You have probably heard and maybe even embrace that money can’t buy happiness.
But researchers Elizabeth Dunn and Michael Norton argue this is not exactly true. Money, if you spend it right, can buy happiness.
So what’s the right way?
“Shifting from buying stuff to buying experiences, and from spending on yourself to spending on others, can have a dramatic impact on happiness,” Dunn and Norton write in “Happy Money: The Science of Smarter Spending” (Simon & Schuster, $25). Dunn is an associate professor of psychology at the University of British Columbia. Norton is an associate professor of marketing at the Harvard Business School.
I’m always trying to find research that looks at how people can do better with the money they have. I plan to use this book in my financial classes, where folks believe that if they just made more money, their level of happiness would increase. Yet studies show that more doesn’t increase your long-term happiness.
Dunn and Norton strive to show how to spend money in more pleasing ways. They offer five principles you can use:
■ Buy experiences. “Research shows that experiences provide more happiness than material goods in part because experiences are more likely to make us feel connected to others,” they write.
■ Make it a special treat. Don’t overindulge yourself, they say, because “abundance, it turns out, is the enemy of appreciation. . . . (In) general, the more we’re exposed to something, the more its impact diminishes.”
■ Buy time. You might decide you’d rather hire someone to cut your grass than do it yourself. “We too often sacrifice our free time just to save a little money,” the authors write.
■ Pay now, consume later. Paying for a vacation in advance may help you enjoy it more because by the time you take the trip you won’t be so focused on the cost. At the same time, fight the power of now. This is especially true when it comes to paying with plastic.
■ Invest in others. I generally hate spending money. But when I helped a friend’s daughter by buying her books for college, I was elated. I was investing in her education. The authors say their research shows that spending even small amounts on others can make a difference in your happiness .
I love their five principles because they aren’t about getting more money but getting more out of the money you have. Let me leave you with this from Dunn and Norton: “Before you spend that $5 as you usually would, stop to ask yourself: Is this happy money? Am I spending this money in the way that will give me the biggest happiness bang for my buck?”