Lifestyle

Money Can Buy Happiness – If You’re Spending it Right

I know it’s cliche, but I think that it’s pretty evident by how many sad rich people there are in the world that money can’t buy happiness. Those that are poor likely think money would in fact make them substantially happier – but it seems to come down to what you’re spending that money on that really matters. Two Harvard professors did an intense study on the subject and published the results in their book, Happy Money: The Science of Smarter Spending. According to Elizabeth Dunn, one of the authors, the issue seems to be  that “people mispredict what will make them happy, how happy it will make them, and how long that happiness will last.”

Money can buy happiness, and it comes down to these basic rules:

  • Buy Experiences (research proves that material purchases are less satisfying than shared experiences)
  • Make it a Treat (limiting access to your purchases keeps you appreciating them)
  • Pay Now, Consume Later (delayed consumption leads to increased enjoyment)
  • Invest in Others (spending money on other people makes us happier than spending it on ourselves)

Spending on experiences

We’ve all done it. We’ve all gotten super excited about a big purchase, just for it to become not so exciting a week or two later. Even worse, we have buyers remorse because we realize it didn’t make us as happy as we were anticipating. Stuff generally wears down with time, or becomes outdated – and with that our appreciation of the items lessen. The authors point out that people adapt to things faster that don’t change, such as material objects, but experiences offer more novelty and variety – creating memories that last a lifetime.

Furthermore, if you purchase lessons or diners and vacations with others, the social connections that you make results in feeling happier, as opposed to having a new TV that you spend hours in front of alone. Even more, experiences become part of our identity. When it comes down to it, we are the sum of our experiences and not the sum of our possessions.

experiences make happy

 Make it a treat

It’s like anything in life – if you indulge in a purchase all the time, it becomes routine and you enjoy it less. Cut your daily latte down to twice a week and I guarantee it will make you much happier. Make something more novel and boom – you get more happiness out of it.

Delayed consumption

You know how when you book a vacation, you seem to spend that entire month or so leading up to the vacation in a better mood? Having experiences to look forward to also brings us increased happiness. It’s kind of like how excited we get about wrapped presents under the christmas tree – that anticipation to tear them open makes them that much more enjoyable. Bill pay up front may hurt in the moment, but it will end up enhancing every subsequent moment. Don’t let the immediate gratification that credit cards bring ruin how much you will really enjoy your purchase – especially when it comes to things like vacations. Why worry about the money you’re spending on your trip? Pay and get it out of the way so you can enjoy it.

Spending on others 

This research has proven that people benefit much more from spending on others than on themselves. Dunn and Norton urge that the benefits of giving are highest when givers feel that giving is their own free choice, when they feel personally connected with the recipients, and when they think that the gift will have a real impact. We are all programmed to be highly social, and therefore it makes sense that much of our happiness is dependent on the quality of our relationships. Dunn adds, “almost anything we do to improve our connections with others tends to improve our happiness as well, and that includes spending money.”

So if you’re deciding if you should buy a new couch or go on a nice vacation – you know which one will likely make you happier for longer. Realize that the way you’re spending your money can greatly influence your overall mood and perception on life – so make sure you’re properly investing in your happiness (or better yet, someone else’s).

 

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