We all sometimes engage in retail therapy to fill the void inside our souls. I know I do. Frivolous impulse purchases skyrocketed when people were cooped up under quarantine restrictions – and for a reason. Whether a board game to pass the time, fitness equipment to keep in shape, or a stationary kit to take up calligraphy as a new hobby, we spent money to cope with stress, anxiety, isolation, and frustration.
Yet did it work? Does it, ever? Do you have a bread maker collecting dust in your kitchen or an extravagantly expensive collectible that you felt buyer’s remorse about as soon as you checked out? Does spending money ever bring us the comfort we long for, or is it an exercise in futility? Well, as it usually is with issues I write about, there is no one straight answer.
First of all, let’s focus on the amount. Having more money does improve your well-being and feeling of happiness up to a point. According to a study by two economists and Nobel Prize laureates, Daniel Kahneman and Angus Deaton, when you get out of poverty and reach relative affluence at $75,000 a year ($92,000 in today’s money), emotional well-being flatlines. Anything you get on top of this sum doesn’t make you happier. In fact, up until this threshold, it’s fair to say you are getting less unhappy. You get the means to solve your problems – get a comfortable home, take care of your health, put nice food on the table, and get clothes and other essentials. Once money fulfills this primary function, it’s powerless.
Or is it? Well, it depends on how you use it. There are ways to leverage money to actually become happier. And here is the kicker – you don’t have to be rich. Research shows that people in countries with different levels of median income report being happier if they do this.
Invest in time
We all know that time is money, but we often value money over time and equate business with status. This approach can be detrimental to our happiness. People who focus on how much they can earn per hour see their downtime as a lost opportunity. This can even spoil their enjoyment of leisure activities. You don’t want to be a burned-out husk of a human that cannot relax and keeps yelling at their phone while others around them sip cocktails at the pool party, do you? In this case, instead of spending every waking moment either working or worrying about how much you could earn if you were working, invest your money in buying time – and enjoying it.
Ashely Whillans, an assistant professor at Harvard Business School, focuses her research on trade-offs between time and money. She has found that outsourcing unpleasant tasks has more measurable positive effects on well-being than buying material things, significantly improving mood and lowering stress levels. So go ahead and hire a cleaning service to thoroughly spruce up your house, get food delivery if you are not in the mood for cooking, or ask an expert, “Please, write my paper for me. I’m so tired!” Delegate tasks that make you unhappy and use this time to do the things that bring you joy. Like walking in a park, sleeping, or hanging out with your friends.
Spend on others
Speaking of friends, why not treat your pals to ice cream when you get together next time? I promise you, it will make you feel good. I have science on my side to back this one up too.
Michael Norton, professor of Business Administration at Harvard Business School, behavioral economist, and author of the How to Buy Happiness TED Talk says that a series of experiments he helped to conduct proved that people are happier after spending money on others than spending the same amount on themselves. Another survey he contributed to showed that this has a consistent, long-lasting effect. There is a positive correlation between spending money on other people and self-reported life satisfaction. At the same time, there is no similar correlation between spending more on yourself.
Of course, spending money on yourself feels good as well. However, according to science, it doesn’t last for very long. So if you want a boost to your happiness with staying power, buy something for a friend. Or better still, donate to charity. As it turns out, generosity has a great return on investment.
Buy experiences instead of things
When faced with a choice between splashing out on a dream wedding or making a house deposit, people tend to be practical. A fairy-tale ceremony and posh reception will come and go, while a comfortable home will be there tomorrow – just common sense, right? It turns out common sense isn’t always the straightest way to happiness.
The thing about humans is that we are super good at adaptation. We get used to everything – the rough and the smooth. Material objects that used to bring us pleasure yesterday are taken for granted today. Whereas experiences, according to Thomas Gilovich, a psychology professor at Cornell University, “live on in the stories we tell, the relationships we cement, and ultimately in the sense of who we are [because] we are a sum of our experiences.”
Moreover, unlike material things that tend to break and disappoint us, experiences only gain with time. It’s easy to romanticize even the bad ones. For example, I remember how we got drenched under the rainfall that started unexpectedly as we were riding a rollercoaster with my classmates. It ruined my hair, makeup, and cool hot pink pants (they were cool back then, okay?), but the memory of it never fails to put a smile on my face.
Invest in things conducive to experiences
Of course, there is always a compromise. For example, if you do buy things, you will make a better investment when purchasing something that can lead to more experiences. Let’s take the example above with wedding vs. house. A house might bring you a comparable amount of happiness in the long run if it enables you to invite your friends over and entertain more often.
On a smaller scale, a bike, for example, is a better investment than a comfy chair because a bike will lead to cycling trips with friends and being outdoors more often, creating experiences and memories. A new smartphone will allow you to communicate better or listen to your favorite music in better quality. These material items don’t improve your happiness per se, but they can contribute to it if you use them well.
Ultimately, before you buy anything, ask yourself why you need it. If the answer involves activities that bring you joy, like hobbies or spending more time with people you love, then go for it!
Space out spending and consumption
If there is a big-time gap between paying for something and enjoying it, there is a higher chance it will make you happy. First of all, you will prolong the pleasure by savoring it in advance. Second, your brain will not directly link the experience with the loss of money as it is with an immediate purchase. You are more likely to perceive this postponed purchase as a gift, and the joy will be unadulterated. Finally, taking care of our future selves is a bit like investing money in others. This may sound weird, but people tend to perceive their future selves as if they were another person. Researchers often study the negative effects of this bias, like procrastination and lack of good saving habits, but it turns out there is a positive flipside.
Therefore, a planned vacation or a highly anticipated concert that you have booked several months in advance should make you happier than a shopping spree on a whim. This way, you combine experiences with delayed consumption.
Invest in shared experiences
While we are still on the topic of that concert, how about booking two seats? Experiences that forge friendships and create shared memories will boost your happiness more than things you do alone. This is true for introverts as much as extroverts. The only difference is that an introvert will probably benefit more from a company of a significant other or a couple of closest friends, while for extroverts, it’s usually the more, the merrier.
A dorm party, a girls’ night out, an evening with buddies in a bar, taking your family on a cruise, a school reunion – all these are worthy investments as they strengthen our social bonds, which are crucial to our sense of well-being and happiness. Even sharing your experience after the fact by telling stories or sharing pictures has a beneficial effect and boosts the joy you get from it. However, be careful not to brag. Instead, describe how it made you feel in a positive and encouraging way that can benefit others, too.
Make it a treat
As I have mentioned above, we get used to things we have all the time. Unfortunately, it includes immaterial things as well. So if you pop into your favorite coffee shop every morning, it becomes routine and stops bringing you as much joy as it used to. The remedy?
Dr. Elizabeth Dunn, a Psychology professor at the University of British Columbia and an author of Happy Money: The Science of Happier Spending, advises you to take a break from the things you take for granted. The benefit is twofold. First, you will cut down on spending (and calories, in my case, as I am a chocolate addict). Second, you will increase your happiness because a previously habitual thing now becomes a treat, something to anticipate and celebrate. A win-win situation that requires nothing but a bit of restraint.
Many a little makes a mickle
Treating yourself to one little thing at a time over a long period boosts your sense of well-being more than saving up and splurging on something big. The joy of purchase – no matter how big – wears off quickly. So investing the same amount of money into many small instances of fun will yield more happiness cumulatively.
The tricky bit is keeping the balance. Otherwise, you risk making those little treats too routine and getting used to them. So, the perfect solution would be to go into that coffee shop once a week – on Friday, to celebrate, or on Monday – to cheer yourself up and kickstart a productive week!
Nowadays, we rarely commit to purchasing anything without a meticulous study of all available options and detailed comparisons. This sounds like a wise way to spend money and responsible consumption, yet it can detract you from enjoying the thing you buy in the end. How? Perceived opportunity cost grows with every alternative you’ve forgone, creating feelings of dissonance and buyer’s remorse.
If you compare for too long, you will end up second-guessing your choice and worrying about all the options you’ve missed out on instead of enjoying the one you’ve picked. Of course, when you buy a laptop for college or something even more expensive, you must make sure that you invest your money in a reliable thing, but agonizing over which hoodie to get – purple or green? – doesn’t make sense. Just grab whichever has caught your attention first and get drunk on that dopamine kick already.
The main secret of contentment is to be realistic and not over-hype yourself about the joys the future purchase will bring. Our imagination tends to airbrush all the potential drawbacks and downsides, painting an idealized picture of pure bliss while reality might not be as smooth. For example, when you plan your seaside trip, you imagine golden days and balmy nights but rarely anticipate sunburns and mosquitoes. Staying grounded and thinking about the big picture before making a purchase will help you avoid disappointment and appreciate the thing or experience at its face value.
It’s important not to overestimate the happiness the purchase will bring you. Otherwise, you will spend money on something you don’t really need or worse – something you can’t really afford.
I know that these tips are very difficult to follow all at once. Quite frankly, they sometimes downright contradict each other. Treading this fine line is tricky – but who said happiness is easy?
If all this sounds too complicated, here is the parting advice from Sonja Lyubomirsky, a Professor of Psychology at the University of California, Riverside, whose primary interest is the science of happiness. She reminds us that not spending money at all can be satisfying too. Instead, we should pay more attention to things we already own, enjoy them, think actively about the benefits they bring, and remind ourselves of the initial pleasure we felt when we bought them. Greased by gratitude and mindfulness, the joy never wears off.