Money itself doesn’t make you happy, wow short post. On the upside the way we spend it can make a significant difference to our happiness.
Between the point of having no income and that point where we have enough to provide a decent lifestyle, every single dollar counts, it makes a genuine difference. Once our basic needs are under control though, each extra dollar earned becomes less meaningful, it makes a smaller difference to our lives.
It’s at exactly this point where the research paper I read recently about money and happiness kicks in. Apart from some fancy maths (if that’s your thing) it’s a dreadfully dry read, which is a real pity because what they found is fascinating.
The experiments conducted as part of the study were focused on spending money and its impact on happiness. Participants were able to spend a set amount on themselves or on someone else (it could either be spent on a person or given to charity).
The predictions made by the participants before they started were:
1. The money spent on themselves would make them happier and
2. Spending it in on themselves would make them happier than spending it on someone else.
Turns out they felt completely different when they took part in the experiments.
They found that spending money on themselves made them a bit happier in the immediate term, but they quickly reverted to their pre-retail therapy happiness level.
They found that the act of intentionally spending money on someone else not only made them happier than spending it on themselves, but that increased happiness lasted.
The happiness difference was felt in spending as little as $5 on someone else.
In the previous post, I talked about a way you might save between $50 and $100 for a simple phone call. What you do with that sort of relatively small saving is worth thinking about.
the full link to the paper is below