So, I’ve been pondering: what is the money/happiness equivalent of making your bed? That is, what is a simple way people can use money to make themselves happier?

I think the soundbite answer is “Treat a friend to lunch.” If I get more words, I’d say “Make plans to treat a friend to lunch next week,” but probably “treat a friend to lunch” sounds better. Planning fun experiences in advance heightens our enjoyment of them because we savor the anticipation (indeed, we enjoy it almost as much as the experience itself!). Humans are social creatures, and we love spending time with people who are close to us. Lunch with a friend is an investment in your social network. Food is enjoyable too. In studies of how much people enjoy different aspects of their days, it’s right up there with sex. As for treating? Spending money on other people is highly correlated with happiness. And if you treat a friend, she’ll probably reciprocate, which means you’ll get to have your fun twice.

There are other ways to buy happiness, of course, but I think this is a good start.

What expenditure always brings you happiness?

Income inequality has long been with us, but it has seldom been talked about as much as in this election cycle. Last fall’s Occupy Wall Street movement introduced us to the 99% vs. the 1% paradigm, and in his State of the Union address, President Obama warned of settling “for a country where a shrinking number of people do really well, while a growing number of Americans barely get by.”

Does inequality matter?

Polls find that few consider it a top issue. Asked by Gallup what worries them the most about the economy, people list jobs and the national debt far above the gap between rich and poor.

Of course, people might be fooling themselves — a position some pundits and economists have taken. Plenty of research finds that humans view life according to where we land in the heap.

But if you think about it, this suggests a path to boosting happiness that perhaps seemingly oblivious Americans have already walked down. If happiness stems, in part, from where we stand in our reference group, why not change reference groups? Choose the right reference group, and you can have any status you want — and coming out on top is easier than you might think.

Can money buy happiness?

As often as we remind ourselves that money can’t buy happiness, science is fairly clear that the human brain has evolved to seek and defer to status. Perceptions of wealth play a key role in that. Some Dutch researchers once set up an experiment in a shopping mall where a woman asked passersby to answer survey questions. Shoppers were four times more likely to stop when she wore a conspicuous designer label than when she didn’t. In a now famous study by economists Sara Solnick and David Hemenway, people were asked whether they’d prefer to earn $50,000 in a situation where others were earning $25,000, or earn $100,000 when others earned $200,000. Half of people chose the first situation, even though $100,000 is — objectively — more than $50,000. You could do a lot of ego-soothing for that extra cash. But humans are social creatures. It is not enough to be well off. We want to be better off than other people.

One can argue whether that’s rational. But if it’s true, then it’s critically important to choose the right reference group. And here is where things get tricky. Because who, really, is my neighbor? I can compare myself with Mitt Romney and feel poor. But I don’t know Romney. So why would he, and people like him, be the right reference group?

It’s a good question. It might be human nature to compare ourselves with those who have more, and thus feel as if we’re somehow behind — that if we’re comfortable we should be millionaires and if we’re millionaires we should be billionaires — but it’s just as easy to compare ourselves with those who have less. Indeed, it’s easier, because there are a lot more of them.

As of October, there are now 7 billion people on this planet. In a globalized world, that’s as reasonable a reference group as 300 million Americans. After all, we keep hearing that we’re competing for the same jobs. With that as a reference group, a quick calculation would find that anyone reading this is most likely among the world’s wealthiest 10% (700 million). The median net worth of the world, according to 2011 statistics from the Credit Suisse Global Wealth Report, was about $4,200 per adult. The median net worth for adults in the USA was almost $53,000.

Put things in context

Of course, if that makes you feel rich, why just limit the reference group to people living now? Centuries ago, King Louis XIV, with all his riches, didn’t have access to the antibiotics, vaccines or modern dentistry that we take for granted. The Population Reference Bureau estimates that in the 50,000-plus year course of human history, about 108 billion people have walked on this planet. During much of this time, people died of illnesses we now shrug off. Childbirth was perilous. If we worry about obesity rather than starvation, and worry about it in the comfort of our heated houses, we have it pretty good. Good enough to be among the 1.08 billion most comfortable people ever to have lived? Perhaps. Being born in the past 80 years or so, knowing how to read a newspaper, and living in a society that allows it amounts to winning the lottery of human history.

To be sure, that doesn’t mean life is perfect. A rich country like ours can certainly do better than an 8.3% unemployment rate. But perhaps the reason Americans don’t express more concern about the gap between rich and poor is that people know, though times are tight, they could be tighter — and are, in much of the world. With the right reference group, we can all be in the 1%. It’s a choice. Look at a few people and feel poor, or look at most of humanity and feel rich. If we want to feel blessed, rather than unhappy, the right answer is pretty clear.

Laura Vanderkam, author ofAll the Money in the World, out on March 1, is a member of USA TODAY’s Board of Contributors.

Those of you with preschoolers may know just how big a deal this is. “Dr. Scott, the Paleontologist,” is the scientist who comes on between cartoon segments on Dinosaur Train (a PBS Kids show). He talks about different kinds of dinosaurs, and other prehistoric creatures, and how we know various things about them. He always ends with “get outside, get into nature, and make your own discoveries!”

Anyway, he was in Philadelphia for some live events at the Academy of Natural Sciences. Hauling little kids anywhere is always vaguely traumatic. I couldn’t find parking, so I was circling around downtown Philly’s various small streets, eventually parking in a lot. I took a ticket with a magnetic stripe, then managed to fold it in my pocket, so it wouldn’t read afterwards in the machine or at the gate. I had to back my car out of the gate, run back to the hut to get the lot attendant, with the kids strapped in the car… ugh. But Dr. Scott! He told us all about various dinosaurs, and showed us clips from Dino Train, and then the kids got to meet him and take a picture with him afterwards. My 4-year-old found this a bit odd. How could Dr. Scott be on TV and talking to him?

But even if he found him odd, he did what he said. We came home and that afternoon, we played “finding fossils” outside for quite a while. Several rocks from our walk way turned out to look like T-Rex teeth. A stick that was bent at an odd angle became a fossil of a pteranodon wing (and shoulder-like hinge). We did, in fact, get outside, get into nature, and make our own discoveries.

I know there’s plenty to lament with TV, and how much of childhood these days is spent in front of a blue screen. But we never would have bothered to go be preschool groupies for Dr. Scott if we hadn’t seen the show. And in this case, a TV show encouraged us to go play scientists. So I’d list that as a mitigating factor in the sentencing of television for all that ails us.

(cross-posted at Gifted Exchange; photo courtesy flickr user timsackton)

Welcome to everybody! Please take a look around, read through the Best Of posts for a quick tour, and if you are interested in buying All The Money In The World, we’ve received some emails that Amazon is shipping the physical book now. The official release date is March 1, but I’m not J.K. Rowling, so it’s not exactly embargoed! The Kindle version, however, won’t be sent until the book is officially on sale. If you’ve received an email from another retailer that your book has shipped, please let me know, so I can mention that as well. 

I’ll be back later today with a real blog post.

But anyway, I’ve been thinking of this topic lately (thanks to some posts over at Wandering Scientist) in light of money. Namely, can money buy you a calmer blend of work and life? In what ways can money make being a working parent easier?

What I find most interesting about this is that it seems to follow a bit of an upside-down U-shaped curve in terms of the greatest stress about the topic. Here’s the reason: Money can buy you all sorts of things. But in pursuit of it, many people move away from extended family, who are often key to making things work without copious volumes of money.

We’ll picture a few different families in this post. First, let’s think about Jane. Jane is a single mom and has worked in a variety of low-paid jobs. She has two kids. This is a highly stressful situation. On the other hand, she lives in the same neighborhood she grew up in. She has an aunt who can watch her kids after school, and a cousin who lives with her from time to time — a somewhat taxing situation in its own right, but one that at least gives her a live-in sitter who makes sure the house doesn’t burn down while the kids are watching TV. The kids stay at their grandmother’s house on a regular basis too. So Jane makes it work. Most of the time. She doesn’t have paid sick days and she gets her pay docked when she’s late to work, which she’s certainly been when the school bus has been late, but since she doesn’t expect life to be easy, Jane has never uttered the phrase “work-life balance.” Indeed, if you ask her what she’d do with extra time, she says she’d get another job.

Then we have Kim and Bob. Kim is a school secretary and Bob works in construction. Bob works longer hours in the summer, but Kim has some time off then. Kim’s hours also closely track the school calendar. Let’s say they each work about 35 hours a week on average. When the kids were younger, they used a home daycare provider in their neighborhood three days per week. Bob’s mother watched the kids two days a week, and continues to pinch hit when necessary — like if a kid is sick. Or if Bob and Kim want to go out for the evening. They’re solidly middle class, and paying for day care ate up a big chunk of their income for a few years, but now that the kids are in school, they don’t have many expenses in this regard, and they have back-up to cover all kinds of emergencies (and fortunately, Bob’s mother is pretty sprightly).

Now let’s look at Stacey and Robert. He’s a lawyer and she’s an executive at a biotech company. They earn a bit above $200,000 between the two of them and have a 3-year-old and a 1-year-old. The challenge? His hours are unpredictable and she has to travel to her company’s other site in London multiple times per year. They moved to Boston for these jobs, but have no family around. They can’t do daycare because neither can be absolutely sure they can pick their kids up by 6, and if she’s out of the country and he’s at a client’s office somewhere else, everything gets out of whack. They have a full-time nanny — their second in two years because the first one quit due to too much unplanned overtime. They have some sitters they call in a pinch, and a cleaning service that comes once a week, but between all this (and high taxes in urban areas) they wind up living on a lot less money than their high combined salaries would suggest. Once, when Stacey missed her flight to London because Robert was out of town and the nanny called in sick last minute and she couldn’t get either of her other sitters to come (and stay overnight – the kicker) and then she took the kids to the park and got a phone call from the police because the cleaning service came but it was a new crew and she forgot to tell them she’d changed the code on the alarm (one of those “mental load” problems)… she broke down crying and started screaming to a friend about work-life balance and her lack thereof.

Then we have Christina and John. John is a professor at a small liberal arts college and Christina runs a successful investment fund. She took home $3 million last year. They have three children. Because she is a sensitive woman, she takes great pains not to indicate in any way, shape or form that she doesn’t think her husband’s job is as important as hers. So she’s decided to set their household help schedule based on her work, not his. They have three nannies, the most senior of whom acts as a household manager, coordinating the other two’s schedules, and that of the housekeeper who comes every afternoon to clean, do errands and cook dinner so it’s on the table at 7 pm, when Christina likes to eat with her children on the nights she’s home. At her fund, Christina is looked up to by younger women who ask how she does it. Christina also speaks at women’s leadership conferences about work-life balance a lot. But the talk is mostly about how she manages to leave the office by 6:30 three days a week which, if you think about it, needs to be viewed from the perspective that Christina runs the place. And she hasn’t emptied the dishwasher in six years.

Of all these families, Jane would, objectively, have the most reason to fret about work-life balance. She worries about a lot of things, but not that she’s working too much. Kim and Bob also don’t earn enough to afford a lot of help, but because of her regular hours and his extended family nearby, they do OK. The families you’ll hear talking about it? Christina talks about it from a sheer logistics perspective. She has built her home life team to the same exacting standards as her business. With both, she talks about the importance of hiring good people. But you’ll probably hear the most fretting out of Stacey and Robert. They earn enough to have very high expectations of how their life should be, but don’t earn enough to have it truly be seamless.

So I’d put it this way: money can, indeed, buy you a calmer life as a working parent. But for couples in certain lines of work — especially if one or both parties has to travel a lot and has irregular hours — it takes a lot of money to approximate the extended family or tight social networks that people often lose when they move in pursuit of highly paid jobs. That apex of the work-life-stress curve is where you hear a lot of howling, annoying as it often is to hear this from people who appear to be doing quite well for themselves. 

Over at CBS MoneyWatch, my big post for the week was “What selling Girl Scout cookies teaches you about business.” Some troops have been forwarding this one around. I learned all kinds of things about setting goals and how cold-calling isn’t as awful as it sounds through a scouting stint a few decades ago. Please share!

I also posted “Why you shouldn’t make big decisions after 3 p.m.” Not only is willpower diminished at that time, an analysis of Twitter feeds published in Science this fall found that words like “annoy” peak then. In the early mornings, we’re more likely to use words like “amazing.” (Though, seriously, if you’re on Twitter during this productive, optimistic time…get off! Get some work done!)

And finally, I tell readers about “Mastering the art of practice.” There’s all kinds of literature about boosting productivity out there, but I think the best way to do things faster is to get better at what you do. The more time I spend writing, the faster I can crank out articles when I need to. People who practice speaking a lot learn what works and what doesn’t. It’s the same with many other skills.

As always, I appreciate a click, a comment and a share.

In All the Money (#allthemoney) news:

• Mint.com quotes me in a story on “The time value of money vs. the money value of time.” This is a fascinating topic. A father writes of taking the week off from work to help out with his daughter’s school library fundraiser. The kids raised $150 for books. Of course, if he’d done any work that week, he would have earned more than $150, which he could have donated to the library. Did he make the right call? Would there be some way to split the difference?
• Meghan MacDowell has a piece over at Levo League called “Not a Long Con: Redefining How Gen Y Thinks of Job Hopping” which quotes me extensively. I’m cited as the author of Grindhopping: Build a Rewarding Career Without Paying Your Dues, which was my first book, and one I maintain a certain affection for.
• Catherine Gillespie of the A Spirited Mind blog sent me her review of 168 Hours. Nice! Gillespie turns out to be homeschooling her children while working, an interesting subset of homeschoolers that I’d like to write more about at some point when the book craziness is over.

Around the web:

• I’ve been reading a blog called Squirrelers. One of the blog’s “Best Of” posts is about calculating one’s wealth in terms of “months of covered expenses.” This is actually how I’ve long thought of my financial security. How long could I go with no money coming in? I’ve learned that my comfort level requires a fairly high number of covered months. Ideally, more than my natural lifespan. Yes, it’s like I grew up in the Depression or something.
• Over at Grumpy rumblings of the untenured, NicoleandMaggie write about the joys of big bookcases. They also claim it’s a horrible new year’s resolution to get rid of books. I sympathize. We just built a huge bookcase this fall, and the major upside is being able to see all my books and rediscover some of them.
• If you’re into wonky blogs, Avik Roy’s Health Care blog should provide some light reading. I’ve also been told to check out Ricochet.com, so I’ll report back if that’s worth reading… 

(photo courtesy flickr user Marit & Toomas Hinnosaar)

(photo courtesy flickr user flotsyflotsam. Lattes buy me happiness for under $10!)

I headed over there. I was ordering a drink at the bar when a gentleman started talking to me about the Irish authors painted on the wall. “Now, James Joyce — what did he write?” he asked.

I have no idea why he asked that question — quite possibly one of the world’s strangest pick-up lines, but one that had me babbling on about various aspects of Ulysses and Portrait of the Artist as a Young Man. We talked for a while, then the crew moved over to the club next door. I had just enough cash in my wallet to take a cab home, so I begged off. As I was heading out, I saw him looking back at me like “you’re leaving?”

The next day, the word came through Jen that James Joyce man had asked for my contact information. She had figured out a few things about him — he was older, relatively senior at the firm, but rumored to be a bit of a player, so I should be careful. He and I got in touch and met for brunch the next weekend. It was a good brunch, though nothing earth-shattering. Afterwards as we stood on the street, he announced that he was going to the art museum. He didn’t ask if I wanted to go with him, so I said something along the lines of “ok, have fun!” If he was a player, I didn’t want to seem too eager, right?

He was persistent, though. The next weekend he asked me out on a mystery date. He picked me up in a car (a strange thing in New York) and took me out to the New York Aquarium at Coney Island. We checked out the sharks and the turtles, and then walked along the very cold beach. After, we went out for margaritas. I remember thinking that I was actually having a really good time talking to him. I was on a date and I was enjoying myself. Good sign, right?

Apparently, the feeling was mutual, because the next weekend he took me out to Aquavit (the restaurant) — quite possibly the swankiest restaurant I’d ever been in at that point. Goat cheese ice cream? We had the chef’s tasting menu plus beverage accompaniment. We went to a bar afterwards and then he asked me if I wanted to meet his parents.

His parents? Yep, he said his parents were staying with him that week, and so I went back to his apartment wondering if this was an incredibly inventive way to get me back to his place. But they were there. They were nice. By this point, it is possible my date was a bit inebriated. He told his parents we were engaged, and then as he was putting me in a cab to leave, he stood there on the sidewalk yelling “I love you!”

Perhaps it was the booze talking, but it all turned out to be accurate, if premature. We got engaged on February 15, 2004, and got married a few months after that.

Sometimes I think it’s good, in life, that we don’t know ahead of time what little decisions and moments will turn out to be so life-changing. If I hadn’t gone to my second bar of the night that February 15, 2003, my life would be completely different. As of that afternoon, I thought the most out-of-the-ordinary thing that had happened to me that day was seeing Al Sharpton on the street when I went to watch the anti-war protests (remember those?) that morning. I smiled and waved because I thought I knew him from some where. The mind does that when you see famous people. He gamely smiled and waved back.

Little did I know I was hours away from meeting the father of my three children.

Of course, if I had known that, that would have been quite an odd scene in the bar.

So anyway, that was 9 years ago today. I think about that each year on February 15 and remember just how random life is, and how fortuitous it was that I decided to go to Boxers. Which, incidentally, closed down a few years ago. But we’re still going strong.

In other news:

• Rachel Emma Silverman over at the WSJ looks at the Executive Time Use Project. Most fascinating to me? The typical workweek she breaks down in a pie-chart is 55 hours. Not 80. These are CEOs we’re talking about! More evidence that people who claim to be working 100 hours a week are, generally, lying.

• I am currently scheduled to do a live chat with the WSJ at 1pm eastern today on time management topics. I’ll try to circle back and stick a link here but you can check Twitter for more updated info (not following me yet? @lvanderkam). NOTE: Chat moved to Wednesday 2/22. More to come next week.

• Do you blog? Would you like to blog about All the Money in the World? Shoot me an email and I can get you a PDF pronto (physical books will take a little longer, of course!)

• Wandering Scientist has been doing a few posts about the issue of “mental load.” In couples, who thinks about logistics and details? You can take turns calling babysitters, but who knows when babysitters need to be called? Good stuff.

• There will be a pre-order incentive hitting in-boxes tomorrow if you’re on my newsletter list. I’ll post it here as well.

(photo courtesy flickr user Carlos Luna)

If you keep asking these questions, over time, you can start to ascertain what has a high utility function for you. The reason to do this is that knowing what makes you happy can help you make better financial choices. We waste a lot of money doing things we think will make us happy, but don’t. Better to use that money on things that actually will get you closer to the life you want.

So what falls into my do-not-spend bucket? After thinking about this topic for the past year or so, I’ve got a few ideas.

First, there’s “clothes I got a deal on.” There’s something psychologically satisfying about getting a bargain, or at least thinking you have, but I read recently that much of J.C. Penny’s merchandise was sold at around 50% off. Clearly, for many stores, a “bargain” is no such thing — it’s part of the company’s strategy. For years, I’ve bought cheap shirts or shoes, and then seen them sit in my closet. It’s not a bargain if you don’t wear it. So I have pretty much stopped shopping for clothes. I borrowed maternity clothes for this last pregnancy. Despite my handbag sporting ink stains, I plan to keep using it until I find a new one I truly love (Zappos is helping this by having their little ads follow me around the web — showing the handbags I’ve clicked on. Curse you, targeted marketing!) I’ve kept repairing a pair of sandals I love rather than buying new ones.

I never buy lunch unless I’ve got a lunch date with a friend. Leftovers work fine. I don’t order pizza much anymore either. DiGiornos tastes as good to me as Dominos, and it’s cheaper.

I don’t buy soda. I’ve realized I don’t actually like it. Diet Coke gives me the hiccups.

I find fancy salons a wee bit creepy. So I’m quite happy with this place I found that charges $23. I can be a big tipper and it still doesn’t come close to what I was paying in New York.

On a much larger note, we realized we weren’t getting enough out of our NYC taxes to justify living there. So we moved, thus saving a bundle there.

But there are also things I’ve decided are worth spending more on. I love eating out in intriguing restaurants — one reason we ate at Sbraga in Philly for an early Valentine’s day dinner (it also helps that a friend is a part owner; I like supporting my friends’ businesses!) I love art, so that date included a stop at the Philadelphia Art Museum to see the Van Gogh exhibit. Our art museum membership definitely has a higher utility function for us than spending the equivalent amount on Valentine’s day presents for each other. I’m going into NYC soon for a concert that features a world premiere of a Mohammed Fairouz work performed by the Young New Yorkers’ Chorus. I know that hearing live choral music, particularly that no one has heard before, makes me happy. It definitely makes me happier than spending, say, the maximum amount that various calculators would say one could spend on a mortgage.

I realize that we live in tight times and many people don’t have much choice about where the money goes. But plenty of people do have choices. I think that part of being good stewards of our resources is being mindful of them. It’s an ongoing process — like teaching myself to stay out of Target — but a worthy one nonetheless.

What’s worth the money for you, and what is not?

(photo courtesy flickr user epSos.de)