Increasing income is often linked to perceiving less free time, impacting the overall happiness negatively. Feeling too busy or not busy enough also affects well-being. Money alone doesn’t guarantee happiness, as highlighted in a Journal of Consumer Psychology study.
Lack of scientific knowledge leads to ineffective use of money for happiness. Despite money being an opportunity for joy, it’s often wasted on pursuits that may not fulfill. Researchers advise spending discretionary funds wisely to truly leverage money’s potential for happiness.
Follow these guidelines to convert money into happiness:
01. Opt for experiences over material possessions
While material items quickly lose their novelty due to ‘hedonic adaptation’, experiences continue to bring joy long after the event. Studies show that people mentally revisit experiential purchases more frequently than material ones.
Experiences are also more memorable and contribute more to one’s identity. Regardless of income, a study in the Review of General Psychology indicates that higher earners are more likely to find happiness in experiential purchases.
In essence, prioritize necessary purchases and invest in meaningful experiences, particularly smaller ones, as explained further below.
02. Maximize your happiness by indulging in numerous small pleasures
Focus on frequent, smaller pleasures for lasting happiness. Research shows that the frequency of positive experiences matters more than their intensity. Investing in everyday delights like double lattes, pedicures, and high-quality socks is advised over occasional splurges on big purchases.
Limited money is better spent on regular doses of joy due to the diminishing impact of each pleasure’s increasing magnitude. While ‘peak’ experiences hold value, they might reduce enjoyment of smaller, daily pleasures. Strive for a balance, as life is meant to be filled with daily joy, not just occasional peaks.
03. Opt for a delayed gratification
Future anhedonia, the belief that emotions will be less intense in the future, may lead to impulsively borrowing for immediate consumption. However, for lasting happiness, it’s the wrong approach. Delayed consumption offers the advantage of anticipation, akin to the enjoyment of planning a vacation.
Immediate purchases often lack consideration for long-term rewards and costs. While borrowing money is easy, it should be viewed as an investment, ensuring returns beyond just financial gains. The key return is the enduring benefit you gain, particularly over the long term.
04. Benefit by helping others with your money
Numerous studies indicate that the quality of your social relationships significantly influences your happiness. Interestingly, individuals who allocate more money to prosocial spending, aimed at benefiting others, tend to experience greater happiness, regardless of their income level.
However, there’s a common mistake in predicting future feelings (affective forecasting error) where people assume spending on themselves brings more happiness than spending on others, despite research confirming the consistent well-being benefits of prosocial spending.
The remedy? Occasionally, spend money in ways that assist others, be it through charitable giving, romantic gestures, gifts for friends, or treating your family to dinner. Research highlights that the giver often reaps significant benefits, including increased happiness and self-regard, on par with the receiver. You can never beat that!
05. Always factor in your everyday life when making a purchase
Research highlights that seemingly ‘irrelevant’ details can significantly influence your happiness with a purchase over time. According to the researchers, individuals anticipating a lasting impact on their happiness from a single purchase can make more realistic predictions by reflecting on a typical day in their life.
When making a purchase decision, go beyond focusing solely on the positives. Deliberate on potential downsides, as they are likely present. Consider how the purchase aligns with your typical daily activities, rather than just occasional needs for specific features.
This brings us to a related point…
06. Shop wisely by comparing products with a clear focus
While it’s natural to want the best value, research suggests that comparison shopping can lead to distraction. Instead of focusing on attributes crucial for your happiness, you may be swayed by distinguishing features among options. For instance, you may only need a lightweight, single-bevel miter saw, but the allure of a dual-bevel model can be distracting.
To make the best decision, identify your essential needs, such as easy portability and setup, and base your comparison shopping on those criteria. Avoid letting irrelevant factors influence your choice, as this could result in paying for features that only seem important momentarily or that you might think you’ll need in the future.
07. Choose your crowd wisely for a greater happiness
While happiness is subjective, research indicates that gauging others’ enjoyment of an experience can predict your own satisfaction. This doesn’t mean blindly following others but rather considering the preferences of people who share similarities with you.
For book recommendations, turn to sources like Ryan Holiday and Adam Grant; for movies, consider Justin Chang’s suggestions. Seek recommendations from those who resemble you, such as friends in the same profession offering valuable tool advice.
As the researchers emphasize, others provide valuable data not only on what made them happy but also on what might bring you happiness, particularly when it comes to spending money for greater joy.