We all know that money can’t buy happiness. But how we spend our savings can increase our satisfaction, according to Elizabeth Dunn, PhD, associate professor of psychology at the University of British Columbia, and Michael Norton, PhD, professor of business administration at the Harvard Business School. In their book Happy Money: The Science of Happier Spending, they offer five key principles.
- Invest in others. Research shows that spending money on someone else provides more happiness than spending on yourself. Studies also find that donating money might make you feel physically healthier.
- Buy experiences. Experiential purchases — such as trips and concerts — provide greater satisfaction than material goods, in part because experiences make us feel more connected to others.
- Make it a treat. Instead of routinely buying a daily latte, reinvigorate your pleasure by cutting back and making it an occasional indulgence. You’ll enjoy it more, and save money, too.
- Pay now, consume later. Buying in advance and enjoying your purchase later can increase happiness levels. If you pay for a vacation ahead of time, for instance, you get the big expense out of the way before you even leave.
- Buy time. If a purchase helps you spend your time in happier ways, it’s money well spent. Use your dollars to outsource jobs you don’t enjoy and make time for the things you love, like family outings.