They say it can’t buy you love, but can money buy you happiness?
The money-happiness relationship is far from straightforward. In some cases, ie people living on very low incomes, researchers have found a very strong correlation between money and happiness. Other studies suggest that for wealthy people, money itself does not seem to be a source of happiness at all.
How much do you need?
Another well known paradox is that money only seems to make you happy up to a certain point. Research by Nobel prize winning psychologist Daniel Kahneman found that once people had reached the ‘magic salary‘ level of $75,000, further increases in income did not make them feel happier.
This still leaves us with the question, can money buy us happiness? And if so, what exactly are the best ways to spend our cash if we want to stay happy? We looked at the latest research and found that, if you spend in the right way, money can indeed be a source of happiness.
1) Spend money on others
Harvard professor Michael Norton’s research has looked into the effects pro-social spending. He found that when we spend money on family, friends, or donate money to a cause, increases overall happiness to a much greater degree than spending the same amount on ourselves.
This effect has been seen at a personal, a community, and even a national level – so that people living in countries that have higher levels of helpfulness and altruism are typically happier than people who live in less giving societies. Spending on others even has positive professional outcomes when we spend on our colleagues. The great thing is that giving even small amounts can yield a lot of happiness.
2) Spend money on experiences
Research shows that spending your money on experiences yields better benefits as compared to money spent buying things. Things – although initially exciting, are static and we soon get used to them. On the other hand, experiences are dynamic, unique and offer a different perspective on everyday life.
The good thing is that experiences don’t even have to be expensive to be memorable. Meeting friends for a meal, watching a movie and then discussing it afterwards with a friend, taking a class. These are all inexpensive ways to build a stockpile of strong, positive memories.
3) ‘Milestone’ spending
Another strategy for spending with satisfaction is milestone purchasing . This is when you’ve planned your spending -maybe for a long time – and you know exactly what you’re buying and why you’re buying it. These kind of considered purchases – whether it is a luxury coffee maker, or a new furniture set – allows you to re-experience the satisfaction of ownership over a long duration.
4) Small Pleasures
An alternative to splurging on one big-ticket item is to make a number of small purchases that keep giving us small bursts of happiness instead of. According to Elizabeth W. Dunn from University of British Columbia says “We may be better off devoting our finite financial resources to purchasing frequent doses of lovely things, rather than infrequent doses of lovelier things,”