Hey honey, you looking for a good time? How money buys you happiness
A tale lurks beyond the shattered remains of a pink porcelain piggybank.
At an age resplendent with felt tip drawings pinned to the fridge, an age where Father Christmas still exists, little Abella had become an avid saver. Obsessed with filling ‘Le Porc’ she had developed a knack for spotting, swiping and storing loose change. But one day this went too far. As she wandered past the kitchen table and spotted €3.47 in change, she simply had to have it. It duly went into Le Porc’s belly. And her father decided there was only one recourse: smash the pig. Retrieve the change. It was the only way that Abella would learn:
“Money can’t buy you happiness.”
How many of us have heard those words? How many of us have said them? It’s a usual warning from parents, a quipped retort to wanting a well paid job, or hoping an investment pays off.
So, should we toss aside our pension plans, our 401Ks, our ISAs and our aspirations for well-paid work?
No. Because the saying is wrong.
At the very least, we know that you are happier when you earn more, roughly up to the $75k mark (Deaton, 2010). After that it plateaus somewhat. But even beyond this rudimentary formula there are other tricks we can use, clever happiness savings plans to help us get the biggest smile for our buck.
Here are three ways your spending power can lead to happiness.
Don’t worry, you needn’t pay for this advice.
“This held true regardless of how much people earned- it’s not a lifehack solely for the super rich.”
1. Buy yourself time, not goods
Remember those superb shoes you saw in the shop window? How great you’d look in them. The shiny, supple quality of the leather. You’d rule the world in those shoes. You see yourself stepping, nay, marching into the boardroom- all eyes on you. They’d change your life, right?
A common mistake we make is to use our money to buy things. Perhaps surprisingly, we’re happier when we buy ourselves time. This requires avoiding instant gratification for longer term happiness, but it’s worth it.
This was illustrated by research published by Professor Elizabeth Dunn and her colleagues in 2017. They sent out a survey to more than 6,000 adults in the United States, Denmark, Canada and the Netherlands. These people were quizzed on whether they spent money each month to free up their time- and if so, how much they spent. They also completed a survey on life satisfaction and how stressed they were about time.
People who spent money on buying themselves time were more satisfied with life. Remarkably this held true regardless of how much people earned- it’s not a lifehack solely for the super-rich.
To check that this wasn’t just because of the questions that they were asking people the researchers also ran an experiment. They gave sixty lucky participants the opportunity to spend $40 on a material item one weekend (maybe not fancy leather shoes, but perhaps a nice leather belt) and $40 on a time saving purchase on another weekend. Which might be just enough to get all those pesky Autumn leaves raked off the front lawn.
The results confirmed their previous finding. People felt happier when they spent money on a time-saving purchase than a material good. Put down the shoes. Buy yourself time.
2. Buying experiences over things
What are your most precious, treasured memories? Your halcyon days?
Chances are they are experiences. Maybe a holiday that took you out of your comfort zone and shook you up. A first kiss with someone you admired and desired from the first time you met. A family day out with no arguments or tantrums- just laughter and games.
It’s less likely that your most enshrined memories include buying a sleek new phone or a yet another pair of jeans.
And the research bears this out. We are happier when we spend money on experiences and not on things. There are a few reasons why this might be.
When we buy something, whether in-store or online, generally we can’t wait to unwrap, unbox it, or try it on. We’re filled with frustration and impatience- we want the reward. Or, as psychologists might describe it, we want the dopamine hit we get from enjoying a new plaything.
But it’s different when we book an experience. Generally, we’re able to look forward to it, we get a pleasant state of anticipation and an ability to imagine the upcoming experience. How often have you heard, or said, “Just two more weeks and I’ll be hitting the slopes.” Researcher Amit Kumar studied these differences in experience, and found evidence for this anticipation effect: we tend to be happier and more excited in the lead up to an experience than before we get a material good.
Even if you’ve spent a fortune on a Porsche, there’s always a risk that a Ferrari will pull up next to you at the lights. We predominantly use material goods to make ourselves feel good- which is in part about affirming our place in society.
But where there might always be someone with a nicer watch, doormat or nose-job, experiences are far trickier to compare. Which means we can usually feel good about them, regardless of what others have experienced. And there’s another important social aspect to experiences- we can talk about them with others.
Whether we’re laughing, joking or shuddering, experiences are woven into the fabric of how we chat and share our humanity. Conversely, no-one wants to talk to the person who shows off their Cartier watch.
Clearly this doesn’t mean we shouldn’t buy material goods at all. And sometimes getting a new wardrobe might enhance our everyday experience, achieving this very effect. But perhaps the next time you need to buy someone a gift, choose an experience over a bauble.
3. Spending money on others
Meet Suja Thomas and Scott Bahr. They live incredibly frugally- they don’t buy cable TV, they drive a ten year old car and they avoid material goods.
They are not straightjacketed by a need for cash.
And in 2016 they donated $50,000 to charity.
This couple may be an unusual case. But, as a rule of thumb, we feel better — happier — when we’re not the sole beneficiaries of our hard work.
Remember Professor Elizabeth Dunn? We’re going to bring her back in here. She ran a study asking participants about their annual bonus. Regardless of the size of their bonus, employees who spent more of it on other people, or on charitable causes, were happier than those who spent it on themselves.
You can decide whether or not that takes away from the altruism and generosity shown by Suja and Scott.
So how do we spend our moolah, our wonga, our hard earned cash?
However the hell you like.
But, if you want happiness, why not treat your income like a happiness portfolio? Once you’ve paid the bills, diversify your investments into things that might just make the difference. Buy yourself time, spend on new experiences, and share what you can around. As the saying goes — “you only live once”. But money, spent wisely, can buy you happiness. Use that to your advantage and you will be rich in the best possible way.
About the author
Iain is a Business Psychologist working for Mind Gym. He is also currently completing a part-time PhD in Applied Psychology at the University of Nottingham.