Could you buy happiness vis-à-vis your shopping purchases or is happiness an intangible and priceless pursuit? It would seem obvious that those with higher incomes, if not savings, struggle less with basic needs and are more likely to be happier than those fighting to stay afloat financially. But putting this statement to the test of science, research shows that money alone doesn’t guarantee happiness and when it does, only to a limited extent. What really matters is how you spend and use your money. Take these tips from researchers on making your money and your life count:
1. Buy experiences, not things
As the trend for pre-ordering phones and long queues at telecommunications outlets would suggest, buying the next new iPhone and trading in their old one has become a de rigueur habit for many consumers. Having a fancy top-of-the-line gizmo in the palm of your hand certainly feels splendid and you will marvel with elation at it for the next few days, but what happens after?
To answer this, researchers at Cornell University conducted a study that asked participants how satisfied they were with material or experiential purchases they had made and that cost them at least US$50. While the participants recalled liking both material good and experience at the time of purchases, their satisfaction with the material purchase declined over time as compared to their satisfaction with their experiential purchase, which in fact increased.
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2. Experiences rather than material goods add colour to our lives
So happiness doesn’t just become more long-lasting with the purchase of experiences such as travelling or paying for a class to pick up a new skill rather than one-off purchases. These experiences also become part of our identity and add to our life stories – an unseen transaction worth more than cold hard cash.
“Psychologically, it is the experience that lives on and the possession that fades away,” wrote the Cornell researchers in their 2014 paper published in the Journal of Consumer Psychology. “Experiences live on in the memories we cherish, the stories we tell, and the enhanced sense of self they help us construct.”
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3. Spend on someone else for more happiness
It’s not to say that money doesn’t factor into the equation for happiness. But instead of purchasing something only you can enjoy, you can in fact become happier when you spend money… on someone else. Professor Elizabeth Dunn, an associate professor of psychology at the University of British Columbia (UBC) and Professor Michael Norton, an associate professor of marketing at Harvard Business School carried out a study to test this out and chronicled their results in their book, Happy Money: The Science of Smarter Spending.
They handed out envelopes containing different sums of money and instructions to students at UBC. Some students received a slip of paper that instructed them to spend the money on themselves while others were told to spend it on other people. By the end of the experiment, the researchers found that those who spent money on other people reported feeling happier, while those who purchased things for themselves felt no different from the start of the experiment.
Additionally, what struck the researchers was that the differing amounts of money they were given and spent did not affect levels of happiness. What mattered to the cause of happiness was spending money on other people whether in Canada, Uganda or South Africa, where they also ran similar experiments.
You don’t have to wait till you’re wealthy to spend money on others or give away some money either. The researchers’ data also showed that people who donated money to charity were happier, whether they were in poor or rich countries. “A lot of us think we’ll give to charity one day, when we’re richer, but actually we see the benefits of giving even among people who are struggling to meet their own basic needs,” said Professor Dunn about their findings in a 2014 interview with the Wall Street Journal.
Make it easier to give by signing up for small automatic contributions from your bank account to causes that you care for. For example, you can regularly donate amounts as small as $10 to any sum you wish to give to your choice of several local charities via your credit card. Maybank is one of the banks that offer such services.
4. Get rid of your debts
But no matter how enlightened or satisfied you think you will be from a spiritual vacation to a remote island far away, Professor Dunn offers a reminder about spending wisely in the same interview. “Savings are good for happiness; debt is bad for happiness. But debt is more potently bad than savings are good,” said Professor Dunn.
Your happiness levels are bound to slip when you realise your spending is over the budget. So before you start booking flight tickets for you and your friends, make sure you have paid off your debts and actually have a substantial amount of savings – not necessarily to build up your wealth, but to ensure your financial independence and protection for a rainy day.
Additional read: 6 Tips to Get out of Credit Card Debt Quickly
If you’re in a healthy financial position to do that sight-seeing trip to a historical spot you always wanted to visit, don’t forget that there are cards that help you save in kind too, such as the ANZ Travel Visa Signature Credit Card that can earn you up to 25,000 air miles when used!