6 Things You Should Know About Money and Happiness
-- intro: If you were offered a well-deserved raise at work or a no-strings-attached wad of money, would you take it? You’ve surely heard that money can’t buy happiness, but it can certainly get you closer to an enjoyable life, right?
Yes and no, says Elizabeth Dunn, Ph.D., associate professor of psychology at the University of British Columbia and author of Happy Money: The Science of Smarter Spending. “It turns out, what you do with your money seems to matter just as much to your happiness as how much you make,” she says; good news for those of us without a sudden windfall or promotion in our near futures.
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quicklist: 1category: What You Should Know About Money and Happiness title: Don’t sweat the six-figure joburl:text: “There is definitely a correlation between income and happiness,” says Dunn. “But actually, money buys less happiness than people assume.”
And in some ways, it buys happiness only up to a certain point: A 2010 Princeton University study found that emotional well-being—defined by the frequency of emotions like joy, anger, affection, and sadness—tended to rise with salary, but only up to about $75,000. Beyond that, people continued to rate their lives as more satisfying, but they didn’t seem to experience any more happiness on a day-to-day basis.
quicklist: 2category: What You Should Know About Money and Happiness title: Spend on experiences, not thingsurl:text: Material goods may last longer, but a 2014 San Francisco State University study shows that life experiences—like trips, fancy dinners, and spa treatments—provide more satisfaction in the long run. Researchers interviewed volunteers before and after they made purchases of both types, and found that afterward, most people viewed the intangibles as a better use of money. However, they add, an experience has to fit a person’s personality in order to have benefit; someone who doesn’t like show tunes, for example, probably won’t see the value in a Broadway play.
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quicklist: 3category: What You Should Know About Money and Happiness title: Donate to charityurl:text: Giving to people or organizations in need “has a direct correlational effect on happiness that is basically equivalent to a doubling of household income,” says Dunn, citing research from a Gallup World Poll. How you give matters, too, she says: You’ll get more of an emotional reward by supporting groups you feel closely connected to, or when a close friend asks for your help. (In other words, accept that Ice Bucket Challenge already—the giving money part, at least!)
quicklist: 4category: What You Should Know About Money and Happiness title: Pay it off earlyurl:text: “The pleasure of consumption can be dragged down by the pain of having to pay for it,” says Dunn. One way to get around that? Put money down for things as early as you can, even if you won’t actually experience them for a while—book trips months in advance, pre-order books and albums you’re excited about, or purchase credit for a service you can redeem at a later date. “Research shows that what lies in the future is much more emotionally evocative than what lies in the past,” she adds. “If we paid for something last year, it’s almost like our brain forgets we ever spent money on it.”
