Once your income meets your basic needs, having more money does not necessarily equate to greater happiness, according to the authors of Happy Money: The Science of Smarter Spending. What makes a difference is how your money is being spent. Authors Elizabeth Dunn and Michael Norton reveal hundreds of scientific studies that explore spending habits that can bring greater happiness. Here are five principles for spending based on their research.
- Buy Experiences – Experiences rather than goods provide greater happiness, largely because they make us feel more connected to others. Satisfaction with experiences also tends to increase over time, whereas satisfaction with goods tends to decrease.
- Make It A Treat – The more exposure we have to something, the more the impact diminishes. The author gives a personal example when she stopped buying daily lattes and purchased them once a week; her satisfaction level increased. A growing body of research suggests that altering consumption patterns can provide more happiness for less money.
- Buy Time – Buy things that save you time. If you don’t like house or yard work, pay someone to do them for you. Use the new time on activities you enjoy.
- Pay Now, Consume Later – The joy of consumption is purest without the experience of paying for it. When we separate the two, we enhance the enjoyment of the purchase. Purchases that have been paid for long ago feel free.
- Invest in Others – Spending money on others can increase happiness even more than spending on oneself. The authors reference Warren Buffet’s advice that investing in others pays off in the form of happiness.
Changing the way your money is spent is obviously not the only way to boost happiness; however, the authors do present compelling points to becoming more mindful in our spending.