Those of you already using our wealth consulting service will know we focus on helping you achieve the outcomes that are important to you, rather than simply helping you to grow your money grow as an end in itself.
With Christmas now behind many end up feeling hollow after all the presents have been unwrapped and only wrapping paper and bills remain.
As an antidote, we thought it helpful to share 6 ways money can buy happiness from research by University of British Columbia academics Elizabeth Dunn and Michael Norton published in their book, Happy Money.
1. Spend money on others, not yourself
One experiment involved asking people on a Vancouver street how happy they were at that point in time before giving them an envelope containing cash and instructions to spend the money that day on either a gift for them self or for someone else.
Follow up questioning that evening found that those who spent the money on others were measurably happier than those who spent the money on themselves, despite there being no differences between the groups at the start of the day. There was also no difference arising from the amount of money provided in the envelope; it simply related to whether money was spent on others or themselves.
2. Spend money to give your more time
Participants were asked to keep a record of everything they did for a whole day, to compare leisure time to similar diaries from the 1960s. It found our sense to have less free time now than in earlier decades to be illusory - we actually waste a lot more time mindlessly watching TV, obsessing over looks or gadgets, or drifting aimlessly from one activity.
Although money can be used to buy free time - by outsourcing the demands of a daily life such as cooking, cleaning, and even grocery shopping - wealthier individuals reported elevated levels of time pressure. The critical issue is how people consume the extra time they buy.
By contrast, people who feel they have plenty of free time are more likely to exercise, do volunteer work and participate in other activities linked to increased happiness – like time spent on nurturing relationships with friends and family, playing music or engaging in satisfying hobbies.
3. Spend money now, but wait to enjoy it
Researchers who studied a thousand Dutch holidaymakers concluded that by far the greatest amount of happiness extracted from the vacation is derived from the anticipation period - a finding that suggests we should not only prolong that period, but aim to take several small holidays rather than one mega-holiday.
4. Spend money on experiences, rather than on possessions
The evidence reveals that it is experiences— not things— that make you happy. Experiences like hikes with friends or family game nights are virtually free. Many others — road trips, boozy dinners, sports tournaments, cooking lessons, and rock concerts — cost money…
5. Spend money on many small pleasures, rather than on a few big ones
Interviewing people of all income levels in the United Kingdom found that those who frequently treated themselves to low-cost indulgences — picnics, extravagant cups of coffee and treasured DVDs — were more satisfied with their lives.
Other scientists found that no-cost or low-cost activities can yield small boosts to happiness in the short term that accumulate, one step at a time, to produce a large impact on happiness in the long term.
6. Spend money on fundamental feelings
If money isn’t making you happy, you may be spending to keep up with neighbours, validate your wealth, or flaunt your looks, power, and status.
The researchers found that perhaps the most direct and reliable way to maximize the happiness and fulfillment that we can extract from money is through need-satisfying pursuits— for example, by spending capital on developing ourselves as people, on growing, and on investing in interpersonal connections.
In other words, spending that yield the greatest emotional benefit are those that involve goals that satisfy one of the three basic human needs:
- competence (feeling capable or expert)
- relatedness (belonging and feeling connected to others)
- autonomy (feeling a sense of mastery and control over one’s life)
The research concluded that focussing spend on activities that satisfy basic human needs brings more happiness and, equally important, stops stimulating the ever-increasing addiction-like desires for more and more that typically plagues us in the affluent west.