We spend a great deal of time and energy throughout our lives to earn money. We spend our youth building skills in order to obtain a job that will pay well enough for us to pay the bills, save for our goals, and enjoy modern luxuries. All of these efforts make us happy, right? It can if we spend it correctly, according to professors Elizabeth Dunn and Michael Norton in their book “Happy Money: The Science of Happier Spending”. The gist of the book is that people who spend more on experiences and prosocial behaviors are generally happier than everyone else. This goes along with the common knowledge that people who have strong bonds with others are generally happier.
Three tips to increase happiness:
- Spend less on material possessions. That new BMW and fancier house may improve our happiness for a while, but overtime we grow accustomed to these things and they fail to bring us lasting happiness. Think back to your time in college. You likely lived on a very limited budget, but were just as happy nonetheless.
- Spend more on activities with friends and family. The authors suggest that vacations and other experiences with family and friends often provide us with some of our richest memories. Looking back on these types of experiences never fails to bring a smile to our face. This type of spending strengthens our relationships, which improves our happiness. Make sure to save ahead of time though. The stress of catching up on credit card payments upon returning will certainly decreases our well-being. Plus, we get quite a bit of joy from looking ahead to our next trip.
- Donate to charity. The authors conducted a study in which users were given a small amount of money. Participants who gave the money to charity reported being happier than the participants who spent it on themselves. We don’t really need any research to prove this. It is common knowledge that knowing you did something to help others can be deeply fulfilling. Organizations like Giving What We Can recommend charities based on evidence and help track your impact, so you can be reminded of how many people you’re helping. You also get the social benefit of joining a community of givers.
Of course, these recommendations are directed towards people in general and may not be what makes you happy. At Windward we believe your happiness is an important part of your overall wealth (if not the most important part). We believe it’s important to take the time to reflect on what’s important to you and compare your personal values with your spending habits.
Dunn, Elizabeth, and Michael I. Norton. Happy Money: The Science of Smarter Spending. New York: Simon & Schuster, 2013. Print. Amazon Link
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