The Trick to Buying Happiness? Spend Smarter

Anna Williams
Posted

happy moneyWhen it comes to money, we tend to think that the more we earn, the happier we’ll be.

Yes, life satisfaction does increase with an uptick in income—but only up to a point. In fact, research shows that once Americans earn beyond $75,000 a year, additional income doesn’t make them any happier.

So how can money buy us everyday happiness? In their new book, “Happy Money: The Science of Smarter Spending,” behavioral scientists Dr. Elizabeth Dunn and Dr. Michael Norton stress that the secret is not how much money you have—it’s how you use it.

So we spoke to Dr. Norton, a professor at Harvard Business School, to find out what little tricks we can do—like splurging on a nice dinner out with friends, instead of shelling out for a high-def TV—to score the most happiness bang for our buck.

LearnVest: The common belief is that having more “stuff” makes us happier, but you say it isn’t true. How do we get past this?

Dr. Norton: It’s a great question because it’s very hard for us to get away from the idea that stuff is a good way to make us happy. We want to know if we are making progress in our lives or doing better than others—both of these things are deeply human tendencies. I can say, ‘I have a bigger house than I used to, so I must be doing better in my life.’

The problem—as research shows—is that these things [like having a larger home] don’t actually make us happier. We like things that we can count, such as square feet and income, but we need to stop counting and really focus on things that you can do to make yourself happier instead.

RELATED: How to Cure Your Money Comparisonitis

  • Natasha

    Very interesting thought provoking article.
    I do have one comment thought – Destination weddings, in my opinion are incredibly selfish – unless you are willing to fly all your guests there, pay for their lodging and transportation and pay for most of their food. Otherwise what you are really doing is having the nerve to demand that all your friends and relatives spend $2-4 grand on YOUR “special day”! Maybe they don’t wish to vacation in Mexico for a few days, luxury resort or not. I am right now in a position of not attending a sibling’s wedding because I don’t wish to fly 4 days and spend $3,000+ on lodging, airfare, etc. to be on a hot, muggy, tiny little tropical island.

    • Valerie

      Natasha, I am right there with you. I’ve ranted for years that having a destination wedding is making everybody pay for your dream vacation. The last one I did, was my former best friend’s (note the “former”) wedding in New Orleans. I was in the bridal party and she had special bridal-party additional events like a “ladies’ gloves and hats” luncheon at a fancy restaurant (which meant spending $60 on a stupid HAT); she ordered the $500 never-wear-again bridesmaids’ outfits late, so that we also paid a late fee; and she spread out the events over 7 days with a few days off in the middle for “sightseeing,” and timed the events so that her whole party had to add travel days before and after (Thanks, but if I wanted to sightsee I could add days) I’m self-employed with no paid vacation, so including 9 days of missed wages my end cost was $4,000. To me it’s the epitome of narcissism.

  • SFproblems

    Living in the bay area and stuggling on a 75k salary, I’m positive my happiness will increase with a salary boost.

  • http://www.danadoesdesign.com danadoesdesign

    There’s so much happiness that we put off in life. If we’re saving for retirement, a house, a car, an emergency fund…that’s all delayed gratification. We’re all doing more with less at home and at work, too. Even if we like our careers, it’s still not the same kind of happiness as going out for a nice meal with someone. As selfish as it sounds, I NEED the happiness of putting on an outfit that I like to get in my 11 year old car for my 40 minute commute to my job. Or I need that $5 coffee, or just to have the coffee creamer I like in the fridge at work to jazz up their crappy free drip coffee. I have a vacation fund I contribute to each month, but I need a little something every day to find a little bliss in, not just that one week during the year when I go on vacation and my life is mine.

    I also agree with everyone else that destination weddings are ridiculous, and a poor example for this article. Unlike most people, I hate the beach, and hot weather. A destination wedding in Mexico is my idea of hell, and I would resent having to pay my own way to go out of obligation to family. Why would I put off my own happiness by spending my vacation funds to go where someone else wants to?