Rethink where you spend your salary: make your money matter

Whether money can make you happy is an age old question, but modern science can actually answer it. The studies show that how much you earn can make you happier to a certain point, but how you spend the money you have can really have an impact on your overall happiness. So how can you spend your money in a way which will make you happier?

Spend on time

Science shows that one of the best ways you can spend your money if you want to make yourself happier is by spending money on things that will get you back time. If you want to dive into the actual science behind this, take a look at Sonia Lyubomirsky’s research. In a nutshell though, if you can find a way to free up your free time, particularly to make time to spend time with loved ones, to enjoy music, films or other cultural events, learn a new skill, or volunteer time for charity.

There are a couple of ways in which you can spend money to free up time. You can employ someone to do tasks you don’t enjoy, such as cleaning or ironing, invest in a service that makes every day processes such as a food box subscription, or even give up over time to give yourself more free time. You can also spend money on tools or equipment which will cut down how much time you spend on manual tasks, such as a robotic vacuum, or a faster laptop.

Spend on experiences

There are a number of scientific studies that show that money spent on experiences makes people measurably more happy than money spent on things. This could be for a number of reasons. The two main ones quoted by experts are that it’s harder to compare experiences directly with others, and also because more time is spent in the build up to the event, planning, organising and generally anticipating the experience.

There are an unlimited number of experiences you can spend money on – from holidays, to concerts, museum exhibitions, and meals out with loved ones. The important thing to note is that it doesn’t need to be expensive in order to bring you joy. Another top tip is that sharing the experience with your loved ones afterwards can prolong the happiness that you gain from this way of spending, so tell your friends and family all about all the cool things you’ve been up to afterwards!

Spend money on other people

It might be surprising, but buying gifts for other people can actually make you more happy than buying something of a similar value for yourself. Elizabeth Dunn has done a number of studies in this area, her research shows that regardless of how much money you spend, and how much money you have, spending on others has a measurable effect on your happiness. Her studies also show that you can spend as little as $5 and still get this effect.

Alongside buying treats for your family and friends on occasion there are a number of other ways you can get this little bump in happiness – paying for the stranger behind you in line at the coffee shop will actually make you happier, and this happiness will last longer, than treating yourself to an extra slice of chocolate cake (believe it or not!).

Spend money on things (mindfully)

It’s an undeniable fact that sometimes spending money on things for yourself does feel good. The problem is that the little dopamine boost you get from spending money in this way doesn’t last very long. However, science can help us here too! Elizabeth Dunn has actually also studied this, and she recommends spending money on several smaller treats which can be spread out a little more. She says you can increase your happiness when spending money on things by planning your spending and anticipating it, as you would when spending money on an experience.

Another thing you can do to make the happiness you experience from your physical purchases last a little longer is by regularly reflecting on the impact that your purchase has had on your daily life. Really taking the time to think about and enjoy the things you have in your life might seem childish, but the science shows that it will have an impact on your overall happiness.

Latest research on giving and happiness 

On a recent episode of my Spotify podcast Happiness and Humans I interviewed social psychologist Lara Aknin on her latest research on the association between giving and happiness.

Lara commented

“Our findings demonstrate a pretty consistent causal link between generous spending and happiness… Specifically, spending money on others is most likely to lead to happiness when spenders choose freely to provide help, when generous spending provides an opportunity to connect with other people, and when spenders see the positive impact of their generosity.”

Freedom To Be Happy 

This mention of freedom by Lara is consistent with much of our other areas of research into happiness. I chose the title Freedom To Be Happy For my new book because freedom is incredibly important to me personally but time and time again we see its association with happiness.

So perhaps it is more accurate to say that money can’t directly buy you happiness but it can help to create freedom if you choose to spend it in the right way.

Written by Matt Phelan.