Get More Joy from Your Money

It's not the amount of cash you have that makes you happy but what you do with what you've got.
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Call it a tale of two charges. Recently I was going through our credit card statement when I noticed two purchases that cost almost exactly the same amount -- $120 -- but evoked completely different emotions. The first was a gadget I'd given my tech-obsessed husband for his birthday. Too geeky to describe here, it has given him hours of manual-reading, programming, and tooling-around fun. The second? Three shirts I neither needed nor particularly wanted but bought on impulse thanks to the urgent tone of the daily deals e-mail. They're sitting in my closet, unworn. File under dumb. The lesson? Not all spending is created equal. True, money doesn't buy happiness but some ways of using it are likelier than others to bring pleasure. Determined to wring more bliss from my hard-earned bucks, I asked around and got some eye-opening advice.

Invest in experiences.

For the last five years Katy Wolk-Stanley, a nurse in Portland, Oregon, has made it her mission to avoid buying new stuff (an experiment she chronicles on her blog, The Non-Consumer Advocate). Whenever possible, she and her family fix rather than replace, borrow rather than buy. "Our lives are much richer than before," she says. One reason? They now have more money and time to devote to activities. This year, for example, Wolk-Stanley's 16-year-old son spent a month in Japan -- a $4,000 cost she deems "absolutely worth it."

Indeed, research suggests that experiences -- a family trip to Disney World, a French class -- are often better investments than things. In one recent study, nearly 60 percent of participants believed the former to be more "worth it" than the latter. Chalk it up, in part, to the fact that we identify more with our experiences, so we feel more strongly about them in retrospect. In 10 years Wolk-Stanley's son may well be telling people that his trip to Japan changed his life. But it's also because of a tic in our psychology: Humans get used to things, even those we've long coveted; having them becomes the new normal and we barely notice anymore. "This is especially true for objects like a new couch," says Laura Vanderkam, author of All the Money in the World: What the Happiest People Know About Getting and Spending. "No matter how excited you are when it's delivered, pretty soon it's just, well, part of the furniture." That new purse or minivan will likewise get old. But experiences are by definition unique. Think about it: A weekly happy hour at the same time with the same people is still different each time.


Memories are one of the secret weapons of happiness because they offer a double dip: Thinking back on something pleasant, science has shown, stimulates the same delight centers in the brain as the original event did. "Say you spend $300 to take a cooking class," says Sonja Lyubomirsky, PhD, author of The How of Happiness. "Talking about it later, looking at photos of the food you made, writing a Facebook post -- all these compound your happiness." Last year, on the 20th anniversary of her twin sister's death from cancer, Christy McMillan, of Toronto, put this power to work by spending $1,400 to print a hardcover book of photos from her sister's life and giving 25 copies to close friends. "People sent lovely e-mails, mentioning Kara's smile and saying that they told their kids about her," McMillan says. "It was the best money I've spent in 20 years."

Stay within your budget.

The bedrock rule for enjoying your money is to make sure it's really your money -- not a bank's or other creditor's. As many Americans have discovered, being in debt is painful and to our brains, say researchers, pain registers more strongly than pleasure. "The data show that negative experiences have three to five times more impact than positive experiences," says Dr. Lyubomirsky. "So agonizing about how to pay your bills if you splurge on a new car will feel much worse than buying that car will feel good." After conducting hundreds of Gallup surveys, Tom Rath, coauthor of Wellbeing: The Five Essential Elements, discovered that people who report a lack of money fears are twice as happy as those who simply make more and income level has almost nothing to do with it.

Buy mindfully.

Remember the last time you snacked absentmindedly in front of the TV? Can you recall the taste? No? My point exactly. Mindless eating is usually more compulsive than pleasurable, and the same goes for impulse or casual buying, like my online shirt mishap. "The essence of enjoying something is paying attention, taking time to savor," says Dr. Lyubomirsky. "Many experts will advise you to skip that pricey morning latte, for example. That's good advice if you're just chugging it down while rushing to work. But if you truly enjoy the experience of drinking it, then that's a perfectly good investment of $3." Ditto the occasional splurge, like that fabulous belt you probably paid too much for in Paris -- because every time you wear it you think about the charming side-street shop where you bought it. Worth every euro.

Spend on others.

Humans are perhaps the most social creatures on the planet. "Ask happiness researchers for the number one predictor of happiness, and most, including me, will say strong relationships," says Timothy D. Wilson, author of Redirect: The Surprising New Science of Psychological Change. No wonder, then, that we gravitate toward behavior that binds us tighter, including spending. In studies across cultures, people who allot more money to "pro-social" spending -- like gifts or good causes -- tend to be happier than those who don't. In fact, in one study, brain MRIs confirmed that even those participants who were forced to give away money felt a bump-up in mood.

Aurora Anaya-Cerda, a bookstore owner in New York City, gets that boost from "crowd-funding" websites, like Kickstarter or Indiegogo, where anyone with a dream can ask for small donations to see that dream realized. A community center may need donors to chip in for gym repairs, or a bunch of geeks may be trying to launch a new invention. "I give when I relate to the project, when it's something I want to see in the world," says Anaya-Cerda. "Whether it's an early-literacy program in Peru or an indie bookstore in Atlanta, it feels good to help."

Comparison shop sensibly.

According to economists, the folks trolling the aisles of big box stores can be roughly divided into two categories: the "maximizers" and the "satisficers." The maximizers are the ones who, charged with buying a flat-screen TV, will read reviews of every model, spend multiple Saturdays comparing picture quality, and inevitably crave the better versions just beyond their budget. The satisficers consider a few options, then settle for what's good enough. Guess who's happier? Yup -- the guy at home watching Dexter while the other is still agonizing in Aisle 3. "Not that you shouldn't be a smart consumer," says Wilson. "But be aware that when you're in the store, you're evaluating the product differently from when you get it home."

Fact is, in order to sort one thing from another, our brains naturally focus on points of difference -- and we lose sight of whether that difference actually matters. To offset maximize impulses, researchers suggest writing down exactly what you're looking for and then limiting your choices (researching only items in your price range, for instance). Here's additional comfort: Experts suggest that once you possess something, you tend to bond with it. So whichever TV set you buy, chances are you'll be thrilled with it.

Put off your purchases.

Remember when you were a kid and would spend the week before your birthday deliciously counting down the days? Turns out there's science behind that anticipation: Looking forward to acquiring something has been proven to bring as much joy as actually getting it. Save up for big purchases instead of just charging them and you'll reap this dividend with none of the interest fees. New Yorker Brenda Della Casa took advantage of this effect while putting money away for a long-planned trip to Italy. "I googled images of the Amalfi Coast, played Italian music, and asked friends to recommend restaurants," she said. "Two months before I went, it was like I was already there!" And if, in the end, you decide not to buy whatever you've been saving for? Count yourself lucky -- you got all those days, weeks, or months of pleasant anticipation and you didn't part with a penny.

Defy the Joneses.

It's human nature to compare ourselves to people around us. And unfortunately the tendency is to see them as having more than we do. Striving to keep up is what scientists call an extrinsic goal -- motivated by the need to look better to other people and far less likely than an intrinsic goal to bring happiness. But comparing and competing are also built into our social DNA. How to resist? One way is to mingle more with those who have less -- by volunteering, say. Another is to "go alternative," as Vanderkam puts it. "Rather than compete in the same categories, recast the choice entirely." In a neighborhood where driving the newest, most expensive car is a badge of honor, proudly drive a decade-old compact and pat yourself on the back for saving energy and not getting sucked into a fruitless competition. The point is not to feign disdain at choices you can't afford or to accept a cheaper alternative (though those aren't bad habits to cultivate) -- it's to genuinely examine your own values, as opposed to the Joneses', and build your desires from there.

Granted, this isn't always the most appealing path, but experts agree it's the right one. Use your money to make sustainable choices that lead to personal fulfillment and you'll have the best shot at achieving the Holy Grail of love and money: a dream life you can actually afford.


Originally published in Ladies' Home Journal, August 2012.


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