They say money can’t buy happiness, but who hasn’t pictured how wonderful life could be if you bought that must-have tech gadget or new set of wheels?
Of course, you’ve probably also experienced the letdown that accompanies the realization that such purchases don’t actually provide the lasting euphoria you’d imagined.
And, somehow, even though we know saving money will make us happier in the long run—by helping us afford that down payment on a home or ensuring a more secure retirement—it’s much more difficult to psych ourselves up to save instead of splurge.
In other words, the human mind doesn’t always work in our best interests when it comes to spending decisions. But the good news is that scientists are trying to tackle the problem—and uncover how we can retrain our brains to make better choices.
Scientists like Dr. Ryan T. Howell, an assistant professor of psychology at San Francisco State University and the cofounder of Beyond the Purchase, a website dedicated to studying the psychology behind spending. Each and every day at the university, Howell’s Personality and Well-Being Lab aims to answer one crucial question: “Can money make us happy if we spend it on the right purchase?”
Curious to hear the results, we tapped Howell to share with us the main takeaways from his research—and divulge some of his favorite psychological tricks for making smarter money moves.
LearnVest: What are the key traits of people who are happy with their spending decisions?
Dr. Ryan T. Howell: To maximize happiness, the very first thing you need to do is get out of credit card debt. You may get some momentary joy from making a purchase you really want, but the financial stress of debt will make you worse off—it’s pretty much the worst thing in the world for your happiness.
Second, we found that happy people follow a particular pattern when spending money after their essentials are paid for: They save or invest about 25% of it. They take about 12% and earmark it for charities, religious organizations or gifts for other people. And they spend about 40% on meaningful life experiences. Those are the three most salient characteristics of happy spenders.