It’s not having money, it’s what you do with it.

Does money bring happiness? This is, in all likelihood, the big question that we have all asked ourselves at some point in our lives. Especially if your checking account hasn’t reached enough zeros yet for you to not care. Behind this question lies much more than a merely financial issue, and we enter into areas of individual perception of the ways of living life.

The Harvard professor and author of bestsellers as ‘Intelligent maturity: How to achieve success, happiness and a deep purpose in the second half of life’, Arthur C. Brooks, gave some keys in the podcast TheStreet to achieve financial happiness without achieving it interfering with emotional happiness.

Being realistic: money is necessary. At this point I could be naive and tell you that money doesn’t matter and what matters is how you feel. I’m sorry. As long as supply companies, banks, oil companies, supermarkets, etc., ask you for money in exchange for services, you will continue to need money. Therefore, the answer is yes, money is necessary.

The real dilemma of the question that concerns us is how much money you need to balance the scales of financial happiness, understood as that state in which money is not a cause of permanent anxiety, and emotional happiness. “People who say money doesn’t buy happiness tend to have it,” Professor Brooks said.

Does money bring happiness, or what you do with it? According to the economics expert, money tends to be associated with success, and success, with happiness. “Some people think: Look, if I follow this path I will be more successful and then I will be happier. These paths really lead to success and achieve fame, money and prestige. But instead of happiness they find frustration,” says the writer.

Instead of answering the question of why you want money, the expert recommends asking yourself what you want to do with money to be happier. “I have spent much of my time helping people understand that happiness should be their goal and that to achieve it they must make decisions that are not always going to be the most obvious and profitable.”

Do you want to have more money to spend more time with your children, but earning that money prevents you from spending more time with your children? Professor Brooks is clear: “Buy experiences with the people you love, set aside time and spend it with the people you love, give your money to causes that make you feel good, and save your money. All of those things actually bring authentic happiness. Those are the ways to buy happiness.”

Science supports it. Psychologists Daniel Kahneman and Angus Deaton conducted a study at Princeton University in which they discovered that people with higher incomes had higher levels of satisfaction with their lives, because money allowed them to satisfy their basic needs without stress.

However, they also discovered that this improvement continued to increase until it reached $75,000 per year, a point at which satisfaction levels stagnated and no longer grew in proportion to the level of income. Other later studies set that figure at $95,000. That is, once financial happiness is achieved, satisfaction levels depend on what is done to achieve emotional happiness.

He didn’t study at Harvard, but my grandfather gave the same advice. In his interview, Arthur C. Brooks mentioned that the truly important thing was not so much to ensure a large income, but that the secret was to keep expenses at bay. With all due respect to the Harvard professor, my grandfather, practically illiterate, but with the wisdom that comes with the years, used to tell me: “it is not the richer who has the most, but the one who needs the least.”

What both wise men are referring to is that the consumerist tendency leads to raising the level of expenses in the same proportion as that of income. In other words, if you earn 1,000 euros, you will need 900 euros to get ahead, but the tendency when you earn 10,000 euros is to look for expenses that add up to 9,900 euros. On a different scale, but you are the same.

The key: reduce unnecessary expenses. One of the keys that Brooks gives in the publication TheStreet, is to avoid financial mistakes and reduce bad spending habits. One of these bad habits to eradicate is expenses. ant: those small amounts of just a few euros per month that, without realizing it, turn into hundreds of euros per year. It’s like having a torn pocket through which money slowly falls out.

Don’t make financial mistakes: lose money. The economics expert also focuses on the financial risk posed by credit cards and, even more so, consumer loans. According to the expert, take out a consumer loan to go on vacation or finance a bigger car than you can really afford. They are goods (sometimes intangible) that cannot be amortized, so those who ask for them are impoverished.

Brooks has the same regard for credit card abuse. Some act like debit cards that allow you to group expenses to collect them at the end of the month without charging interest. This formula, although it does not add interest, generates a false sense of security that must be taken into consideration when settling accounts to avoid generating overdraft balances.

The expert recommends avoiding deferred credit card payments at all costs because, here, a percentage of interest is applied to the collection. Again, they are toxic formulas for finances.

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