“Money can’t buy happiness,” as the saying goes.
Is this, however, correct? Or is it simply a story that has been told so many times that we have come to believe it? Money can buy happiness, or at the very least, open more doors to happiness. This is reflected in the research on satisfaction and money and why most people aren’t very happy regardless of their income.
Some even go so far as to misquote the Bible, claiming that “money is the root of all evil.” Consider an alternative narrative in which poverty is the true source of all evil. After all, poverty is associated with shorter life expectancies, poorer health, and lower levels of reported happiness (more on that shortly).
1. Invest in Experiential Learning
Invest in experiences if you want to buy happiness.
An abundance of psychological research over the last 15 years has concluded that purchasing experiences improve our well-being far more than purchasing things. A new car, sweater, or bike will never make you as happy as a hike, concert, vacation, or almost any other experience.
Thomas Gilovich was the first to propose this concept in 2003. He has expanded his research and demonstrated time and again that it is our experiences that bring us happiness. In addition, he has demonstrated that experiences outperform material possessions in terms of pleasantness, excitement, and happiness.
2. Buy Some Time With Money
According to research, spending money on time-saving services such as a house cleaner, gardener, or takeout and grocery delivery can make people happier than spending money on material goods.
How much happier are you? “What we found is that people who spent money to buy time reported being nearly one full point higher on our 10-point ladder than people who did not spend money to buy time,” Dunn explains. People of all income levels benefited from “buying time,” she adds. “That makes sense.” People who are time-pressed are stressed, and studies show that they are less active and less able to spend time with friends and family.
3. Save Enough for the Future
Saving is a type of expenditure. Individuals who have a written retirement or financial independence plan are more likely to save adequately and make sound financial decisions. People who have a plan are also more confident, and experience less worry and stress.
Create your roadmap to a more secure, wealthy, and happy future with the NewRetirement Planner. Learn how much you need for financial independence, if you’re saving enough if you’ll run out of money in the future, and how to get back on track, as well as advice for better decision making.
4. Purchase Security for Your Family
Aside from simply living in a good neighborhood, money allows you to purchase safety and security for your family.
Spend your money on good health insurance for your family. If you’ve reached financial independence and have left your high-octane job with all of its perks, consider these health insurance options for early retirees.
If you still rely on your job to cover your living expenses, purchasing security may imply purchasing life insurance or long-term disability insurance. Although one of my favorite hidden benefits of the FIRE lifestyle is that you rarely need these insurance policies because you live on a fraction of your income and quickly build your net worth and passive income.
5. Change Your Career Path
Far too many people work long hours doing work they either “can live with” or actively dislike. In fact, 85 percent of people don’t like their jobs, according to a 2019 Gallup poll.
Even among middle- and upper-income earners, many are stressed and work more than 40 hours per week. Why do they keep doing it? Because their living expenses demand that high-salary jobs after years of lifestyle creep with every raise. This phenomenon is most likely known as the golden handcuff.
Instead, consider another option. Imagine creating your ideal life, doing work that is fulfilling and meaningful to you, and living in the ideal city or town for you. Lifestyle design is the polar opposite of the rat race.
6. Assist Your Children with College Expenses
College is prohibitively expensive. Even more so when you factor in student loan interest on top of tuition, room and board, books, and other student living expenses.
So? Use your money to assist your children. After all, what’s the point of accumulating wealth if you can’t provide a solid foundation for your children’s future success? You certainly can’t keep it after you’ve passed away. That doesn’t mean you should send your children to an overpriced $60,000-per-year liberal arts college.
7. Increase Your Time Being Active
Researchers at Yale and Oxford discovered an intriguing result in their 2020 study: while money increases happiness, exercise increases happiness even more.
In their study of over 1.2 million Americans, those who exercised regularly reported feeling mentally ill 35 days per year on average. Those who did not exercise regularly felt unwell an average of 53 days per year, as measured by depression, stress, and emotional problems.
In fact, physically active people have the same level of happiness as inactive people who earn about $25,000 more per year.
8. Spending Allows You to Express Yourself
Spending on things or experiences that reflect your personality or identity can make you happy.
According to a 2016 study, people who have a better match between their personality and the personality of their purchases are more satisfied with life. So, if you enjoy traveling and identify with an adventurous lifestyle, spending money on travel (an experience) or a travel gadget (possession) will both bring you joy. If you consider yourself a technology geek, the new iPhone (a possession) may bring you happiness.
9. Give, but make an effort to see the impact of your charitable contributions.
Charitable giving is an excellent example of how to spend money for happiness.
According to research, if you know exactly how your money will be spent and, ideally, can see the spending in action, you will be happier than if you just give the money to an organization without knowing or seeing the impact.
