When 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.