A recent Ally Bank Survey showed how saving money could help make you happy. Spending money, though, can also bring you joy — as can giving it away, asserts author Martha Beck.

The trick, says Beck — a life coach and monthly columnist for O, The Oprah Magazine — is knowing when to spend. Make the wrong choices, and you’ll merely deplete your savings — which can make you unhappy.

Here, Beck tells Straight Talk how to turn money into happiness.

Plotting the Matrix

It can be tough holding onto your hard-earned dollars when there’s so much temptation out there. “Everything around us is designed to attract our attention,” says Beck. “Shiny things, sparkly things, edible things. Advertising, marketing — the whole culture is geared to make us think we need and want stuff.” Most people, Beck adds, spend a fair percentage of their income on things that are unnecessary and unfulfilling.

The key to taming your spending, Beck says, is to take an honest look at what you really need and/or want. Beck asserts that putting cash toward something you absolutely need is a no-brainer, while laying out money on things you “really, really want” can make you happy.

To help you gauge whether to spend — and how much — Beck urges you to plot a potential purchase on a two-by-two matrix, set up as follows:

  • Upper-Left Box — Really Need/Really Want: Anything that you both really need and really want gets plotted in the upper-left quadrant of the matrix. For those items, you can allow yourself to spend top-dollar. “Get the absolute best possible,” Beck advises.
  • Upper-Right — Really Need/Don’t Really Love: This corner is reserved for anything that’s a necessary purchase — but which doesn’t delight you. Here, spend only as much as required. Beck suggests you save as much as you can here.
  • Bottom-Left — Don’t Really Need/Really Love: Non-essential items — that send you over the moon — go here. This is where Beck gives you permission to spend the rest of your disposable income.
  • Bottom Right — Don’t Really Need/Don’t Really Love: Anything you don’t need, and which you find less-than-irresistible, goes here. Never spend money here, advises Beck — regardless of how low-cost the item or how great the deal.

Spending and Unhappiness

The obvious downside to spending unwisely is having less money to put toward a more enriching life. But Beck notes there are other ways in which poor spending habits can make you unhappy.

“I think you only need to watch one of those shows on the Discovery Channel about hoarding,” says Beck. “You end up poor and suffocating on things you don’t really need and don’t really want.”

Beck explains that spending can become an addiction. “You tell yourself, when you get that yacht or Rolls Royce, that you won’t need to get anything else. You feel contentment, but it’s very transitory. Then you have to live with the aftermath of addiction, which results in no money and an over-cluttered life.”

One way to avoid undesirable purchases is to spend only when truly inspired. Going on a shopping excursion — with the goal of buying — isn’t the best way to find something you’ll really love. “If you go out on a shopping trip hoping love will come your way, you’ll very likely go for the mediocre,” Beck says. “It’s like going to a singles bar hoping you’ll meet the one.” Instead, Beck urges you to wait patiently until the real thing comes along.

Saving and Happiness

Agreeing with the results of our Ally Bank Money-and-Happiness Survey, Beck believes saving money can contribute to happiness. “We really do have a deep primal thing that says, if you have enough food stored for the winter, you can relax,” Beck says.

Unfortunately, Beck believes, our culture has become too fixated on collecting more and more stuff. “People just blow right past that idea of, ‘Wow, if I just had a lump of money in the bank or invested, that would give me such a feeling of freedom or joy.’ In the long run it’s actually much more blissful to take care of yourself, and saving money is taking care of yourself. You’re actually spending it on you and on your future.”

Giving Back and Happiness

There’s one type of spending that Beck generally approves of all-around, and that’s spending to give back.

“Allowing other people to experience joy — that’s where I get high,” she says of giving to charity. “It’s like watching your kids opening presents on Christmas morning and having them think it came from Santa. There are no strings attached because they think Santa gave it to them. Being Santa Claus all year long is the best purpose for money.”

How do you tell the difference between the things you really need and want and those you don’t? When does spending make you happy?