By Cheryl Steinberg
It’s an age-old question that many of us have come to recognize as a sort of trick question: Can money buy happiness? The answer may surprise you.
Duh. The answer is no, of course. Right? Well, not exactly.
New research suggests that money can play a role in your level of happiness but, there’s an important distinction: it’s not how much money you earn, but rather, how you spend it.
More recently, new research by both economists and psychologists across the globe has given way to a much deeper understanding of the relationship between money and happiness.
And, although we all want to believe that money can’t buy happiness, there’s something to be said for having enough money to provide for your basic needs – and then some. Therefore, the results show that yes, people with higher incomes are, generally speaking, happier than those who are struggling just to get by.
But, upon closer examination, the findings get a lot more surprising, as well as useful.
This latest research suggests that wealth, alone, doesn’t guarantee a good life. What matters most is you spend your money. So, for example, giving money away makes people a lot happier than spending it on themselves. And when they do decide to splurge on themselves, people are a lot happier when they use it for experiences, such as travelling and vacations, rather than on material goods.
Here are some ways to maximize your spending so that you can increase your happiness.
#1. Experiences Are Worth More Than You Might Think
Professor Howell, associate professor of psychology at San Francisco State University, published a study earlier this year, in which he found that people think that buying material goods will offer more bang for their buck because, these goods will last longer than, say a two-week trip to another country. Although they’ll occasionally splurge on concert tickets or a nice vacation, when they’re in a more conservative spending mode, they tend to spend their money on material goods.
However, Prof. Howell found that, in retrospect, people realized that experiences actually provided more value than bought goods.
“People think that experiences are only going to provide temporary happiness, but they actually provide both more happiness and more lasting value.” And yet we still keep on buying material things, he says, because they’re tangible and we think we can keep on using them.
The new car or latest iPad might give us a brief thrill but, we soon come to take it for granted. Experiences, on the other hand, often meet more of our underlying psychological needs. That’s because experiences are often shared with other people – and usually our loved ones, giving us a greater sense of connection, and they form a bigger part of our sense of identity. So, for example, if you went to the top of the Eiffel Tower or you visited the Great Wall of China, that’s something you’ll always remember and talk about, long after all your favorite gadgets have gone to the landfill.
Lastly, the phenomenon of “Keeping Up with the Jones’s” tends to apply more to material things than experiences. Therefore, experiences leave us with our own personal memories that cannot be compared to someone else’s.
#2. Practice Gratitude for What You Do Have
One of the main reasons why having more stuff doesn’t always make us happy is that we adapt to it. “Human beings are remarkably good at getting used to changes in their lives, especially positive changes,” says Sonja Lyubomirsky, psychology professor at the University of California, Riverside.
Adaptation comes from taking for granted what you have. One approach to avoid this is to practice gratitude by continually fostering appreciation for what you have.
#3. Give It Away/Spend It On Others
The irony of money is this: although earning more of it (usually) enhances our lives (being able to afford food, clothing, shelter), we actually become happier by giving it away rather than by spending it on ourselves.
#4. Don’t Spend More Than You Make
Getting in over your head is definitely the quickest path to misery. Although the research in this field has mostly focused on spending money rather than saving it, researchers agree that taking care of your basic needs and achieving a level of financial security is important.
So, here’s the bottom line, folks: When you don’t have much money, having a little extra can go a long way to cover your essential needs. As you accumulate more money, however, it becomes more and more difficult to continue “buying” your happiness.
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