Whoever said money can’t buy happiness, simply didn’t know how to spend it.
Money can buy you better food, better medical care, more free time and more meaningful labor – so why does people with more money are not much happier than those who have less? Jennifer Aacker and Melanie Rudd of Stanford, along with Cassie Mogilner of Wharton provide an answer: they aren’t spending it right.
In an article in the latest issue of Rotman journal, the authors offer seven tips on how to wring more happiness out of your hard earned money.
- Spend on experiences like holidays instead of things like jewellery. Experiences are usually shared with people we love and they tend to be our greatest source of happiness.
- Buy many small pleasures instead of a few big ones.
- Don’t spend your hard earned money on extended warranties.
- Pay now and consume later. Delaying consumption provides the benefit of anticipation, which increases happiness.
- Remember that happiness is in the details, so a farmhouse in the hinterlands may not bring as much happiness as you might think if you factor in the inconveniences you have to put up with when living there.
- Beware of comparison shopping because it focuses your attention on attributes that are not always important for happiness.
- Spend money on others instead of yourself — it actually gets you more happiness.
When asked to take stock of their lives, people with more money report being a good deal more satisfied. But when asked how happy they are at any given moment, they are barely different from people with less. This suggests that money provides us with more happiness when we think about it, but not when we use it.
If Money Doesn’t Make You Happy, Consider Time