“Money can’t buy me love,” sang the Beatles. But can greenbacks buy a measure of happiness?
Yes, to a certain extent, psychologists say, but many people don’t know how to spend money for maximum happiness.
“Money is an opportunity for happiness, but it’s an opportunity that people routinely squander because the things they think will make them happy often don’t,” says Elizabeth W. Dunn, PhD, associate professor in Psychology from the University of British Columbia, Canada.
As a young academic, Dunn took a personal interest in finding out how best to spend money. “I went from being a graduate student making about $20,000 a year to being a faculty member. While most people don’t think of professors as wealthy, I suddenly found myself like ‘the nouveau riche,’ with a lot more money than before,” she tells WebMD.
As a psychology researcher, she sought science-based advice on how to spend her money — not to make financial investments, but to increase life satisfaction. “I was surprised to find out that there is actually very little research on this topic,” she says.
As she researched the topic, she discovered that people often misjudge purchases on three counts: “People misjudge what will make them happy, how happy it will make them, and how long that happiness will last.”
Other experts agree with Dunn’s view. Acquisitions like a remodeled bathroom or a new couch might bring joy, but the joy often fades faster than expected — “like a spring puddle evaporates under a sweltering summer sun,” says Sonja Lyubomirsky, PhD, a psychology professor at the University of California, Riverside, and author from The How of Happiness: A Scientific Approach to Getting the Life You Desire.
Take the renovated bathroom for example. At first it’s a joy, but those positive feelings fade until the bathroom becomes commonplace and “completely recedes into the background of conscious experience,” says Lyubomirsky.
All of those sparkling, new bathroom fixtures can also increase expectations and desires, creating a “high pinnacle of presumption” that makes people feel dissatisfied and keep striving for more, says Lyubomirsky. “After redesigning your bathroom, the living room and bedroom look comparatively drab. The increasing demands of people are making eyesores on rooms that used to be normal.”
Well, no one is saying that money and spending play a negligible role in happiness. In fact, wealthy people have better diet and health care, more meaningful work, and more free time, Dunn says.
“And yet they are not the much happier than those who have less,” she writes, along with co-authors Daniel T. Gilbert and Timothy D. Wilson, in an article to be published in the Journal of Consumer Psychology. Article title: “If money doesn’t make you happy, then you probably aren’t spending it properly.”
So how can you spend your money to maximize happiness? Try these tips, experts say.
Many people assume that filling a large house with possessions makes them happiest. So why could a cooking class or vacation trump a new kitchen floor or TV?
In one study, Cornell University researchers found that buying an experience tended to improve well-being rather than buying a possession, in part because people are more prone to comparison and remorse when buying tangible goods.
Also, objects tend to degrade over time, but experiences can create lasting memories. If you share classes or dinners and vacations with others, the social connections can also make you happier.
“Experiences are just easier to assess,” says Lyubomirsky, who did not collaborate on the Cornell study. “Experiences make us happier. You’re more likely to remember it. It’s more likely to become part of your identity. You are the sum of your experiences, not the sum of your possessions.”
People adapt more quickly to things that don’t change, such as physical objects, says Dunn. But experiences offer more novelty and variety, which can prolong enjoyment.
“While cherry wood floorboards are generally the same size, shape, and color on the last day of the year as they were on the first day,” says Dunn, “each session of a year-long cooking class is different from the one before.”
Do you tend to be happier when you’re saving up for a few expensive items like a sports car, or when you often indulge yourself with little things like lattes and manicures?
Saving up for a big purchase can be admirable. But in terms of happiness, “We may be better off using our limited financial resources to buy frequent doses of nicer things than rarer doses of nicer things,” says Dunn. Research shows that, according to her, happiness correlates with frequency of pleasure rather than intensity.
Because common, small pleasures are different every time — whether it’s dinner with friends or a new book — we don’t adapt and get bored easily, says Dunn.
It really is better to give, as research shows.
Dunn once conducted an experiment in which researchers fanned out on the University of British Columbia campus and gave students a $5 or $20 bill. Students were randomly assigned to spend the money on themselves or others by the end of the day.
In the evening, those who had been told to spend money on others reported feeling happier — even if they only spent $5 — than those who were told to buy for themselves.
The emotional rewards of social spending can even be demonstrated on MRI brain scans. In a University of Oregon study, people were given the opportunity to donate money to a charity. Others were forced to donate to the charity through a tax-like transfer. Providing money voluntarily activated brain areas normally associated with receiving rewards, but also obligatory giving.
As highly social creatures, much of our happiness depends on the quality of our relationships, Dunn says. “Almost anything we do to improve our connections with others also tends to improve our happiness, and that includes spending money.”
So next time you buy a cookie, make your buddy happy too.
In these lean times, it’s wise to be frugal. You can still enjoy something without owning it, Lyubomirsky says, whether it’s a video, a cabin stash, or a sports car.
If you love the thrill of driving a luxury car, occasionally rent one, she says. You get the boost of pleasure, but not the hassle of changing oil and tires or the burden of paying for unpredictable repair costs. And even if you could afford a vacation home, you’ll have less hassle and expense if you’re a visitor rather than an owner.
Often people make purchases the way some lovers hastily marry—in a rosy glimmer of imagination, with little realistic thought of what eternity will really be like with that person.
So people looking to buy a lakeside cabin will focus on the quiet, beautiful sunsets, and good fishing, Dunn says. What they don’t account for: buzzing insects, late-night calls about plumbing disasters, and endless drives home after a weekend at the cabin, with tired and cranky kids scratching mosquito bites. And yet such things will spoil the happiness of the owners.
It’s a common trap. We just don’t see the future in detail, and the further away in time the event is, the more abstract our visions are, says Dunn.
So before you buy something big, try to consider the less obvious costs, including how a purchase might impact your time. “Happiness is often in the details,” says Dunn.