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Can You Spend Your Way to Happiness?

June 7, 2016

Posted in Behavioral

There’s a right way and a wrong way to spend money for maximum happiness gain, according to behavioral science experts Elizabeth Dunn and Michael Norton. In their book, “Happy Money: The Science of Happier Spending”, they explain that if you think money can’t buy happiness, then you’re just not spending it right.

Most people recognize that they need professional advice on how to earn, save, and invest their money. When it comes to spending that money, most people just follow their intuitions. But scientific research shows that those intuitions are often wrong.

We were fascinated by the principles and various examples outlined in the book. Some interesting tidbits include:

  • Earning more isn’t the key to achieving peak happiness. Instead, one needs to learn to spend differently.
  • Material purchases provide less happiness than experiences – it’s better to “do” a thing than to “buy” a thing.
  • When something wonderful is always available, we are less likely to appreciate it and derive less happiness as a result. In the same vein, people who drive a luxury car enjoy no more happiness than drivers of economy models – it’s just transportation.
  • Outsourcing tasks (housecleaning, yard work, laundry, or other chores) in order to buy time to pursue passions is one of the best ways to boost happiness.
  • By paying now and consuming later, you can buy more happiness. Delaying consumption allows spenders to reap the pleasures of anticipation. How much more enjoyable is that pre-paid vacation, versus the one you take months to pay off once returning home?
  • Spending on others provides a greater happiness boost than spending on oneself alone. This idea extends beyond the charitable realm – buying coffee for yourself and a friend is a more pleasurable experience than going to Starbucks alone, for example.

We heartily recommend the addition of this book to your summer reading list (also good for book club discussion). By the time you finish it, we wouldn’t be surprised if you are asking yourself one simple question every time you reach for your wallet: Am I getting the biggest happiness bang for my buck?

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