People who get more money don’t necessarily get and stay happier.
But that’s because they’re spending money in the wrong way, according to Elizabeth Dunn and Michael Norton, authors of the new book “Happy Money: The Science of Smarter Spending.”
Their book uses research into happiness to recommend five ways you can get more happiness out of your money.
Most people spend their money on themselves, Dunn said in a video interview with U.S. News and World Report. “We buy ourselves stuff,” he said, “There’s nothing really wrong with that. It’s nice to have a house. It’s nice to have a car. It’s nice to have a TV.”
But people who only spend their money on stuff for themselves don’t report much happiness from that.
Instead, the book cites research that says people are happier spending money in these five ways:
1. Buy experiences. “We get more happiness from buying experiences – concerts, special meals, trips — than we do from buy material things like couches, flat screen TVS, even houses,” Dunn said. “We’re better off investing in that trip to Paris than on more lasting material things.”
2. Invest in others. Buying somebody else a cup of coffee makes us happier than buying ourselves a cup of coffee. “It feels like you’re having an impact on other people,” Norton said, and that makes us happy.
3. Buy time. Spending money to cut a long commute so we can spend more time with our family will make us happier, Dunn said.
4. Pay now, enjoy later. “This is very hard for people to put into practice,” Norton said. But paying first makes us happier in two ways. First, if we pay for our vacation up front, when we experience it, we don’t dwell on the expense. Secondly, waiting lets us enjoy the anticipation, a source of happiness we underestimate, according to Norton.
“The best part of Christmas for little kids is the day before, when they’re insanely excited about what’s coming,” Norton said. The same is true for all of us.
5. Make it a treat. “Things that you love and have all the time stop delivering the kind of pleasure they once did,” Dunn said. “If people give chocolate up for a week, it increases their capacity to enjoy it.”
Elizabeth Dunn is an associate professor of psychology at the University of British Columbia in Vancouver, Canada.
Michael Norton is an associate professor of marketing at the Harvard Business School.
Here’s more information about their book: http://www.amazon.com/Happy-Money-Science-Smarter-Spending/dp/1451665067
Here’s an interview with the authors: