How To Make The Most Of Your Tax Return | Men's Health Magazine Australia

How To Make The Most Of Your Tax Return

Rue du Faubourg Saint-Honoré is a narrow, mile-long thoroughfare lined with boutiques like Chanel, Prada and Cartier. It’s the most fashionable street in Paris, the most fashionable place on Earth. It’s where travel budgets go to die – happily.

 

On holiday with my wife last autumn, I landed in the street’s Hermès flagship store. Normally I’m a frugal guy. My purchases are largely utilitarian. But I’d just capped off a banner year at work and it felt empowering to waltz into one of Paris’s most exclusive boutiques to treat myself to a bonus in the form of a $200 tie. I spent half an hour perusing the colour-coordinated wall of neckwear, settling on a fiery-red pattern stamped with sky-blue running shoes set into an elegant matte finish. The slim piece of silk was hand-stitched and soft as a feather, and it formed a dimpled knot with little effort. That tie has become my signature adornment for any significant occasion. I simply feel more successful whenever I wear it.

 

Now, even if you don’t share my affinity for Hermès neckwear, there are surely similar things that you covet. Acquiring those things can make your life just a tiny bit better, especially when you know their value. Example: in a taste-testing study, participants ranked wine they believed to cost $90 as superior to wine they thought was $10. The thing was, they were tasting the same wine each time. The high price, it seems, improved their enjoyment.

 

Of course, you’re familiar with the other kind of purchases, the ones you wish you could take back. Maybe it’s a $300 jacket you only wore once, or a $30,000 boat that sits on a trailer in your backyard. It makes you wonder: are there rules for planning a smart purchase? Guidelines that guarantee every fiscal sacrifice will elevate your life? Well yes, in fact, there are.

 

Thanks to the largesse of the Australian Taxation Office, you may soon find yourself the recipient of a financial windfall. So it may be an appropriate time to talk about the ways in which you part with your hard-earned tax refund. But before you pull out your wallet again, consider what the world’s top researchers can tell you about buying a better life.

 

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Invest in Your Future Memories

The most straightforward way to convert dollars to pleasure is to spend them on travel, adventure or events, says psychologist Dr Thomas Gilovich. “Every financial investment that you make in an experience keeps on paying dividends once that experience is over,” he says. You retell the stories to colleagues, reminisce with the people who were with you and think back on them when you find yourself in a particularly banal moment. And unlike most material purchases, experiences are completely unique to you. After all, thousands of people have the same TV or car you have, but nobody has your specific memory of that Airbnb room in Istanbul. “Although material goods physically last longer, the happiness they provide fades,” says Gilovich.

Even experiences that haven’t happened yet can bring you happiness. In a 2014 study, Cornell University researchers asked people to describe the feeling of waiting for an experiential purchase or a material purchase. The result: anticipating an experience brought significantly more feel-good mojo. So book a cheese-making class instead of buying a fancy cheese board, or pick up concert tickets instead of new speakers.

Gear Up for a Life of Adventure

So should you stop buying physical things? Live like Pope Francis? Well, that’s not going to happen. And anyway, it’s not necessary. Despite Gilovich’s research, not all stuff is junk. Some of it can make your life better.

Consider a study published in 2014 in the Journal of Consumer Psychology: objects that make future experiences possible, the researchers found, provided a level of delight similar to that of the experiences themselves. As long as you plan on using them, things like musical instruments, hiking boots or a unicycle (no judgment here) can make you happier. This is likely because these items bestow a feeling of competence, and they sometimes help you participate in experiences that will connect you to others, says study author Darwin Guevarra.

For instance, a $1500 bike will probably make you happier than a $1500 watch. The watch is a status symbol, while the bike lets you imagine yourself taking long rides over winding country roads with a group of friends. Or maybe you even envision the finish line of your first 100-kilometre ride. Regardless of whether you ever hit that century target, striving towards it can make your life feel more purposeful.

Anchor Your Best Days

Where does my Hermès tie fall on the happiness spectrum of purchases? Should I have spent that money on a boat ride on the Seine instead of some fancy neckwear? I don’t think so, because every time I wear that tie, I’m transported back to Paris. I’m strolling that fancy street, acting like I belong and looking $200 flashier at dinner with my wife later that night.

“Every time you wear your tie, you can still feel that excitement,” says Dr Ryan Howell, a co-founder of the consumer spending site Beyond the Purchase and Guevarra’s co-author on the spending study. And therein lies the second way that material goods can bolster your experience of life: they transport you back to the exceptional moments in which you bought them. They’re artifacts of your good life.

In that sense, it’s less about the item than it is about the memory it conjures, says Howell. An expensive bottle of pinot noir is going to taste a hell of a lot better if you buy it at a Tasmanian winery rather than if you bring it home from the local bottle-o. And a piece of art will look better on your wall if you buy it during a vacation to Buenos Aires instead of on eBay on a lonely Friday night.

Spend Big – But Only When it Counts

The truth is, I’d go broke if I dropped $200 every time I wanted a nice souvenir. And according to Howell, I shouldn’t waste my money on every small upgrade I can afford. “Middle-grade acquisitions” do little to budge the happiness needle, he says. “Upgrading from a $5 bottle of wine to a $15 bottle won’t bring much extra pleasure. You have to go big.” Before you do that, ask yourself two questions:

1. How memorable does this moment really need to be? The more likely you are to want to retell the story a decade from now, the better off you are dropping some coin.

2. Is the difference between affordable and expensive significant? “Moving 10 rows from the nosebleed seats is not likely to change how memorable the game is,” says Howell. “But moving to the front row – that will stay with you.”

Granted, most of us will have to do plenty of time in the cheap seats before we can afford the front row. And that’s okay. “You should stay thrifty until you decide to do something memorable,” says Howell. In other words, try to keep most of your expenses low so that when you occasionally choose to drop $200 on a tie in Paris, you’ll still feel good about it.

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3 things you should never skimp on

Shoes That Shine

People can make fairly accurate assumptions about you by checking out your shoes, University of Kansas research reveals. So send the right signal: opt for real leather and stitched soles. “Once they start to separate, glued soles are done,” says shoe designer Justin Fitzpatrick. “Stitched soles can be replaced.”

Skinspiration

Pricier grooming products generally contain higher concentrations of active ingredients, says stylist Diana Schmidtke, whose clients include George Clooney and Matt Damon. “So you’ll end up using less per application.” The bargain brand, on the other hand, is more likely to deliver scents and fillers that do little to truly help your skin.

Your Next big Trip

We’ve known for years that frequent vacations can reduce your risk of heart attack by about 30 per cent, and in a 2013 Uppsala University study, researchers found that antidepressant use declined as workers spent more time away from work. So yes, your week in Port Douglas is a necessary investment. It’s an investment in your health.

By Mens Health Staff

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