The way we spend our money, sometimes, does not give any psychological boost. You just need to learn how to do it the right way.
Take a minute and try to remember your last trip to the mall, did you feel satisfied with your purchases? If you felt good then you are doing it right, if not, then this article will definitely help you.
Many people tend to believe that money cannot buy you any happiness. Well in truth they can, it is just the matter of how to spend money the right way. The majority spend their money on gadgets, clothes, basically staff that in fact does not contribute to your psychological boost. Think about your own spending habits. You may want to reconsider them. Statistics show that not everything you buy will bring you happiness.
Scientist has already proven that money indeed can buy you happiness. There were conducted a lot of different researches about this topic and here are a few of them:
- Money Buys Happiness When Spending Fits Our Personality - A scientist from the University of Cambridge wrote a very interesting essay about ways how money can make you happy. They used 76,000 bank transactions to find out how matching of personality and the product can increase your life satisfaction.
- Buying time promotes happiness - Princeton University conducted research that proves that by spending money on your time (which I will go deeper later) can bring you a lot of happiness
- Money, Consumption, and Well-being - This list of publications is another good resource if you are interested in scientific proves. Most of this article is based on these publications.
And many more. These are the most important ones that I, personally, found. If you find any good research about this topic, please share in the comment section, I would gladly go over it and maybe include in the next edit of this article.
So hopefully that is enough to convince you. Here comes the list of 7 ways how money can buy you happiness, proven by many scientists 😅.
Money Buys us Security
If you don't have your own security found that always provide freedom to you and your family then you might have psychological pressure and fear to lose staff that you cannot afford to lose. So if you can save a certain percentage of your money to develop your security found then definitely do it. This investment in your future is proved to reduce your anxiety towards money and improve your psychological wellbeing.
For example, imagine you lost your job and you need to find another one as fast as possible. You don't have a lot of money to live on, so what are your actions? Will you find the first opportunity and take the hold of it? Or you will take some time and consider all possible options and chose the best and ideal job for yourself. The second option is only possible if you have enough money to stay afloat while searching for a new perfect job for yourself. And this is what is called security found, it needs to be developed beforehand and works pretty much like any insurance. You take, for example, ten percent of your salary and put it aside to some other untouchable account and keep money there. It is best when it happens automatically, that way you don't have to even think about it. That will give you the freedom to choose and say no, which of course will definitely improve your happiness.
So I, as personal finance enthusiast 😎, will strongly suggest you first invest in establishing your money security.
Buy More Experience Then Staff
The scholars are all seems to be agreeing on the fact that buying staff is something that doesn't make you any happier. "Life experiences and experiential products provide more well-being than material items," says Journal of Consumer Psychology in their article about the importance of experiential purchases. Therefore spending money on fun time, in fact, makes you happier especially if you share this experience with others. Hanging out with your friends and sharing some cool experience, like sky diving 🤪, sounds so much better than buying those tenth pair of jeans you always "needed".
Spending Money on Others
Have you ever spent money on someone? What have you felt? I bet if you genuinely wanted to do that then you felt awesome. You felt happy. Well, as a matter of fact, it is also has been proven that spending money on others makes us happier. Listen to what Michael Norton has said in his article about how money can buy us happiness:
People who spent on themselves didn't receive any happiness benefits — one more coffee doesn't change how we feel about our day. But people who spent on others were reliably happier. And this is true all over the world, even in very poor countries. At a very fundamental level, spending on others gives us the “warm glow of giving.” - Michael Norton, Actually, Money CAN Buy Happiness. Here's How
This "warm glow of giving" is something that everybody feel when they spend their money on charity. So if you really want to invest money in your wellbeing consider investing them in others.
Better Quality Social Interactions
There is a popular thought that the wealthier the community the happier they are. Well, it is not that easy as it looks. If you live in the poor community you have a bigger chance to end up around thugs and bandits who will do anything for money. This will definitely will not make you happy. On the other hand, people living in poverty are bond to their community. They spent more quality time socialising together.
On the other hand, people in wealthier communities seem to care more about their wealth and not care about surrounding people. But at the same time life in wealthier communities are safer and more comfortable.
What will make you happier, to grow your kids in the poor and bond community or wealthy and save? It is your decision to make.
But I know for sure that investing money to be in your perfect community will surely pay off. So seek better quality interactions and don't be afraid to spend money on it. At the end it is people who bring us the most joy.
Debt Free Life
Debts are rising. Debts put tremendous pressure on your life. Your financial choices are affected by your debt, which leads to worse health and a decrease in the quality of your life.
Nobody argues that debts will not bring you any happiness but paying off your debts will. Imagine to be a debt-free person, even a thought of it will make you feel better. So next point in my list is investing money in paying off your debts. Paying off your debts might not make you happy instantly but it definitely will in the long run. It is a long term investment that you will be thankful for.
We tend to run away from our problems, and debts are no exception. You would think that you'd rather spend your hard-earned salary on something "more valuable" than paying off your debt. As a matter of fact, it is not more valuable, the pressure of your debts will increase, you might face some extra charges for not paying off your debt on time. So commit to it, in the beginning, spend as little as five percent of your monthly salary to, at least, start paying off your debt. You will thank yourself later.
Buy Yourself Time
The most valuable thing in our life is Time. A lot of people underestimate the importance of their time. The money will come and go, but time, time will never stop, you don't have much time to live in this world. You need to understand that it is all we have. And we need to learn how to value time.
What would you rather do, spend some time reading your favourite book or clean your house? Well if cleaning is not your hobby then you probably would rather read your favourite book instead of cleaning. Then do it! Trust me even science is on your side. spending your money to hire some help around the house and free up a little of your time will make you happier is a proven fact. But it is expensive, you might say. Well, it is a lot of money to pay upfront, but you can reduce some unhealthy spending in your day (like drinking coffee) and save up just enough to hire a cleaning service once a month.
So don't be scared to hire someone to safe up some time, it will greatly increase your life satisfaction.
How else you can buy time? Every day you spend on average an hour to commute to your work. This twenty hours per month you can spend on yourself, or your family. What can you do about it? Try to invest in accommodations that are closer to you work. It might be a little bit more expensive, but, as I already said before, your time is very valuable don't waste it.
Princeton University conducted research where they proved that buying yourself time, actually, boosts your happiness. Here is the link to the article.
Across several distinct samples, including adults from Canada, the United States, Denmark, The Netherlands, and a large sample of Dutch millionaires, buying time was linked to greater life satisfaction. - Buying time promotes happiness
Quality Time With Your Family
That leads us to another good investment. Invest in the quality time with your family. That could be buying yourself some free time and then spending it with your family or sharing experience with your family. This is a combination of some of the points I mentioned above but I believe that it should have its own section. It is very important to spend time with your family, especially with your kids.
It is easy to find yourself working extra time without any free time. Unfortunately, majority of individuals are working hard all day and then returning home tired and, sometimes even, angry. But what I am trying to say, and what I myself believe to be true, is this: if you invest your money into some quality time with your family, you will definitely be happier.
Finally, I would suggest to write some of this points down or make a checklist, so every time you are going to buy something ask yourself: "Is this really going to make me happier?". If the answer is yes then go ahead, don't regret this purchase, nothing is more expensive then physiological health of you and your family. Learn how to spend money the right way and never regret it.
My name is Evgeny and I am a personal finance enthusiast, I am writing weekly articles about how to handle your money the right way. I've made it my mission to make all things money easier to understand and I am here for you to reach any of your financial goals. Subscribe to be the first to read all my latest articles.