Does Money Buy Happiness?

Yes, but not as much as you might think. This seems strange, since money gives people choices, allowing them to buy higher quality food; engage professionals to assist them, such as personal trainers or gardeners; and spend more time with family and friends. So why are happiness scores only a little higher for wealthy people and countries compared to poor ones? According to the Journal of Consumer Psychology, it’s because people don’t spend their money on things that significantly enhance happiness.

Here are the authors’ suggestions for spending money that will increase your sense of happiness:

1. Spend your money to do or experience things, such as on vacations, classes, or concerts, rather than to get more stuff. Memories and learning stay with us, but possessions require care and break, and the pleasure of acquiring them wears off.
2. Spend your money on others. Giving strengthens relationships and stimulates areas of the brain related to receiving rewards.
3. Indulge in many small pleasures rather than one large one, especially if you’re on a budget. As pointed out previously, the enjoyment of the large purchase wears off quickly, but the good feelings from little treasures can be extended over time.
4. Plan as much in advance as possible, so you have the joy of anticipation. Looking forward to an event is very pleasurable, even if the activity itself isn’t all you’d hoped for.
5. Consider how much the item you’re purchasing will affect your daily life and how it has affected others. Aim for things you will enjoy often, to enhance happiness. If you’re unsure how beneficial something will be, consult others; their experiences are typically a good predictor of how you’ll feel.

Source: University of California, Berkeley Wellness Letter, September 2011