5 Ways To Increase Happiness By Changing Your Spending Habits


The old adage that “Money can’t buy happiness” is somewhat misleading.

Recent research suggests that your level of  “happiness” could actually be increased by spending your hard-earned money the correct way. In other words, money can indeed buy happiness, but only if it is spent properly. According to a Harvard University research paper, “Most people don’t know the basic scientific facts about happiness—about what brings it and what sustains it—and so they don’t know how to use their money to acquire it.”

Here are 5 simple ways to change your spending and consumption habits in order to increase your happiness.

1. Buy More “Experiences” Than Material Objects

What this really means: Often times when we are feeling down or depressed it is recommended that we treat ourselves to something nice in order to feel better. However, research shows that experiential purchases (those that seek to acquire a life experience) show greater hedonic benefits compared to material purchases (those that solely seek to acquire a material good). One reason why is that we often look back and revisit our memories because they are connected to our identities and perceptions of self.

What To Do: Go on a cruise, travel to a foreign country for a summer or rent a cabin in the forest. Do not buy the new watch or shirt that you’ve been eyeing from Brooks Brothers. You’ll be happier about the experiences that you gain than you will be about the tangible item. Plus, you already have plenty of shirts.

experiential purchases

2. Use Your Money To Benefit Others Rather Than Just Yourself 

What this really means: Humans beings are very complex social creatures. We value friendships and relationships that we build throughout our lives. Because of this, the quality of our social relationships is deeply related to our level of happiness. One way to improve our connections with others is to spend money on them. Prosocial spending, or spending on others, has been shown to have a profound impact on social relationships. Spending money on another person also leads to an opportunity for positive self-presentation which has been linked to improvements in mood.

Even on a neurological level, when we give to others or volunteer, the areas in our brain that are associated with receiving rewards become activated. In other words, it simply feels good to give as well as help others.

What To Do: Buy a small gift for your significant other or best friend. Surprise a coworker with a small token of appreciation. Stop worrying about yourself and focus on the loved ones around you.

Prosocial spending
Maybe this is an exaggeration, but you get the idea.

3. Make Multiple Smaller Purchases Rather Than Fewer Larger Ones

What this really means: According to researchers, “… as long as money is limited by its failure to grow on trees, we may be better off devoting our finite financial resources to purchasing frequent doses of lovely things rather than infrequent doses of lovelier things.” Therefore, you are better off purchasing smaller frequent pleasures rather than expensive infrequent ones.

Also, smaller purchases are less likely to result in diminishing marginal utilityThis essentially means that as you consume a product over and over again, you derive less and less happiness each time. For example, pretend for a moment that you are very hungry and then eat a large chocolate chip cookie. After devouring the cookie, you might feel pretty good … perhaps even a bit happy. If you were to eat another big chocolate chip cookie you probably would experience some pleasure, but not as much as you derived from the first cookie you ate. Imagine eating cookie after cookie until you eventually felt sick. At this point, you have reached your maximum amount of utility — eating more cookies from here on out does not result in any more positive gains.

What To Do: Split up your large purchases into smaller pleasures over time. Instead of purchasing a 60-minute massage, purchase two 30-minute massages over the course of a week. Variation and variety can yield more enjoyment.

diminishing marginal utility
Sorry, there were slim pickings for funny images related to “diminishing marginal utility.”

4. It’s Okay To Follow The Herd And Not Your Head

What this really means: Simply put, “research suggests that the best way to predict how much we will enjoy an experience is to see how much someone else enjoyed it.” Think about how many times you’ve relied on reviews and ratings from websites like imdb.com, Amazon.com, grubhub.com and how they have influenced your consumption.

What To Do: Seek out authentic reviews and take them into consideration. Consult others before making a purchase. If a lot of people seem to like it, chances are you will too.

Follow The Herd
When it comes to reviews and rankings, sometimes it is best to “follow the herd.”


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5. Delay Your Gratifications

What this really means: Don’t give in to buying something right away to satisfy short-term demands. Research shows that waiting and delaying an anticipated purchase or event can actually make the overall experience more enjoyable. In other words, anticipation can be a positive thing.

For example, “when asked to choose a snack from an array that included apples, bananas, paprika-flavored crisps, and Snickers bars, people overwhelmingly selected an unhealthy snack if it was to be consumed immediately, but drifted toward the healthier options when selecting a snack to be consumed the following week.”

What To Do: This isn’t easy, but the best advice is to simply wait and delay your purchases. Mark it on your calendar or set periodic reminders on your phone. When the time comes, you’ll enjoy whatever you’re buying/doing even more!

Delayed Gratification
Do you really need it right now?


Sources: Harvard University



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