How You Spend Your Money Can Make You Happier
What will make you happier?
Buying stuff or spending money on experiences?
It’s become conventional wisdom that consumers are happier when they spend their money on experiences rather than material things. For instance, many people will feel better about eating at a restaurant rather than buying a new teapot from Amazon.
A study back in 2003 first revealed how gratifying it can be spending money on experiences as opposed to things, but there was a caveat. Higher income individuals were more likely to enjoy and favor experiences.
There hasn’t been much focus on this issue in intervening years, but academics at the University of Southern California revisited the subject and recently released their findings that support the original research.
The research has shown that people with less education and income are likelier to be happier purchasing goods or equally happy spending money on stuff or experiences. Higher-income consumers gain more satisfaction from experiences.
It makes sense that wealthier individuals can derive more happiness from experiences such as taking a trip, getting a massage or taking painting lessons because they are more likely to have their material needs taken care of.
In contrast, if you have to watch your pennies, spending a fun weekend at a resort might not be as satisfying, when what you could get with the same amount of money is a bigger television to watch your favorite shows, movies and/or sports.
The findings even held true for younger Americans. As part of their research, academics from the University of Southern California and elsewhere looked at data from more than 20 studies investigating experiential experiences among college students at public and private colleges. Students who attended private colleges with higher prices reported greater experiential happiness than students who attended public universities with lower tuition prices.
"The take-home message is that, when it comes to increasing one's happiness through discretionary spending, there is no single 'right' answer of what to buy," said Wendy Lee, a professor at USC.
Another Take on Enjoying Your Money
In a previous blog post, we covered another angle on this topic when writing about a book entitled, Happy Money: The Science of Smarter Spending. The coauthors, professors Michael Norton from Harvard and Elizabeth Dunn from the University of British Columbia, offered up these suggestions:
If you want to be happier, you should stop focusing so much on acquiring more money and pay attention to how you can get the most happiness out of the money that you do have.
In an article in Scientific American, Norton, who is a professor at the Harvard Business School, shared his own experience:
“I try to ask myself before I make any purchase: What else could I be doing with this money? Am I really using this in the best way to maximize my happiness? If not, and this happens with alarming frequency, I put my wallet away.”