March 24, 2022
You’ve probably heard that money can’t buy happiness. But what if it could?
What if you were able to find a way of spending your money that made you happy, and the more you spent on it, the happier you became? Doesn’t sound possible, does it? But it IS entirely possible.
At least, that’s the premise of a paper written by scholars from Harvard, the University of British Columbia, and the University of Virginia. The title? “If Money Doesn’t Make You Happy Then You Probably Aren’t Spending It Right.”
The thesis? If you spend money right, it makes you happy. If you spend money wrong, it makes you feel… well, meh.
Here’s what they found…
Buy experiences, not things. The researchers found that people tend to be happier when they spend money on experiences rather than things. That’s because experiences provide us with opportunities to create memories, which can be recalled and enjoyed long after the experience is over. And as you get older, those memories become constant sources of joy, satisfaction, and happiness.
So if you’re looking to spend your money in a way that will make you happy, focus on things like travel, getaways, skydiving, sunsets, long walks, and conversations. Those will remain with you for the rest of your life.
Help others first. It’s a fact—social relations are critical for happiness. The better your relationships, the greater your happiness.
So it follows that one of the best ways to spend your money in a way that will make you happy is to help others. This could mean donating money to charity, or simply spending time with friends and family.
Focus on little pleasures. Another way to spend your money in a way that will make you happy is to focus on little pleasures. This one seems counterintuitive—shouldn’t you save a whole bunch of money and spend it on something fancy?
However, the paper cites research that frequency is more powerful than intensity. Is eating a 12oz cookie better than eating a 6oz cookie? Absolutely. But is it two times better? Probably not. It’s a concept called diminishing marginal utility—the more you indulge in something, the less enjoyable it becomes.
What does that mean? Frequent day trips beat rare but epic vacations. Fun, quiet date nights once per week beat going all out twice a year.
Pay now, consume later. Again, this seems counterintuitive. But it makes sense when you think about it.
Consider the all-too-common alternative—buy now, pay later. First off, this model encourages rampant spending. Without facing immediate consequences, it’s just too tempting to rack up debt and buy stuff you don’t need.
But more than that, it entirely removes antici…
.. pation from the equation. And that’s half the fun!
So instead of whipping out the credit card, save up. Pay cash. Delay gratification. You’ll enjoy your purchase more, and you’ll be happier overall.
So there you have it! The complete guide to spending your money in a way that will make you happy. Just remember—experiences over things, helping others first, little pleasures, and pay now, consume later. Follow these tips, and you may find that your money’s doing its actual job—making you happy.