I recently attended a conference where the author of "Happy Money: The Science of Happier Spending" gave a keynote speech. Many of us wonder if more money can make us happier. Research shows that it does, indeed, up to an income level of about $75,000 per year. Then it evens out. So if more money can't make us happier, can spending it differently?
It turns out that it can. Good news this time of year where overspending is an American pastime. Most people equate overspending with regret, and that clearly won't make you happier. Below I'll summarize the 5 key principals of the book, and offer tips on how spending your money during the holidays might be able to make you happier, instead of regretful, come January.
Buy Experiences, not Material Things
If you're a fan of camping out for Black Friday deals, you might resist this one. The holidays are an especially important time to separate the happiness gained from experiences v. things. Research shows that we gain more happiness by purchasing experiences than we do by buying things.
I know it's hard to put experiences under the Christmas Tree. It's hard to box them up and give them as a gift. But years later when you look back on your holiday memories, you will remember going out to cut down your tree, or the family vacation, or the moments you spent with family and friends during your time off.
You won't remember the toys that got broken the first day the kids took them out of the box. You'll compare your "stuff" to others' and be disappointed. It's more likely you won't regret the experiences you had, and the lasting happiness they provided. You may tell the stories for years and the happiness keeps multiplying.
Make it a Treat
Think about it, did your most recent phone purchase bring as much happiness as the first time you got one with a camera and internet access? Abundance makes it very easy to take everything for granted. Similar experiences or things that we get all of the time undermine our capacity to really appreciate those purchases.
Instead of doing or getting more of the same over the holidays, spend your money on something unique. Something that is out of the ordinary and will surprise the recipient. In addition, take the time to enjoy gifts, instead of rushing through. It's the small moments when we appreciate something new that our happiness is most intense.
The holidays are a crazy time. Between family, friends, holidays and vacation, there's cooking and shopping, and driving and the effort it takes to put all of this fabulousness together. You'll be happy to know that buying time has been proven to increase happiness.
So go ahead and buy the store-bought desert. Consider going out for the holidays, or buying a prepared meal. Shop online to save time, have presents already wrapped, and get them delivered to your door. It might even make sense to pay someone to decorate for you!
The key is to pay someone to do the things you don't like or want to do. Keep for yourself the holiday experiences you love the most. Be honest with yourself as to how much you can accomplish and keep your sanity intact. If others ask you to do things for them, think about saying no, and suggest they buy time for themselves too!
Pay Now, Consume Later
It turns out that we enjoy things more when we feel like they're "free". For example, an experience like a vacation is actually more enjoyable if you've paid for it in advance. This is why all-inclusives are great. You've paid for lodging, food, and maybe even drinks. You might as well enjoy it while you are there and you don't have to think about spending money for every meal or drink.
Unfortunately, our current spending habits are such that we tend to buy/consume now and pay later. This actually lessens your happiness because you have that bill hanging over your head.
Paying and consuming at the same time can lower happiness as well, because the pain of paying gets in the way of enjoying what you are paying for. Making money decisions is stressful and decreases our happiness.
Invest in Others
The holidays are actually a great time to do this. Research shows that spending money on others makes us happier than spending it on ourselves. It can even improve health. Gift-giving is a great way to do this. Think about the previous 4 principals when giving to others as well.
Another way to do this is to donate to charity, or volunteer your time. As I mentioned above, time and money are intertwined and doing something for others while you pay someone else to clean your kitchen, might just lead to your happiest holiday ever!
If you're interested in learning more about using your money to improve your happiness and increase your "Return on Life", take our free assessment!