I would never assume everyone reading this article has their financial needs met. However, there are two assumptions I make when writing about money.
1. More people have their financial needs met than think they do. In our consumeristic society, the baseline of need is always revised upward. The items considered “needs” today would have been considered a luxury not that long ago. Most of us have our financial needs met.
2. Minimalism provides greater financial flexibility to those who choose it. When we remove ourselves from the constant pursuit and accumulation of material possessions, greater financial flexibility is one of the benefits experienced quickly and recognized easily.
Based on those two assumptions, I want to talk about how to increase our overall happiness and well-being with our money.
Or, more specifically, how can we spend our money in ways that improve our subjective well-being? Not based on conjecture, but science.
There is a fascinating study recently published in Advances in Experimental Social Psychology by researchers from Harvard, the University of British Columbia, and Simon Fraser University.
In the study, Prosocial Spending and Buying Time: Money as a Tool for Increasing Subjective Well-Being, the researchers discuss four possible uses of our money.
Three of the uses result in an increase of subjective well-being, one does not.
After our immediate needs are met, purchasing additional personal possessions does not contribute, in the long-run, to increased happiness. But there are choices we can make with our financial resources that do increase our overall life satisfaction.
When determining the best use of our money, this research is valuable. Their findings are summarized below.
Spend Your Money on These Three Things to Increase Happiness
1. Purchasing Experiences.
Whether going to the zoo, the ballgame, or Europe for two weeks, spending money on experiences shared with others brings more lasting happiness than physical possessions.
According to the study:
The earliest and most well-developed line of research treating money as a resource to be intentionally utilized shows that, on average, people experience greater happiness when using money to purchase experiences, as opposed to material goods.
Based on their findings, spending money on experiences rather than material goods results in more positive feelings before consumption, during consumption, and after consumption.
2. Prosocial Spending.
Spending money on others—whether supporting a charity, treating a friend to dinner, or buying a gift for another—brings more lasting happiness than physical possessions.
When we entered personal spending and prosocial spending into a regression predicting happiness, we found that people who spent more money on others reported greater happiness; in contrast, the amount of money they spent on themselves was unrelated to happiness.
By conducting tests of universality, we have been able to demonstrate that the joy of giving is not merely a quirky feature of North American college students, but rather a fundamental component of human nature, detectable from the first years of life across a wide range of contexts.
Based on their findings, spending money on others enhances social connection, provides opportunity to make a meaningful impact, promotes well-being and autonomy. And in each regard, delivers these results in more measurable and lasting ways than buying material possessions.
3. Buying Time.
Whether paying someone to rake your leaves, clean your house, deliver your groceries, or buying a smaller house to reduce your commute, research indicates there is happiness to be found in not just purchasing positive experiences (above), but also purchasing the removal of negative experiences.
People who regularly buy time report greater life satisfaction.
The researchers admit this finding requires some deeper analysis and study, “Although experimental manipulations are necessary to enable clear causal conclusions, this longitudinal study provides the strongest evidence to date that the broad proclivity to prioritize time over money predicts subsequent well-being.”
But based on their findings already, buying time provides more opportunity for people to choose relationships, reduce daily stress, and help navigate major life decisions. Even across socioeconomic variables, those results were discovered.
Your specific financial circumstance varies from the person next to you because nobody is exactly alike in this regard. However, the studies above do indicate some consistencies among us as human beings.
If you want to direct your financial resources toward pursuits that pay off in the long-run, choose to purchase experiences, prosocial giving, or buying time. Based on the studies, spending your money on those three things is the best way to increase happiness.
Kate says
#3 is one I need to reconsider. I was brought up with the perspective of being very independent and self-sufficient. My parents did everything, whether it was electrical, plumbing, yard work, woodwork, sewing, … The thought was why pay someone when you can do it yourself and there was pride in doing that. But I like the idea of buying time.
Pat says
I totally agree. They are in jail.
Tina says
Last Christmas I gave my married children and my grandchildren tickets to the Zoo, the Aquarium, and a Mountain top adventure complete with chair lifts. I did put a small toy related to each adventure since the grandchildren were all 5 and under.
Duffy Lupe says
I live with my Landlord and friend.
I like keeping the house clean for her. And when I cook I make extra for her mom who she takes care of and lives with more then she lives at home.
I realized by doing this she has more time to sit and relax when she does come home. And by serving her gives us extra time to sit and spend more time talking to one another.
So I guess my generosity to her buys us time together.
Den Greyanne says
what a fabulous gift too share. i can’t think of better way to b of service. both are of value and worth this time.
So, thank you! Giving a hand and be present to those who need this most. i really mean it. was there done that.
Tina says
This gift is worth more than diamonds.
Linda Ede says
You are a wonderful friend.
Claudia says
You lost me at ‘going to the zoo’. Let’s get with the times and not promote animals in captivity as ‘entertainment.’
Marion says
Many children would not see an animall is there were no zoo’s. It is my happy place. I know the animals and they know me. Our zoo is clean, large and well maintained. I have been walking in my safe place for 14 year. So it is different strokes for different folks.
Alla says
I believe today there are laws that zoo keepers must abide by that enhance the life of a captive animal. Many of the animals have been rescued. The educational component is of huge value for children. So it is not all bad,
laura leigh says
I agree. I would rather go to an animal shelter and help out by walking the dogs or fostering animals.
Tara says
We have a local hotel who does and enormous candy house every Christmas. Around the holidays my mom takes me and my family for dinner at that hotel and then we go and look at the trees that they have set up. The candy house is roped off so people don’t touch it. The problem for me is I am blind and feeling things is the way I see. One year after my mom pestered me I called the hotel and ask them if before they took the candy house down, they would let me and my family come and touch it. To my complete surprise, they graciously said yes. I was so touched and grateful by their generosity that I cried when we arrived at the hotel and found that it really was going to happen! That candy house was so beautiful! I couldn’t believe that people could be so talented! My most treasured memory of that experience was when somebody described to me that my two-year-old daughter was licking the candy house! Experiences really are wonderful! The next year we had the privilege of taking a family with us whose daughter is blind and she also got to have the joy of knowing what an enormous candy house looks like.
Gossip Girl says
I love this. And your books. I live 4 you. Love xoxo
Jenny says
At a time when many service-sector workers do not earn a living wage, my husband and I have made a habit of tipping generously for good service. It has increased our happiness when travelling and every day life.
Veronica says
I agree with this article. I am much more happy now that I am not worry about Christmas presents and having so much decor or material things. I just focus on enjoying my family. Also the joy of giving is powerful! Thank you for this article
Jyri V. says
Every tuesday I go to local japanese sushi buffet.
At €13 price point I can eat unlimited everything supporting local japanese sushi makers in my country. I feel so good to spend on my local sushi location, and I bet you can too. Support local!