Eight ways money can buy happiness

It is often said that money is the root of all evil. We are often told that the best things in life cannot be bought. The accepted wisdom is that money cannot buy happiness. But is that really the case? It may be true that a blind pursuit of money without regard for anything else result in unethical behaviour that causes much suffering. It may also be true that most of the more important things in life do not necessarily have price tags attached to them. That said, for most of us living in a modern urban society, money is important and spending money can bring some amount of pleasure and perhaps even happiness. Here are 8 suggestions of how we can get happier by spending money.

1. Save first

Life is a long journey with many twists and turns, some of which are more pleasant, others can be quite upsetting. While we always hope for a smooth road ahead of us, we know that it is more realistic to expect some potholes here and there. While we pray for good weather all the time, we know that it is wiser to prepare for some stormy days. So before we spend any money, it is always good to set some aside first. In other words, saving should not be what happens after spending. Instead, spending should only happen after we have set aside some money to be saved.

So when we get any money, whether as a gift, or a paycheck, or profits from a good business deal, or dividends from a good investment, it is a good idea to cultivate the discipline of immediately putting some money into a savings account or investment vehicles. How much to put aside depends on which stage of life you are in and some reasonable expectations of the future (see here for some suggestions).

This discipline helps prevent overspending and getting ourselves into debt (most people in debt are unhappy…). It also helps to give us a peace of mind that should anything unexpected happen, we have some reserves to tap on. This helps us be happier in the long run.

2. Fulfill your financial responsibilities

Each of us has some needs which we consider to be basic. These are things which we cannot live without. These include having a place to live, food that give us enough nutrition for sustenance and perhaps even maintaining certain key relationships such as those between us and our spouse, our children and our parents.

So it only makes sense to first spend money to fulfill these basic needs. Before spending on rewarding ourselves or on luxuries, it would make sense to first spend on a safe and comfortable enough place for ourselves and our families to live in. It would make sense to spend money to ensure that ourselves and our families get good enough food of sufficient quantities. For those of us who have children or aged parents, ensuring that they are taken care of should be the top priority of how we spend our money. If not, we will likely not be happy for long.

3. Delay gratification

In modern urban societies, we are bombarded by messages in various media that encourage and breed an intense desire for instant gratification. We see something and we HAVE to get that NOW! See this shiny thing! Get it now! Look at this new gadget. Got to get it NOW! But research has shown that impulse buying does not actually make us any happier.

On the contrary, some research suggests that putting off purchasing things which are “wants” and not “needs” actually increases the pleasure we experience if we eventually do make the purchase. This could be because of two reasons.

Firstly, delaying the purchase gives us time to think through our purchase and thus helps to minimize the possibility that we would regret the purchase. We may be have experienced this before- we bought something that we did not really need, such as a branded bag, on an impulse, only to feel guilty for having spent so much on it. Or we could have bought one more pair of shoes only to realize that we already have so many pairs of shoes at home and our apartment is already cluttered enough as it is.

Secondly, delaying purchase helps to build anticipation. This anticipation often leads us to think about the pleasure that the purchase can bring to us. Some times this in itself can be quite fun. Also, looking forward to making the purchase helps us appreciate and enjoy that purchase a lot more.

So, instead of buying things which are “wants” but not “needs” the moment we see them, it would be useful to have a “cooling off” period where we take a deep breath (breath meditation helps!), walk away, cool off for at least a day. If after a day, we still feel that making that purchase will make us happy, then go ahead to get it. Better yet, we can make that purchase a reward to ourselves for achieving another goal – I don’t need that watch, but I’ll get it if I can hit the gym five times this week.

If it is a fairly big-ticket item, it would useful to talk to someone else about the purchase during the “cooling off” period. Ideally, this person should be a few years older than you. Some would suggest that this person should be about at least a decade older than you. So, before making a purchase that is a “want”, breath, cool off, talk to someone and build anticipation.

4. Spend on something that you REALLY want

When you do eventually spend on the “wants”, be mindful that you are spending on what you really want. There is nothing wrong with buying nice new shoes, a beautiful watch, or an exquisite art piece. Very often, spending money on these things does indeed make us happy.

However, research has found that spending on material possessions just because someone else has something similar and we want to keep up or appear to be better off than those around us will not only not make us happier but will actually result in unhappiness instead. If everyone you knew drove a Toyota, buying a Lexus may give you some satisfaction for a while. But then you start notice a lot more Lexus around you and your happiness quickly disappears (remember, your focus determines your reality!). Then when more of your friends really start to get better cars, your Lexus becomes a cause of your unhappiness instead. You now need to get a Mercedes. And when you find out that more people around you own Mercedes, the Mercedes you yearned so much for no longer held the same value nor generated the same happiness. And you feel the need for a Rolls Royce. There is a fanciful term for this. It’s called the hedonic treadmill.

Basing our happiness on conspicuous consumption and whether we are keeping up (or ahead) of people around us is a zero sum game – someone’s move up devalues what everyone else already has. This breeds resentment, causes a rift in our social relationships and such comparisons, more often than not, results in unhappiness. It is the luxury goods equivalent of a nuclear arms race.

Fortunately, unlike the nuclear arms race, the consequence of not playing the game is not deadly. That is good news. Because the only way to win at such a game of one-upmanship is to not play. So, to get maximum happiness from your purchases, ask yourself if you will be happy with the purchase even if your friends or neighbours also get something similar. By all means, get a more expensive car than the one you have if the new car has the features that make you happy regardless of whether anyone else has that car too. Get a piece of art if you personally think that that piece of art speaks to you and moves you regardless of whatever your friends say or however much someone else has spent on another piece of art.

In short, spend on something you really want, rather than to keep up with your friends, colleagues or neighbours.

5. Spend on experiences

Think of times when you spent more than a hundred dollars with the intention of increasing your enjoyment, pleasure or happiness. You would have likely spent money on either getting a material possession (e.g. clothes, watches, bags, shoes) or paying for an experience or activity (e.g. a holiday, rock climbing, going to a concert).

Chances are, you would have been happier recalling the times you spent money getting experiences, and thought that the money was better spent, compared to those who recalled spending on a material possession. This is the result of experiments and research performed by psychologists Leaf van Boven and Tom Gilovich. Their analysis of the results from their research suggested that spending on experiences and activities make people happier than spending on material objects because experiences and activities we spend money on are often things we do with other people.

In other words, spending on experiences or activities help us to connect with others while spending on material possessions often create a rift with others. Since human beings are social creatures, anything that help us connect better with others serve to increase our overall happiness a lot more than things which separate us from others. That is why it is often a good idea to spend on experiences and activities rather than to spend on buying expensive conspicuous things.

6. Spread out your purchases

If you love ice cream, the first few mouthfuls of ice cream on a hot afternoon can feel like heaven on earth. But most people, including even the most ardent fan of ice cream will be turned off by the prospect of eating a whole litre of ice cream. It is no longer a pleasurable experience. Instead, it actually becomes quite painful.

Research has shown that pleasures that are spaced out are more potent – for example, most people would say that two massages of one hour each with a short 15 minute break in between is more pleasurable than a single two-hour massage. Similarly, instead of spending all your money on a long shopping spree in a single day, space out your shopping over a few days. Instead of going for a single month-long vacation in a year, have a four one-week holiday throughout the year.

In addition to spreading your purchases over time, another way to get the greatest happiness out of spending your money is to spread your purchase over a variety of forms. Instead of just spending your money on just buying things, also spend on a good meal out, watching a good movie, or even a short simple no-frills vacation.

7. Spend on others

Research has found that spending on others bring about greater happiness than spending on ourselves. The reasons are similar to why spending on experiences often bring greater happiness than spending on material objects – spending on others help us be more connected with other people and strengthen our social relationships.

So the next time you have some money to spare (i.e. after you have saved for the future and spent on the necessities of life), consider spending some of it on others rather than all of it on yourself. It could be as simple as buying your friends a meal or treating them to a movie.

Also, if you know someone who needs a little financial help to get by, say someone facing some challenges paying his school fees or a neighbor who needs just that little bit of help to put nutritious food on the table, consider spending some money to help them out.

8. Spend the money on a cause you personally find meaningful

Similar to how spending on others can make you happier than spending on yourself, so can spending money on a cause you personally find meaningful. If you care deeply for the welfare of stray animals, spend some money to help organisations that contribute the welfare of stray animals. If you love traditional ethnic art forms, then contribute to organisations that promote traditional art forms. If you are concerned about cancer research, then donate to institutions conducting cancer research. However, rather than just give money, it would also be useful to get involved and find out how your money goes toward making tangible advances in the areas you care about.

Conclusion

People who say that money cannot buy happiness probably are not spending their money in the right ways. Money is an important part of modern urban life. Making money is important. Knowing how to spend it, so that we get the maximum happiness from money, is as important, if not more so, as knowing how to make money.

[Featured image: photo from website cultofmoney.com]

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