If you are like most Americans, you have likely asked, “Can money buy happiness?” Yes! However, only if you think about and spend money in certain ways. Many studies tout the amount of money required to buy happiness. Yet, these studies rarely provide:
- concrete ways to spend for greater happiness
- the importance of mindful goals
- and the true key to finding happiness with your money
Let’s explore all three of these points. And snag more happiness and satisfaction from your money along the way.
In 2010, Princeton University published a (now famous) study linking happiness and money. The study discusses the differences in daily emotional well-being and overall life satisfaction as they relate to money. The study concluded money can buy happiness (daily emotional well-being), but only up to an annual income of roughly $75,000.
Which begs the questions:
- Can you find happiness with your money if you make less than $75,000 a year?
- You make $75,000 a year, so why are you unhappy?
The answer to both of these questions lies in how you spend your money. Many people believe money can’t buy happiness, however, that’s simply not true. Money can buy happiness and, even more important, money can buy satisfaction.
Here are three ways to buy a little more happiness with your money.
1. 5 Happiness Factors for Spending Money
One of my favorite money books is Happy Money: The Science of Happier Spending. Housed within this book are a treasure trove of ways for you to spend money to achieve greater happiness! Follow these five general guidelines for spending and you will discover (based on scientific research) an increase in happiness with your money.
1) Buy Experiences
Buying experiences increases your happiness. The authors explain leisure experiences specifically yield more happiness with your spending. Even when you spend money on physical “stuff”, by focusing on the experience generated by the “stuff” you will find more happiness.
2) Make it a Treat
Lessening the frequency of your purchases whether it’s a fancy coffee, new item of clothing, or the latest technology will boost your happiness with your spending. Likely, this spending tactic works because of hedonic adaptation. Regardless of the reason, reducing how often you spend on a specific item will improve your spending satisfaction.
3) Buy Time
It’s true, buying time is a known happiness factor. When you spend on money on buying back your time (think lawn mowing service or grocery delivery), you will bump up your overall level of happiness. Just be sure to not buy time for activities you enjoy doing. If you love cleaning, don’t pay for a cleaning service.
4) Pay Ahead
The pain of paying is a real thing. It’s why using cash instead of a card will naturally reduce your spending. However, when seeking money happiness, be sure to pay before you receive the good, service, or experience. Separating paying from the enjoyment of the purchase is key to improving happiness.
5) Invest in Others
In other words, give back! Spending on someone else, even in small amounts, will jump your own happiness levels. You don’t need to be a millionaire to reap the rewards of sharing your money whether it’s in the form of charitable giving or gifts for friends or family.
The book goes into much greater detail on all these five general guidelines. And, while these guidelines will get you started, it is critical to recognize they are just a start to answer the question, “Can money buy happiness?”
For more lasting money happiness you need to dive a little deeper and spend money on mindful goals.
2. Spend Money to Pursue Time & Value-based Goals
Often when managing your money, you forget it’s not about money at all. It’s about life. To gain more happiness from your wallet, you need to spend money to pursue satisfying goals (i.e. goals focused on time usage and based on your values).
If you are spending money to achieve a purely financial goal, you may be unknowingly falling into an emotional dead end. Financial goals are oxymorons. They will not create satisfied spending in the long-term.
Instead, create mindful goals and spend your money to support those goals.
Deeply satisfying goals have two key components :
The focus on your goals needs to be on how you use your time. Sure money is required to support those goals, yet the main focus must be on how the goal impacts your time.
Developing mindful goals also requires an emphasis on your values. Values are foundational and life-long. Your goals are physical expressions of your values. To ensure the highest level of happiness and satisfaction with money, your goals should reflect your values.
After you have goals focusing on time usage and expressing your values, develop financial milestones to achieve your satisfying goals.
Then constantly ask yourself when spending money,
“Does this spending support and help me achieve my mindful goals?”
If the answer to this question is no, odds are lower the purchase will end in long-term happy spending. This is true regardless of if you follow the five happy money guidelines above.
Which leads us to the ultimate key in finding happiness with our money.
3. Repair Your Money Relationship
The five happy spending guidelines and spending money on satisfying goals are only the tip of the iceberg to answer, “Can money buy happiness?” The true key to money happiness is to understand and improve your relationship with money.
Money is the longest relationship you will ever have. Yet, many people do not understand how their money relationship generates powerful feelings. These feelings toward money, in turn, drive most of their spending.
Money is more than dollars and cents. Money is emotion. It represents all of your hopes, dreams, and desires for life. Money is spent not just to live physically, but psychologically as well. Money’s greatest power is found when it’s used to meet psychological needs.
If you want to grasp the absolute most happiness and satisfaction from your money, it is essential that you understand and repair your relationship with money.
How do you do this?
Start by digging deep and asking yourself: “What is(are) my greatest fear(s) in life?”
Then take a look at your spending patterns and note how many times your spending reflects your attempt to alleviate those fears.
So if you have ever wondered, “Why can’t money buy happiness?” or “Can money buy happiness?”
- The five happiness spending guidelines listed above
- Creating and using money to pursue satisfying goals
- Healing your relationship with money
Implementing actions from these three areas will drive you toward happiness with your money. Yes, money can buy happiness, but only when you think about and spend it in certain ways!
What are ways you spend money to buy happiness?