Can you really be happier with more money? Of course not, right? Studies have shown that having more money, beyond what is required for the basic needs of life (food, clothing & shelter) don’t make us any happier.
I’ve caught myself in the past thinking that just another raise or bonus would provide more for our family and yes, maybe we would be happier. Maybe not necessarily a truck load more of material possessions, but more money would allow us to experience more travel and vacations. Or, it might help us become financially free and give more of our time and money to others.
I admit there are sometimes thoughts of having some material possessions that would only come with an increase in income. I’ve dreamt of many of them. And there have been past empty moments of material pursuit when the item, after getting it home, didn’t really mean that much to me after all. I think the excitement seems to be in the purchase of the item itself and not a long-term investment of happiness.
I’ve found that part of living in financial peace is to be content with the income and possessions I have today and not count on more tomorrow. It’s my job to manage them wisely for today.
I recently read an article in the Dallas Morning News about money and happiness. I thought the article was interesting because it talked about scientific studies that have tested the happiness level of people when they had more discretionary income and could buy more material things. The studies prove people are not happier when they increase their material possessions.
Positive psychologists and so-called behavioral economists both turned their attention to the money-happiness nexus. Mapping financial statistics against people’s self-reported happiness, the researches sifted data from rich nations and poor nations, from people up and down the economic ladder, and from individuals as their economic fortunes improved or deteriorated. The connection between wealth and happiness, they found, was pretty weak.
The article reminded me of so many people who have climbed to the top of the financial mountain only to find themselves without anything once they were there. They have all the money anyone could possibly imagine having, yet they are alone and unhappy at the top. Pursuits of material possessions and more money for individualist reasons are empty endeavors, again as studies have proven.
Interestingly, the article discussed other types of spending that can indeed make us happier simply because they are more socially oriented.
One of the most consistent findings of the happiness literature is that having a social network is an excellent predictor of happiness, and it seemed plausible that you could use money to buy happiness that way.
There were two forms of social related spending discussed in which the results have shown to make people happier.
One of the studies conducted, showed spending money on helping others, or giving, makes people happier. Most people enjoy helping others; they feel good about it and enjoy the selfless act they are performing.
Higher prosocial spending – gifts for others and donations to charity – was indeed correlated with higher self-reported happiness.
I can say that my wife and I have personally experienced reward with our tithing and giving. We are happier and have feelings of comfort because we are using money to help people and at the same time giving related to our faith.
In the past, we’ve either cut out giving or reduced it for various reasons. There was a feeling of emptiness associated with this decision that wasn’t filled until we began our giving again. Primarily for reasons of faith and probably somewhat an empty feeling, we will continue to give and increase our giving as our wealth increases.
Studies have show that experience type purchases can generate more happiness because they put happy memories in our minds. Sure, sometimes you need a vacation from the vacation because some experiences might not be so positive, but apparently, the negative thoughts are often replaced with the positive ones.
Experiences are inherently more social – when we vacation or eat out or go to the movies it’s usually with other people, and we’re liable also to relive the experience when we see those people again.
I can relate to these feelings as I’m sure you probably can too. Before we had children we had more discretionary income and could afford to travel more and take larger vacations. If we had the choice of furniture or improving our house, we would typically choose the experience, or vacation over the material item. There was a positive experience we received in the travel or vacation. We thought of the furniture as just another item in our house that would soon grow old, but our experience would last forever in our minds.
If more money and material items beyond essential needs can’t buy happiness, but experiences and giving can, does that change the way we should think about spending our discretionary income? I think it can, if we’re conscious about it.
It would seem that discretionary income could be used to stretch giving and also be used towards a moderate amount of material and experience purchases. Even though the article mentioned experience spending makes us happier, I think spending all discretionary income on such purchases may not make us happier because we’re focused entirely on ourselves.
Why not take the happiness path to financial freedom? My view of financial freedom is having more money and time to help others after acheiving such goals as funding retirement and eliminating all debt including the home mortgage. And why couldn’t part of this financial freedom include some experience spending?
What do you think? Do you think we are happier when using discretionary income for giving and experience spending?
Picture by emdot.