Elizabeth Dunn and Michael Norton are human behavior researchers at the University of British Columbia and Harvard who have devoted years of research to the relation between money and happiness.
The findings are summarized in the book "Happy Money: The Science of Smarter Spending", and for the surprise of many, it turns out that money can buy happiness... but only if you spend it accoriding to this 5 principles of Happy Money:
1. Invest in experiences
Dunn and Norton’s research in 136 countries shows that material objects cause less satisfaction than experiences. Norton says that experiences—like going to a concert or a vacation (because why not, you can go on a trip)—are more rewarding because we look forward to them with greater desire and even makes us happy before experiencing them, like when we plan them. What’s more, experiences leave memories that become life stories that make us happy in the long run.
2. Buy time
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Before making an expense, take a moment to ask yourself: How does this purchase influence the way I use my time? What really matters to be happy is what we do with the minutes and hours of our day. An amazing dress or a great pair of shoes are not going to add anything significant to our time, so what we should do with our money is invest it in activities that, at the end of the day, give meaning to our time.
3. Make it a treat
Limiting access to your favorite things keeps you appreciating them. If you constantly buy that ice cream you like simply “because you can afford it” or “because you have the money” or “because I work for it” you will take away its value and place in your life. It’s important to find a balance between giving yourself a treat every once in a while and giving it to yourself every time you feel you deserve it.
4. Pay now, use it later
This principle is related to delayed gratification, and it basically means that we will be happier if we delay the satisfaction of our desires. That is, when we save money or have to wait to get what we want, we develop a sense of self-control, so when we get it, that purchase becomes a reward, and it is much more significant. On the other hand, if we immediately satisfy our desires, the world becomes something so easy to acquire and discarded that it loses meaning and value.
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5. Invest in others
Spending our money on other people makes us happier than spending it on ourselves. These people could be strangers, family or friends; the secret behind this principle is that we are aware that we contribute to somebody else's happiness and that connects us socially: it helps us talk, exchange ideas, and emotions, even for a brief moment.
“If you buy a big house, the latest car model but you are alone on your private island, you will not be happy because we need other people to be happy.” - Michael Norton, researcher.
"To be happy we don't have to do amazing things with our money, you can do small, trivial things and still get these benefits."
