Can you buy happiness? Virtually all of us have purchased or wanted to purchase “stuff” that we thought would make us happy. But, in reality, how effective is spending money at bringing joy into our life?
Research that examined the relationship between income and level of happiness discovered that there was only a significant correlation on the lower end of the income scale. People who are not making enough money to sufficiently meet their needs are more stressed and less happy than people who can easily meet their needs. But someone who is making $500,000 is not necessarily happier than someone who is making $75,000, even though the former can afford more toys.
So, is that the end of the story? Not quite. Some studies suggest that the weak relationship between money and happiness may be due in part to the ways we spend money. Buying typical consumer goods such as televisions and other electronic gadgets tends to produce a short “purchase high” that fades quickly. But there are things that we can spend our money on that may contribute more enduringly to happiness.
- Experiences: Instead of buying a $300 copper pot, take a cooking class! Studies that asked participants about past purchases found that most of them derived greater and longer-lasting pleasure from experience-based purchases than material-based ones. Why is this? For one, experiences often involve interacting with other people, and, in general, having positive social interactions makes us happy. Additionally, we tend to pay more attention to our experiences than our stuff and adapt more slowly to them. (Once we become used to something, it becomes meh instead of how exciting.) We tend to revisit them more often too. Have you ever shown your friends pictures of you purchasing a smartphone? Probably not. But you may have shown them pictures of your vacation.
- Other people: Researchers have found that people are typically happier when they spend money on others than when they spend money on themselves. This applies not only to charitable donations, but also to less philanthropic purchases such as gifts for friends. Humans are social creatures, and putting a smile on someone else’s face makes us feel good. And it does not even require you to shell out a ton of cash – the giving boost occurs regardless of the amount that is actually spent.
- Frequent, small rewards: The frequency of pleasure purchases has a stronger correlation with happiness than the size of the purchases. Thus, it may be better to go out to eat three times a week and spend $10 a meal than go out once a week and spend $30 a meal. It is speculated that this is due to not adapting as quickly to frequent, small purchases (since each purchase is new) and the law of diminishing returns. Just eating out can be a pleasurable experience, and spending three times as much probably won’t give you three times the pleasure.
In addition to the types of things you purchase, the way that you shop can have an effect on your happiness too. We often think that immediate gratification will make us happy – the pleasure that we receive from purchasing something now seems greater than the pleasure that we will receive in the future. But in reality, the happiness that we feel while we are, for example, on vacation, probably won’t vary whether we do it now or three months from now. In fact, waiting to make a purchase creates anticipation, which can increase happiness in and of itself. (On the other hand, making the purchase now and putting it on a credit card can create stress in the future if you cannot afford to pay the bill.) Avoiding extensive comparison shopping can also increase happiness. If you are, for example, planning to buy a camera and spend days researching all of the cameras out there, it is easy to regret your purchase because you are very aware of the other options. However, if you do just enough shopping to make an informed choice, you won’t wonder, What if I bought that other model?
A popular adage says that money can’t buy happiness, but by being mindful of what and how you purchase, it may be possible.
1. Consider if there are any problems that you have that can be solved by spending money – within your budget, of course. For example, if you and your spouse often fight about chores, you may want to hire someone to come clean twice a month.
2. If you have debt, look for ways that you can pay it off sooner. Ask creditors if they are willing to lower the interest rate. Use whatever spare cash you have to pay extra.
3. Don’t compare what you have to what others have. Remember, having more things does not automatically make you happier.
4. Focus on the positive side. E.g., instead of being upset that you can’t afford a $3,000 vacation or television, be proud that you are saving and not charging up your credit cards.
5. Before upgrading, question if it is necessary. Can you get by with what you have now?
6. Remember that enjoying something does not necessarily mean having to own it. Renting a bike or a fancy car for the afternoon can give you the same thrills at a fraction of the cost.
7. Consider the downsides of any potential purchases. Are they enough to significantly impact your enjoyment of the product or experience?
8. Examine how much pleasure you are getting from habitual purchases. If it is not much, you may want to use that money for something else.
9. Learn new skills, such as how to sew or change the oil on your car. Not only can the DIY approach save you money, but it can give you an enjoyable hobby too.
10. If you make a financial blunder, don’t be too hard on yourself. No one is perfect.