You’ve likely heard people say that money can’t buy happiness. Let’s dig a little deeper into that cliché. Really? Perhapas, someone working two jobs making poverty level wages ($24,000 for a family of four) wouldn’t be happier working one higher paying job and being home with the family?
Research shows that people who make $55,000 are happier than those that make $25,000. But here’s the surprise, only 9% happier. It turns out that in the United States that once people make $75,000 per year, making more money has no influence on their happiness. Those making $200,000 are not happier than those making $75,000.
I have an intriguing short book (157 pages of text) with many practical suggestions to improve your happiness for you to spend your money more effectively. Happy Money: The Science of Smarter Spending by Elizabeth Dunn and Michael Norton may have you rethinking your particular romance with money.
In this fast read, the authors outline five ideas to improve your happiness with the money you have.
Chapter One – Buy Experiences
Chapter Two – Make It a Treat
Chapter Three – Buy Time
Chapter Four – Pay Now, Consume Later (I bet that sounds counterintuitive.)
Chapter Five – Invest in Others
Let me dig a little deeper into Chapter One.
Buying experiences is right up our alley. As parents we focused on giving our kids experiences. For example, we thought traveling West would be a short and long term positive experience for them.
When our kids were young, Hannah and I took them on driving and camping trips to the American West for four straight summers. For four to six weeks, we would drive to Yellowstone in Wyoming, Zion National Park in Utah, or even to Denali National Park in Alaska. One night we all squeezed into one tent when torrential rains flooded our campsite at Devil’s Tower, WY.
Driving in a GMC Van with three rows of seats, we packed tents, sleeping pads and bags into a Sears Cargo Carrier on the roof, which allowed us still to have room for all five of our bicycles. Camping in state and national parks and the occasional KOA Campground with a pool, we treated ourselves to breakfasts out and made lunches and dinners on the road.
The authors claim that experiences have value over material goods if they:
- Bring you together with other people to foster a social connection
- Make a memorable story that you’ll enjoy retelling for years to come
- Provide a unique opportunity without easy comparisons to other activities.
When researchers at Cornell asked strangers to discuss purchases that they made with the intent to increase their happiness, those who talked about experiential purchases enjoyed the conversation more than ones who talked about material purchases.
Other research shows that the satisfaction with experiential purchases increases over time while satisfaction decreases with material purchases.
Happiness is not something ready made. It comes from your own actions. Dalai Lama