6 ways money can buy happiness

The key to contentment is less about how much you have and more about how you use it.

By Aimee Picchi Jul 5, 2013 9:24AM

Woman with jar of cash © SelectStock, the Agency Collection, Getty ImagesIt turns out the phrase "Money doesn't buy happiness" doesn't quite capture the entire relationship between people, money and joy. 


Money actually can buy happiness -- as long as we spend it according to certain principles, such as shelling out for experiences rather than things, according to a new book from Harvard Business School professor Michael Norton and University of British Columbia professor Elizabeth Dunn. 


Their book, published by CBS' (CBS) Simon & Schuster and called "Happy Money: The Science of Smarter Spending," is "packed with tips to help wage slaves as well as lottery winners get the most 'happiness bang for your buck,'" the Economist noted.


Their book comes on the heels of research that shows earning a middle-class income of $75,000 per year helps boost happiness, but anything over that doesn't appreciably help. (But annual income below $75,000 does decrease a person's feeling of contentment.)


So, how can we best use what we've got? Here are six tips Norton suggested in an interview with Scientific American:


Buy experiences, not products. People tend to spend their money on stuff, like gadgets, books and lattes, Norton noted. That won't make you unhappy, but don't plan on it making you happier, either. "Consider the difference between buying a TV and buying a vacation. TV is great, sure, but the experience of watching TV pales in comparison to the experience of going to a special meal once a week with a partner or friend," Norton said. 


Prepay for your vacation. Anticipation is often more pleasurable than the actual trip. To help keep that feeling going, pay for the trip up front, so that you can truly enjoy the vacation without worrying about the cost during the trip. "And of course, paying up front also increases the likelihood that we will spend the time before the vacation daydreaming about it," he noted. 


Consider maximizing your time. Before you buy that big house in the suburbs, consider what you're giving up for the big barbecues and lawn. If you are adding hours onto your commute, you might have just unknowingly dinged your happiness level. "Thinking about how every purchase you make is going to affect your time allows us to spend money in ways that buy us happier time," Norton said.


Copy Sarah Silverman. No, don't start a stand-up career. Norton called her one of his heroes because she understands how to save up fart jokes -- which she loves -- to avoid getting sick and tired of them. Whether you love fart jokes, chocolate or milkshakes, the idea works the same way. Said Norton: "By limiting our access to certain products, we enhance our consumption greatly once we encounter those products again."


Be generous. Giving provides a benefit not only to the recipient, but to the giver. "In experiments we've conducted in countries ranging from the United States to South Africa, from Canada to Uganda, we consistently find that spending money on other people -- whether buying gifts for friends or donating to charity -- provides people with much more happiness than spending that money on themselves," he pointed out.


Ask how else you could spend your money. Think about the opportunity costs, Norton said. He added: "We get stuck in thinking that we need to have a house, a car, a flat-screen television to be happy, and so we spend nearly all of our money on these possessions. I try to ask myself before I make any purchase: What else could I be doing with this money? Am I really using this in the best way to maximize my happiness?"


Follow Aimee Picchi on Twitter at @aimeepicchi


More on moneyNOW

Tags: CBS
26Comments
Jul 5, 2013 1:13PM
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I grew up in poverty and can truly say that money does buy happiness.  Believe me, you're not very happy when you don't even have money for food or heat and forget clothes.  You don't have to be rich to be happy, but you need to have enough to survive and have at least the bare necessities.
Jul 5, 2013 9:37AM
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The secret to happiness is NOT having what you want, it's wanting what you have.  This applies to jobs, relationships, investments, homes, toys and gadgets, etc... The sooner you figure this out, the happier you'll be.
Jul 5, 2013 1:12PM
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I've lived with and I've lived without.
As for me, I prefer with.

Jul 5, 2013 12:11PM
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If you are fortunate enough to enjoy extraordinary good health, you can consider yourself very rich and extremely happy.  AMEN!
Jul 5, 2013 1:20PM
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I have been poor....and now I am fairly well off.....It is better to be well off. It took some effort and a little work, but I am glad that I did it.....I seem to be much more mentally independent.....and if I really want something, I can get it.....Because I earned it...
Jul 5, 2013 2:19PM
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I have heard that money can't buy happiness.

I would like the opportunity to put that theory to the test.

Jul 5, 2013 1:14PM
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That gal in the pic has more teeth than a saltwater croc.
Jul 5, 2013 3:14PM
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It is better to be rich and healthy than poor and sick.
Jul 5, 2013 2:12PM
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Like some of these but others don't appeal..... I believe happiness comes from liking who you are and feeling good about yourself, your goals and objectives. Don't expect others to be just like you and appreciate them for being independent or different.
Jul 5, 2013 2:51PM
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I don't have money for hot water and air conditioning because I have to pay $1054/month for my health insurance premium.   Any extra income makes me feel happy!
Jul 6, 2013 5:06PM
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Anyone who says money can't buy happiness has never bought a puppy or a kitten.
Jul 5, 2013 5:34PM
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"Be generous"....anyone want my p.o. box so they can send some cash....remember giving money..."provides people with much more happiness than spending that money on themselves"
Jul 9, 2013 9:37PM
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I grew up respecting money because all of ours in my family of origin went out the door for alcohol.  Growing up without much of anything, except the bare necessities caused my beliefs and behaviors about money to be shaped in  a frugal shaped way.  I appreciate the authors article, and one very important factor about what money cannot buy is HEALTH.  For sure, studies do bear out that those individuals with monetary and financial access to better health-care do manage many of their chronic diseases better than those individuals below the poverty line.  In fact, they may even take better care of their health because they have medical knowledge accessibility about their condition, than individuals less fortunate.  While there are many elements of my life I have little or no control over them, my health is not one of them.  I can choose to exercise, eat healthy meals, reduce stress, meditate, stay socially connected, and trust that my Higher Power (for me is GOD) will take care of my joy, contentment, and happiness.
Jul 5, 2013 11:31AM
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Would that be buying a hooker if your a man,, or buying a gigolo if your a female???
Jul 5, 2013 3:02PM
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Sorry before I really noticed her teeth, The jar of Money caught my eye..

Not really sure why ??

Jul 5, 2013 3:00PM
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Yeah she does have a lot of teeth....eh.

 

Although I do believe a person should go after their Happiness, Wishing doesn't work, work does.

 

Material items are wants, except for the sustaining of life.

Using them for enjoyment can be rewarding in body and soul..

When you no longer need or want them, gift them or sell cheap to another;

There is where your Happiness increases....I call it Karma.

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