1) Spend Your Money On Many Small Pleasures Instead Of A Few Big Ones
One researcher, for example, interviewed people of all income levels in the United Kingdom and found that those who frequently treated themselves to low-cost indulgences— picnics, extravagant cups of coffee, and treasured DVDs— were more satisfied with their lives. Other scientists have found that no-cost or low-cost activities can yield small boosts to happiness in the short term that cumulate, one step at a time, to produce a large impact on happiness in the long term.
2) Spend Money On Fundamental Feelings
If money isn’t making us happy, it’s likely because we are spending it to keep up with the neighbors, validate our wealth, or flaunt our looks, power, and status. The problem, then, isn’t in the money but in how we use it. Perhaps the most direct and most reliable way to maximize the happiness and fulfillment that we can extract from money is through need-satisfying pursuits— for example, by spending our capital on developing ourselves as people, on growing, and on investing in interpersonal connections. In other words, the purchases or expenses that will yield the greatest emotional benefit are those that involve goals that satisfy at least one of the three basic human needs—( 1) competence (i.e., feeling capable or expert), (2) relatedness (i.e., belonging and feeling connected to others), and (3) autonomy (i.e., feeling a sense of mastery and control over one’s life). Such activities have been shown by researchers to bring happiness and, equally important, not to stimulate ever-increasing addiction-like desires for more and more.
3) Spend Money On Others, Not Yourself
In a groundbreaking set of studies, University of British Columbia professor Elizabeth Dunn and her collaborators set out to test the notion that money can buy happiness, but only if it’s spent pro-socially— that is, when we invest in others rather than in ourselves. First, they surveyed a nationally representative sample of over six hundred U.S. residents on their spending habits, and found that the more they spent their money on gifts for others and charitable donations, the happier they were. Notably, the amount they spent on gifts for themselves, bills, and expenses was unrelated to their happiness.
4) Spend Money To Give You Time
If we spend our money to open up more “free” hours in the day— for example, by reducing our work hours (because we already make enough) or paying others to perform time-consuming chores (e.g., fix the plumbing, stand in line at the post office, fill in tedious documents, call airlines)— we can spend our time enjoying those things in life that both empirical and anecdotal evidence suggests make us happy. Essentially, these activities include the kinds of need-satisfying pursuits I discussed earlier— for example, connecting with friends, nurturing intimate relationships, socializing at parties, consuming art, music, and literature, learning new languages and skills, honing talents, and volunteering at our neighborhood hospital, church, or animal shelter. Tellingly, these are precisely the activities that people on the brink of death, like mountaineers caught in a blizzard on Mount Everest, wish they would have spent more time doing in their everyday lives. Therein lies the rub. The critical issue is how we consume the extra time we buy. If, instead of doing something meaningful, engaging, fruitful, or growth-promoting, we fritter the hours away by mindlessly watching television shows, obsessing over our looks or gadgets, or drifting aimlessly from one undertaking to the next, then happiness will surely not come from riches.
5) Spend Money Now But Wait To Enjoy It
For example, a month before embarking on a guided twelve-day tour of several European cities, eager travelers report expecting to enjoy their trip significantly more than they actually do during the twelve days. Identical results are found when students are surveyed about their expectations three days before their Thanksgiving vacation, and when midwesterners are surveyed three weeks before a bicycle trip across California. Indeed, researchers who studied a thousand Dutch vacationers concluded that by far the greatest amount of happiness extracted from the vacation is derived from the anticipation period, a finding that suggests that we should not only prolong that period but aim to take several small vacations rather than one mega-vacation.
6) Spend Your Money On Experiences Rather Than Possessions
Growing evidence reveals that it is experiences— not things— that make us happy. Many experiences, such as hikes with friends or family game nights, are virtually free. And many others— road trips, boozy dinners, sports tournaments, cooking lessons, and rock concerts— cost money…In sum, the research on the superiority of experiences over possessions is hugely persuasive, and all of us— but especially those of us with meager budgets— would do well to apply its recommendations. However, it’s important to remember that material things can also make us happy— as long as we turn them into experiences. We could take along our family and friends in an adventure in our new car; we could throw a party on our new deck; and we could practice a self-improvement program on our new smartphone.
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