It’s often said that money can’t buy happiness, but new research suggests a twist: It’s how you spend it that matters. At least that’s the contention of Elizabeth Dunn, Daniel Gilbert and Timothy Wilson in their Journal of Consumer Psychology paper, “If money doesn’t make you happy, then you probably aren’t spending it right.”
The authors outline eight strategies which they say can make you happier when you’re spending money. Don’t take this advice too literally (we’ve added a few notes), but here’s what they suggest. Think of it as food for thought.
1. Buy experiences instead of things. We adapt to things too quickly—remember how big that TV seemed when you bought it?—but experiences can be both anticipated beforehand and savored later.
2. Help others instead of yourself. Human beings are deeply social beings and so “almost anything we do to improve our connections with others tends to our happiness as well,” the study says. Sending money to help others and connect with the world provides us with more happiness than spending money to help ourselves alone.
3. Buy many small pleasures instead of a few big ones. Small pleasures can invoke a sense of novelty, surprise and variability better than larger ones. These qualities make a product more memorable, and that increases our satisfaction with it. Plus, buying yourself several small pleasures spreads out the satisfaction of the purchase over more time.
4. Buy fewer warranties. Human beings are more adaptable than we give ourselves credit for, and so we typically sell ourselves short by purchasing warranties, thinking we will drown in sadness if an item we purchased breaks. We also don’t enjoy a product more because it’s under warranty. (We’re not totally convinced about this one. We might not get a thrill from using a product that’s been fixed for free, but we sure breathed a sigh of relief that it was covered when it broke.)
5. Pay now and consume later. The anticipation of positive events is a source of “free happiness,” the study says, or in other words, “The person who buys a cookie and eats it right away may get X units of pleasure from it, but the person who saves the cookie until later gets X units of pleasure when it is eventually eaten plus all the additional pleasure of looking forward to the event.”
6. Think about the practical side. Don’t buy something thinking it will have a magical effect on your happiness. It’s better to think about your daily use of the product to get a more realistic picture of how it will make you feel. Happiness is in the details.
7. Beware of comparison shopping. While comparison shopping can help you save money, it has two drawbacks. It focuses your mind on the differences between two products, which are frequently unimportant to your overall enjoyment and it encourages you to buy something just because it’s the best deal. (But you shouldn’t give it up altogether, just don’t take it too seriously. Figure out what features are important to you first and focus on those when looking for the best price.)
8. Follow the herd instead of your head. Research suggests that the best way to predict how much we will enjoy an experience is to see how much someone else enjoyed it. This is why we consult restaurant reviews on Yelp or the user ratings on IMDB before dining out or choosing a flick. We tend to enjoy things more when other people already have.
See the entire paper here: “If money doesn’t make you happy, then you probably aren’t spending it right.”
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