OK, I think we can all agree that money can’t buy happiness.
Or can we?
Some actual scientific research released recently suggests that we can at least get more happiness per dollar spent, if we make some smart decisions. Poor decisions about spending choices can lead to less happiness per dollar, and even cause negative feelings that are much worse than not spending at all.
A study called Money Buys Happiness When Spending Fits Our Personality 1. published online September 8 in the UK journal Psychological Science described a University of Cambridge study of 76,000 UK bank transactions of 625 people. This may be the most comprehensive research yet into the effectiveness of spending choices on happiness.
The results showed that “…individuals spend more on products that match their personality, and that people whose purchases matched their personality report higher levels of life satisfaction.”
OK, sounds good. But what does that mean in practical terms?
Methodology - the researchers divided spending choices into categories, primarily between extrovert activities and introvert activities. An example of the former is spending money at a pub, out with friends, while an introvert activity would be buying a book.
Forcing participants to spend in a way that did not match their personality decreased satisfaction, while forcing them to spend in a way that fit their personality significantly increased satisfaction for the money spent.
There is much more to it than that, but the lesson for you is to focus your choices on the things you know will bring you joy. Avoid impulsive spending on other categories.
It helps now to determine if you are an introvert or extrovert, and make a specific list of purchases that give you joy, and ones that you may have felt empty about, or even regretted, in the past.
Other authors and researchers, including Gretchen Ruben (The Happiness Project) and Michael Norton (Harvard professor, co-author, Happy Money: The Science of Smarter Spending), suggest that we have control over the happiness that results from our spending.
Their suggestion is that buyingexperiences (a great play, concert, travel experience), tends to trump material things like clothes or furniture.
Satisfaction increases when the experience is shared with friends or other people. However, this experience advantage can be transferred to things, if you experience that thing regularly, like a piece of art you see frequently, or a bike you enjoy regularly.
So, there you go. Use this information to think your way to more happiness from your purchases.
By the way…there appears also to be recent research supporting MY contention that maintaining extra cash on hand contributes to happiness, even if that cash is “idle.”
More on that in my next column. Have a happy weekend!
1. Matz, Sandra C. (2016), Gladstone, Joe. J., & Stillwell, David; Money Buys Happiness When Spending Fits Our Personality; Journal of Psychological Science, September, 2016.
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Dollars and Sense is meant as an introduction to this topic and should not in any way be construed as a replacement for personalized professional advice.
Please consult legal, tax, insurance and investment experts for advice on your unique situation.
David Christianson, BA, CFP, R.F.P., TEP, CIM is a Certified Financial Planner and senior advisor with Christianson Wealth Advisors, a Vice President with National Bank Financial Wealth Management, and author of the book Managing the Bull, A No-Nonsense Guide to Personal Finance.