How money buys happiness – The science of happier spending
The other day I was listening to a podcast with Arianna Huffington as a guest. She said something that sparked my interest: In today’s society, we have associated happiness with success and money instead of living a good life. This has resulted in people running around and burning out like crazy to try and earn as much money as possible, losing sight of other factors that are important for our happiness. But what if we do not only focus on the way that the cash flows into our bank accounts and look a bit into the way the cash flows out of our bank account. Would there be a relation to our happiness? In other words, let’s dig deeper into the concept of happier spending our hard-earned cash!
The correlation between income and well being
More income = more happiness. Unfortunately, this equation doesn’t add up. Researchers show that annual income higher than 70.000 dollars do not add any significant value to our happiness. Furthermore, the materialism associated with a higher income is found to reduce life satisfaction, resulting in a lower well-being. Therefore, it’s not only the income we need to focus on when increasing our happiness, but also the spending side of the coin.
The science of happier spending
In their book Happy Money, Elizabeth Dunn and Michael Norton explain the concept of happier spending in five simple guidelines. The best thing is that these guidelines can be applied at any income level, seeing that we’re not residing in the money to burn category (yet). As associate professors of Harvard Business School and The University of British Columbia, Norton and Dunn have found scientific evidence of how to get the biggest happiness bang for your buck.
Buying experiences instead of physical items are the easiest way to make better spending choices in regards to your happiness. The high of buying items fades quickly, while when spending the money on experiences is paired with the bonus of a fond memory. As a matter of fact, even buying bad memories has a higher positive impact on our happiness compared to buying items.
Make it a treat
This is a simple one. The cake you’ll buy for yourself once a week will taste a lot better than the same cake every day. Sweet Ashley (see what I did there) is living proof of this, as she is committed to cycle every Saturday morning (even with a foot brace on or when she still had stitches from leg surgery) to the French bakery as it is only open for business during the weekends. Keep things a treat to enjoy maximum happiness, rather than seeing it as a regular thing.
In the book, commuting is described as one of three activities that make us the unhappiest. While I am okay with commuting to work during the workdays, I hate it on the weekends. Even though I love reading and buying books, I never (with the exception of traveling) go to the bookstore. Wasting time commuting to the bookstore, having to deal with crowds of people are making me reluctant to do so at all. Instead, I like to save time buying books online and picking them up at the local grocery store. It’s a little bit pricier looking at the shipping costs, but not having to deal with the loss of time is a big *KA-CHING* on my mood and happiness meter.
Pay now, consume later
In order to consume, we’ll have to pay for it at a certain point in time. While from an economic point of view a euro today is worth more than a euro tomorrow, one might be leaning towards consuming now and paying later. When it comes to your happiness, though, it works exactly the other way around. Think of booking a trip way ahead and having lots of pre-vacay fun with your travel buddies. Prior to the trip, you’ve already taken care of the plane tickets and accommodation. By the time the trip comes around, the only thing you’ll have to worry about is how much fun you’ll be having, with the big expenses taken care of.
Invest in others
Doing something for others rather than yourself is a way to get a big happiness bang for your buck. It creates the feeling that we are well taken care of ourselves since we’re able to do something for another. Biggest examples of this guideline are Tony Robbins, Oprah Winfrey and Warren Buffet and Bill Gates donating most of their money. If it works for them, it might just work for us, right?
So how do you choose to spend your happy money? Anything we’re missing out on or need to try out? Let us know in the comments below!