Do all dollars spend the same? Maybe on paper, but in real life, what people spend their money on can have huge differences for their lives, especially when it comes to their happiness levels. Mindful spending leads to greater satisfaction with purchases. It should be no surprise that that some things bring more joy than other
Happiest Ways of Spending Money
This video is a short summary of the things that have the biggest impact on a person’s happiness, regardless of age, gender, nationality or other factors.
It can be a helpful reminder that you get to choose what you spend on, so choose wisely. There are several things that have the biggest and longest lasting happiness boosts, so let’s look at Number one:
1- Buy Experiences, Not Things Happiest Ways of Spending Money
While material possessions can provide short-term pleasure, experiences have a more enduring impact on happiness. Things like like travel, concerts, or dining out. The anticipation, memories, and shared stories associated with experiences enhance their value which contributes to long-term well-being. If you want to get more bang for your buck then you can spend on:
Experiences that bring people together, fostering connection.
Experiences that make a memorable story that you’ll enjoy retelling for years to come.
Experiences that are tightly linked to your sense of who you are or want to become.
Experiences that provides a unique opportunity, eluding easy comparison with other options.
Based several studies across various countries, while home ownership can provide a sense of security, results show it does not increase happiness because it is a material acquisition, rather than an acquisition of human connection and experience, which is surprising.
Happiest Ways of Spending Money
2 - Make it a Treat
Occasionally treating yourself to special purchases or experiences maintain novelty and enjoyment. We humans, tend to get used to changes in our lives, and this is the concept of "hedonic adaptation" which suggests that we quickly get used to new things, which diminishes their initial joy or pain. When couples do exciting and novel things together, their relationship itself feels more novel and exciting.
A study took place in Belgium, where wealthier individuals reported a lower proclivity to savour life’s little pleasures. They were less likely to say that they would pause to appreciate a beautiful waterfall on a hike or stay present in the moment during a romantic weekend getaway. This helps explain why the relationship between income and happiness is weaker than many people expect. While money gives access to things, knowing we have access undermines our happiness by reducing our tendency to appreciate life’s little joys. Basically, less is more.
3 - Buy Time
Spending money to outsource tasks you dislike or that take up valuable time can lead to greater happiness. This could involve hiring a cleaner, ordering takeout instead of cooking, or using a laundry service.
You can always ask yourself, “How will this purchase change the way I use my time?” Taking the time to ask yourself this question can make you more scientific in figuring out how best to spend your money. Time affluence is a strong predictor of job and life satisfaction, which means people that feel like they have more time, tend to be more fulfilled.
Knowing that something won’t last forever can make us appreciate it more. Younger people tend to accumulate (this might be experiences, things, wealth or anything really) while as we age we tend to recognize life’s limited time and start pruning away people and things that don’t deliver emotional payoffs. One additional way to do this, is by savouring the moment because it allows us to fully appreciate and get more out of enjoyable experiences, whether big or small. That has a positive impact on happiness.
4 - Pay Now, Consume Later
Delaying gratification by paying upfront for future experiences can enhance the overall enjoyment. Part of experiencing something that is pleasant is the anticipation you feel before the experience itself. For example, planning and booking a vacation in advance gives you time to anticipate and savour the upcoming experience. Delayed benefits are magnified when we pay up front because the pain of making the payment is done and once the experience comes, it feels free.
While income has a weak relationship to happiness, debt is a very strong predictor of unhappiness. Paying later can increase the pleasure of consuming now, but the depressing effect of dread for paying later will outweigh the pleasure. The emotional benefit of paying off debt CAN even outweigh building savings (but savings are still important). This is basically saying that debt can contribute to unhappiness.
5 - Invest in Others
Spending money on others, through gifts or charitable donations fosters a sense of social connection and strengthens relationships, leading to greater happiness for both the giver and the recipient. In fact, a Gallup study including 200,000 people across 136 countries found that donating to charity had a similar relationship to happiness as doubling household income. There are some specific ways to make this more effective though:
· Make it a choice: people that are guilted, shamed or feel forced to do good don’t feel boosts in happiness the same as someone that decided to gift on their own. They must feel like they decided on their own.
· Make a connection: Happiness is higher when spending on someone that has a strong tie, compared to a loose/weak tie OR if you make a connection deeper to someone, even if they started as a total stranger.
· Make it an impact: Bigger impacts have bigger happiness payoffs. That sounds obvious but it’s a reminder to be diligent when giving to make sure it does the most good it can. An example comes from another study where bonuses were given to sales teams, sales increased 5x when the bonus was for a prosocial cause (spending money on others), as opposed to personal spending.
Relationships themselves are investments. While that might sound too transactional to some, remember that people that prioritize time and resources for building and nurturing relationships have significantly higher overall life satisfaction. Strengthening social connections provides a profound sense of well-being, and is one of the best predictors of happiness from the 80-study called the Harvard Study of Adult Development.
Putting it all together
These principles can even be applied together, and in daily living. If you have a cafe gift card hanging around, why not use it as an opportunity to take a friend or loved one out for a specialty coffee? Simply experiencing coffee-time together changes how you both spend your time that day, accomplishing the indicators of mindful, happy spending outlined in this video. It is experience based and leads to improving a connection and relationship.
The more you look for opportunities to spend money in these overlapping ways, the more you’ll find. And the more you find, it’s likely the happier you will be.
If that’s not a good use of money, I don’t know what is.
If you want to take a deeper dive into this information, a great book to read is called Happy Money, by Elizabeth Dunn, who carried out studies on the information discussed.
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