Have you ever gone through that exercise whether verbally with someone else or in your head, where you work out how you would spend a lottery win?

My wife and I like to compare what cars we would treat ourselves too. It used to be Aston Martins but now Jaguar would do well out of us because I really like the F Pace and my wife is an admirer of the F Type. We'd also take time to travel more (with our children, of course) but also give a significant proportion away to family and those most in need. As we don't actually play the lottery on the face of it, it's a rather futile exercise except that it does have the benefit of helping us see what is important and what we value in life.

I wonder if you, like I do, succumb to the mistake of seeing someone in an expensive car or with a big house and assume they are rich/successful/happy. Just me?

Because of course, they may not be. They may have their spending priorities wrong and be up to their necks in debt or using material purchases to counteract unhappiness or gaps in their lives: "If I can get X, then I will be Y". But as Jamie Smart explains in his book, Clarity, this backwards thinking traps us in a spiral that can be hard to get out of. You get the nice car or the big house but find the emptiness isn't filled, so you chase the next material thing that will make you happy.

We've got friends who've admitted to being in this trap. I don't believe it is limited to London and the South East, nor that everyone living in London and the South East is unhappy and unfulfilled but it does appear to be more commonplace there.

I have no empirical evidence to back this up but my hypothesis is that because London and the South East has a higher proportion of larger companies, paying larger salaries they expect more from their employees in terms of time commitments and pressure to perform. So the rewards employees give themselves for the time they spend at work, commuting (ever been on the M25 during rush hour?!) and dealing with emails at the weekend tend to be material.

The problem is, whether you are driving a BMW or a Toyota Prius, the commute is still the same. And whether you have 3 bedrooms or 5 with an acre of land; you can't enjoy it if you are not there or stuck on the emails when you are.

So, how can you make sure you are using your money in a way that makes you happy?

First of all work out what makes you happy.

Ask these two questions of yourself and with your partner too if you have one:

1. If you were to repeat a major purchase that you have made in your life what would it be?

2. If you were to get a refund for a major purchase that you have made, what would that be?

My guess is that answer 1 would be some sort of experience you have had. Perhaps a holiday, a special meal or an event that you went to. Mine would be the five-week trip my wife and I took to Hong Kong and New Zealand.

For answer 2, unless you were really unlucky and had a bad experience I bet your answer is a material possession. We've probably all had that poor post-purchase experience when we have spent good money on something we quickly decided we didn't want or need.

This belief is backed up by research covered in a book, Happy Money, by Elizabeth Dunn and Michael Norton, in which they look at various studies of people from all walks of life around the world to see how we can use money in ways that make ourselves happy.

In this meta-study, Dunn and Norton found that happiness comes from using money to:

• Buy experiences. People who spent more money on leisure reported significantly greater satisfaction with their lives

• Treat ourselves. Making something a treat is far more enjoyable than experiencing it regularly. As we tell our son: if he had Christmas every day it would soon become less special.

• Buy time. For the time-pressured, spending money on services that create time (a cleaner or gardener) can have a demonstrably positive effect.

• Pay now, consume later. The deferral of the experience is more enjoyable knowing it is coming up and has been paid for rather than paying for it and experiencing it at the same time and, worse: have now, pay later. Compare the feelings and emotions of the forthcoming holiday to the receipt of the post-Christmas credit card bill to know what they are referring to.

• Invest in others. Whether it is family, friends or those in greatest need, charitable gifts have a direct and immediate effect on our happiness. And, can make us feel wealthier than we are.

• As found by Mihaly Csikszentmihalyi on his work on finding how people can achieve a state of flow in their lives, staying focused on the present moment is beneficial for happiness. What is more, whether an activity is pleasant or unpleasant, people are happiest when they stay focused on it.

Research also bears out what I have covered before in the secrets to a successful retirement: the presence of a loving relationship, being part of a community, living with a purpose, being fit and healthy as well as the peace of mind that comes with financial security are the factors needed for a successful retirement.

Money can help provide financial independence, but only if used in ways that are appropriate and consistent. If you would like to discuss how you can use your money appropriately contact me for an initial conversation.