Most articles about personal finance focus on the negative aspects of money.
That’s probably because money is the biggest source of stress across all income levels in the US.
However, we shouldn’t neglect the positive side of money. After all, there are documented benefits to certain kinds of spending.
Revisiting “Happy Money: The Science of Happier Spending”
A decade after it was published, Elizabeth Dunn’s book “Happy Money: The Science of Happier Spending” (HBR) still has important insights about how our spending habits impact our emotional lives.
Indeed, in a new era of a turbulent economy, high personal debt, and high interest rates, Dunn’s findings are more relevant than ever.
Among other findings, “Happy Money” presented the idea that some forms of spending can increase our happiness and even bring us joy.
So as an antidote to all the negative and shaming posts about spending, here are some of the ways spending can improve our emotional well-being and even spark joy.
1. Spend money on experiences instead of things
One of the most enduring insights from “Happy Money” is that spending money on experiences (travel, cultural events, workshops) makes us happier than spending money on things.
Of course, material possessions can make us happy, at least for a short amount of time. But it doesn’t take long for new things to lose their luster via hedonic habituation.
In contrast, experiential purchases tend to improve happiness and well-being over the long-term.
Also, experiences tend to involve other people and can connect us with others. And when it comes to enduring, long-term happiness, relationships matter most.
2. Spend money to get your time back
“Happy Money” suggests prioritizing saving your time over saving your money. Research shows this type of spending is uniquely beneficial for improving life satisfaction, and boosts positive emotions more than material purchases.
Maximizing time over saving money can also mean spending more to “buy” time. For example, Dunn found that people who spent more on a closer, more expensive grocery store rather than traveling to a further, cheaper store reported a higher life satisfaction compared to those who didn’t.
3. Spending money now on things you’ll enjoy later
The gist of this idea is “there’s pleasure in anticipation.” Instead of “buy now, use now, pay later,” to “buy now, look forward, enjoy later.”
By spending upfront and consuming later, you can fully enjoy the anticipation of a purchase without the stress of having to pay for it later.
Americans love credit cards, so spending on delayed gratification is especially challenging. One way to experiment with this is by starting small.
4. Spend your money on others
It’s well documented that people feel better when they spend money on others vs spending on themselves. This can involve gifts, donating to charity, and other forms of generosity.
“What we’ve discovered is that people were actually getting more happiness out of money that they used to benefit others, than money that they used to benefit themselves,” she said. – Elizabeth Dunn
Results from a huge, international study of over 200,000 respondents found being generous had a positive effect on one’s happiness in a whopping 93% of (120 of 136) countries. Other studies find “the more generous people were, the happier they reported feeling.”
5. Of course, not spending money can also lead to joy
Besides spending your money, Elizabeth Dunn has found that having cash in your bank account (distinct from total net worth) is “of unique importance to life satisfaction.”
Or, put another way, “spending” your money by putting it into a savings account can make you feel happy.
In the Atlantic article “Who Actually Feels Satisfied About Money?” Elizabeth Dunn noted “One reason why middle-income people might feel pretty good about their level of income is if they just happen to be living their lives in such a way that even if they don’t actually have a lot of net worth, but they always have 8,000 bucks in the bank.”
Another study from the U.K. found the amount of money people could see in their checking and savings accounts impacted their happiness more than their incomes. And it didn’t take a lot to feel better. Building even a small cash reserve of $500 can make people feel happier – even for those burdened with debt.
Cultivating a happy life
Most if not all of us consider our happiness and what we can do to help it flourish. Perhaps it’s outsourcing the yard work to get back a couple hours to go on a hike with the kids. Maybe it’s hiring a professional organizer to help you declutter and donate those seven extra sports water bottles and outgrown kids’ clothes to Goodwill. Maybe it’s finally getting a handle on your finances.
On the flip side, perhaps what some consider mundane, like trimming the bushes, actually adds enjoyment to your weekend.