurging it on shoes and clothes every month, for instance, we would rather go and share an experience together and that becomes a permanent memory that we can always share and always look back on.”
Stop the cycle of overspending
The good news is there are ways to rein yourself in, according to the experts. And you do not have to stop splashing out entirely.
“If a person is a spender and that’s what makes them happy and that’s what they value, then perhaps they could budget to spend a bit more than a saver might spend,” says Patricia O’Sullivan, the managing director of Protraining, which runs personal finance training courses for corporates. “That would at least make them not feel deprived. In some cases people have it almost as a hobby.”
Decide to spend only a set amount of your salary each month, for example 10 or 20 per cent. That way you can still experience the thrill, says Ms O’Sullivan.
And share your plan with somebody, whether a spouse or a friend. Also avoid the malls and tell friends you would prefer to meet at a coffee shop outside instead, she adds.
“The other trick is to not spend money at the moment you want to,” says Kim Stephenson, an organisational psychologist and author of two books, Taming the Pound: Making Money Your Servant, Not Your Master and Finance is Personal: Making Your Money Work for You in College and Beyond.
“Research shows you get more happiness from waiting and anticipating spending, than you do from impulsive spending now. It’s counter-intuitive, it feels like the thing that ‘I’ve got to have’ that you buy is a real buzz, but actually it gives you a lot less than anticipating getting it, leaving it a while, contemplating it, and then buying it. And, of course, you might find you don’t want it after all, so you get all the fun of anticipation and haven’t spent any money,” he adds.
Lastly, become more conscious about what you are spending, suggests wealth and wellness planner Rasheda Khatun Khan. Examine it by keeping an income and expenses sheet to see exactly what you are spending on.
“You can then see what you are saying yes to. And based on what you are saying yes to, you can then ask what you can say no to,” she says. “You will then make some decisions differently because you will realise what you say no to is more important.”
pf@thenational.ae
