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Think money can't buy happiness? Think again

As it turns out, money can make you happier. It's all in what you do with it.

By MSN Money Partner Nov 8, 2013 1:10PM

This post comes from Donna Freedman at partner site Money Talks News. 

Money Talks News on MSN MoneyOnce I saw a bumper sticker that read, "People who think money can't buy happiness must not know where to shop."

While I abhor the empty-headed entitlement of the statement, I have to say that its underpinnings are true. I've been broke and I've made a decent salary. Guess which is better?

In the strictest sense, money can buy happiness. Having enough cash means you don't have to choose between heating and eating, or to beg the landlord to give you another week to come up with the rest of the rent. When your car breaks down you can fix it; if your kid gets strep throat you can pay for the antibiotic.

In an interview on National Public Radio, Harvard University's Daniel Gilbert said that money can't buy "a fixed amount of happiness." But he also pointed out it's "ridiculous" to believe that cash has nothing to do with contentment.

"All you have to do is go stand outside with no coat, no shoes, nowhere to go and hungry, and in about five minutes you go, 'Wow, money would make me happier,'" said the psychology professor and author of "Stumbling On Happiness."

Happy Man © Radius Images/Jupiterimages"So money is obviously related to happiness, but its relationship is intricate and complex."

How do you figure out that relationship? 

You don't necessarily need loads of lucre to be happy; in fact, there seems to be a point of diminishing returns. A Princeton University study indicates the magic number is $75,000.

The lower a person's annual income falls below that benchmark, the more unhappy the person feels. Yet no matter how much more than $75,000 people earn, they do not report greater feelings of happiness.

To be clear: The study is not saying that higher salaries won't improve your life. (See "heating and eating," above.) Instead, it suggests that after $75k a person's emotional equilibrium is more affected by factors such as "temperament and life circumstances."

Rethinking how we spend

Back in 2007 I was a midlife college student living on approximately $12,000 per year. My budget was pretty bare-bones yet "charitable giving" was a non-negotiable line item, for two reasons:

  1. Need existed. (Duh.)
  2. It got me out of my own head, i.e., it reminded me that other people had it a lot worse than me.

It wasn't much of a donation – just $20 per month. That double sawbuck could have bought me a nice bag of oranges plus something meatier than neck bones to flavor the pinto beans that made up the bulk of my diet. But giving the money away made me feel good.

That's a pretty common reaction, according to Elizabeth Dunn and Michael Norton, co-authors of "Happy Money: The Science of Smarter Spending." In a Harvard Business Review article, they wrote that even "modest forms of generosity can make us happy."

A decade's worth of research shows that "asking people to spend money on others … reliably makes them happier than spending that same money on themselves," the authors note.

"By rethinking how we spend our money -- even as little as $5 -- we can reap more happiness for every dollar we spend."

What can be gained?

The ways that money buys happiness are as individual as our desires. Some expenditures are purely physical: big houses, high-end automobiles, expensive furniture.

Sometimes we buy ourselves the gift of time or reduced stress. There's a reason that people like my cousin Gertrude are cleaning up, so to speak, with their housekeeping businesses: If you have just three or four hours between getting home and collapsing into bed, would you rather spend that time relaxing or spend it scrubbing floors?

And there's no denying that money can bring some pretty fabulous experiences. Travelers fly to Europe (and upgrade to first-class plane tickets). Hobbyists indulge themselves freely (ever try telling a quilter she has "enough" fabric?) and music fans buy box seats for the symphony or the opera.

But happiness can be bought only if you know what you're seeking. Don't just spend haphazardly, hoping that the next DVD or car accessory will bring lasting joy. Instead, try to determine what you want out of life: More time? More clothing? More collectible figurines?

Examine those choices. What do you expect to gain? Is that realistic? Think about other things you could do with the money -- pay down debt, create a retirement plan, pay cash for your next car.

Oh, and look around you: Is your home and/or storage locker already filled with stuff you thought would be the answer? If your life is already replete with things you've stopped noticing, it's probably time for a reality check. Maybe a garage sale, too.

Spending with intention

I've been fairly happy without money. But would I willingly go back to living on dried beans or to the time when I used a scrub board to do the laundry (including the baby's cloth diapers)? Nope. I can buy more than one kind of food now, and I delight in tossing dirty clothes into a washing machine.

I can help people I love and people I don't even know. I can go to a midnight movie with my best friend and get kettle corn if I want it. (Hint: I almost always want it.)

It's OK to spend money. Buy that kettle corn three times a week if that's what makes you happy. Just do it mindfully, vs. following the latest trends or flailing around with a credit card in the hopes that this time you'll find true bliss.

To turn that bumper sticker motto on its head. Some people know that money can buy happiness -- they're just really careful about what they buy.

More on Money Talks News

There is nothing "entitlement" about that bumper sticker statement. And there is nothing dirty about having money. The notion that it is was started by people who want to convince you that you shouldn't try to get ahead. Or by people who are too lazy to do the inner and outer changing required for getting ahead.
Nov 11, 2013 7:29AM

"Kachina Doll is too tired to log in".


When your ID is a statement about your psychopathy problem, your comment seems nothing but shallow bogus hokum.  There are three types of people in the world: Those ahead who will stop at nothing to keep it that way- they aren't happy, they are crazy. Those establishing bars where they are to create the illusion of success, but can't look themselves in the mirror for selling out- they aren't happy, they have low ethics, no character and an inferiority complex. Then there are people who wake each day and try to make the most of it, regardless of their circumstances, positions, conditions and restrictions- they ARE happy because they try so hard everyday that they sleep the night through, if only from the exhaustion of sheer effort. Guess what Kachina... you don't know anyone in that third category.  

Nov 8, 2013 11:23PM

The failure of the assumptions of this article written by/for MoneyTalkNews results from basing happiness on feelings.  Happiness is more than just a feeling that comes and goes with the wind.  Happiness is not about fulfilling desires, but happiness is something that is greater than those things and is reflective in one's attitude and state of mind, regardless of one's circumstances or possessions. 

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