Spend Less, Be Happy? The New Price Tag for Happiness

When was the last time you asked yourself the question “what makes me happy?” Can’t come up with the answer? Nobel Prize winner Daniel Kahneman of Princeton University did it for us and guess what - money is not the primary indicator. Well, it is to some extent - money can give us the ability to afford a healthier, less stressful lifestyle, but there is a limit to the pleasure we derive from it. And that threshold, the researchers discovered, is $75,000 a year. Apparently, dollars earned above that number don’t correlate to happiness.

If wealth does not lead to lead to happiness, then what does? Happiness experts Elizabeth W. Dunn of the University of British Columbia,  Daniel T. Gilbert from Harvard University and Timothy D. Wilson of the University of Virginia allege that experiences keep people merrier than belongings. Perhaps it’s wishful thinking but at least it’s an investment everyone can afford. Their latest paper suggests new ways of spending that will help you stay happy. 

Invest in Pleasure Purchases:  Studies show that people derive more pleasure from experiential purchases than material ones. Part of the reason is that we adapt to things more quickly while experiences, particularly those that we share with others, turn into fond memories upon which we are more likely to reflect. The next time you want to splurge on something new for your wardrobe remember this: spending dollars on dinner with friends, drinks with a new date or a ticket to a concert or museum is healthier for your happiness. 

Opt for More of Less: Little things add up, especially if you do them more regularly. Think of it this way: four ten minute massages are less expensive than a one hour rub down but when done over the course of a month the effects linger longer. By the same token, taking several long weekends instead of one weeklong vacation allows you to spread out your vacation time, explore different places and reboot more regularly. Smaller or cheaper purchases will not turn you into a miserable scrooge, they simply help you stretch out your smiles.

Gift Others Over Self: Time is money, so giving up hours from your schedule should be considered spending. And there is no more gratifying way to dole out your spending than by helping others. According to one experiment, individuals who spent money on others were happier than those who had been assigned to spend it on themselves. Giving time, money and gifts to friends or donating to a meaningful cause improves social connections, which will make you feel more connected, helpful and content in the long run.