The secret to a happier Friday, according to our latest blog post, is buying a surprise cupcake for a friend and avoiding television.
The findings have plenty of relevance outside of a Dublin weekend, so here are five tips for happier spending that you can apply to any part of your life.
1. Spend more on experiences, and less on material goods
“Whoever said money can’t buy happiness didn’t know where to shop”
It’s the quote that launched a thousand #shopaholic tags, but it’s wrong: they just didn’t know where to go on holiday. Swapping material purchases for experiential ones is a cornerstone of the advice from Happy Money.
There are a few reasons that experiences offer greater happiness bang for your buck.
‘Hedonic adaptation’ is one. It’s our human habit of adjusting to both positive and negative changes in our life very quickly, and returning to a ‘baseline’ level of happiness. It’s why the buzz of a new handbag, car, or even lotto win wears off much sooner than we’d hope.
Experiences, on the other hand, can’t gather dust, get tarnished or suddenly look less desirable compared to the one in the next driveway. A night out, holiday, or special event lives only in your memory after you buy it, where it you consider it more fondly (not less) over time. Experiences also contribute to a sense of ‘who we are’.
The other reason experiences trump material goods is that they’re more likely to involve other people.
2. Spend more hanging out with friends
Last November, Robert Waldinger gave a TED talk on the findings of Harvard’s 78-year-long Grant Study, one of the longest studies of adult development. He revealed that what keeps us living longer is also that worth living for:
“People who are more socially connected, to family, to friends, to community, are happier, physically healthier, and live longer than people who are less well connected… good, close relationships seem to buffer us from some of the slings and arrows of getting old.”
Research by Nattavudh Powdthavee actually put a number on this: strong social connections give us the same happiness boost as an extra £85,000 (€108,300) on our annual salary. Marriage, by the way, is worth around £70,000 (€89,200) a year, while separation is like a drop of £170,000 (€216,700).
Even if you didn’t know how much your friendships are worth, your boss might.
Bank of America asked research firm Sociometric Solutions to find out why some of their call centres were more productive than others. They discovered that the most productive workers had strong social bonds in work because they were able to take breaks with colleagues. The bank swiftly brought collective breaks into all their call centres, and saw performance rise by 23 per cent. This was worth “conservatively $15 million a year” to the bank according to Sociometric, and the amount of stress in workers’ voices also dropped by 19 per cent.
So if you want to be happier, live longer, and be more productive in work, spend money and time strengthening your social relationships. It is an investment in the true sense of the word.
3. Buy back time
In the book Happy Money, the authors advise that we should try “buy time”; spend money to avoid the activities that drain us, and use that time on more pleasant activities instead.
The funny thing is, we don’t always know seems to know which is which. Daniel Kahneman and Alan Krueger created a U-Index (U for ‘unpleasant’) to plot our regular activities on a desirable to non-desirable scale, based on what makes us happy, tired, stressed, sad, and even pains us.
Top of the U-index are dealing with financial and government services, shopping for ‘routine goods’, commuting, and housework. These are the things you want to reduce in your life if you can. It might mean paying more in rent so you’re closer to work or college, or shopping online and paying a few euro extra for delivery to save you the journey to the shops.
4. Spend money on others
It might seem counter-intuitive, but the research is clear: spending money on other people makes us happier than if we spent the same amount on ourselves. As little as $5 is enough to give us “non-trivial gains in happiness” according to researchers.
Giving makes us feel better about the rest of our life too. Those who give money more feel more wealthy than those who don’t, and people who give their time by volunteering feel that they have more free time than those who don’t. Spending money on others even lowers our blood pressure.
Michael Norton explains more about this research, and the boost we can get from giving to charity, in his TED talk:
Spending money on others is also bound to strengthen those social relationships we know so much about. Noticing a pattern here?
5. Pay upfront and savour the anticipation
Buying on credit is not great for your happiness. Credit reduces the natural “pain of paying” which keeps us in budget, and the sight of credit card logos can even stimulate our desire to spend.
The time gap between payment and getting our hands on the goods is why an ASOS delivery is such a thrill: by the time it arrives you’ve forgotten you bought for it, and it almost feels like some person called ASOS has sent you an early birthday present.
That’s why, where possible, try pay upfront. If it’s a gig, event or accommodation and you get the pain of paying over with early on, then all that’s left is to savour the anticipation before the big day. “Anticipation is a huge and often untapped source of happiness” says Norton. All-inclusive holidays are ideal for this reason, so you don’t even need to look at a bill during the holiday.
Careful of activities where you must pay at the end, like a delicious group dinner ruined by a 15-minute bill-splitting scene.