Does having money make you happy? According to the old Beatles song, we know instinctively that ‘Money won’t buy you love.’ Yet who would honestly turn down a lottery win? Given that most of us need to earn a living, what can we do to change how happy we feel about money and improve the choices and trade-offs we make? As it promises in the title, “Happy Money” from researchers Elizabeth Dunn and Michael Norton explores the relationship between money and happiness with an easy to read work backed by serious research. The message of the book is that money can make you happy once you understand how to spend smartly.
Happy Money offers offers five key principles to your approach to money from choosing experiences over possessions to investing your money on others. The five principles can be used by companies who want happy employees and customers too.
The five principles are:
- Buy Experiences; spend your money on experiences you’ll remember rather than collecting objects and smart cars. You’ll remember the day out with friends much more than the new item of clothing.
- Make it a Treat; instead of splurging on an expensive super frappacino each day, make it an occasional treat to savour that special cup of coffee. We look forward to treats and remember them.
- Buy Time; before you spend, ask how a purchase will affect how you spend your time. ‘If I buy this, how will it affect how I spend my time next Tuesday?’
- Pay Now, Consume Later; we enjoy our purchases more when we anticipate them in the future, rather than getting the bill later after the event. So reverse the trend of consuming then paying to paying then consuming. When you buy tickets to an event or treat well in advance, the pleasure comes in the build up.
- Invest in Others. Spending on other people and sharing an experience with others make us happier than spending on ourselves.
Given that in my work, I meet so many people who feel ‘time poor’, I turned quickly the chapter on the third principle: ‘Buy Time. ’ While it’s theoretically possible to use money to buy time, the research demonstrates that people with more money do not spend their time in more enjoyable ways on a day-to-day basis. In fact, wealthier individuals spend more of their time on activities associated with relatively high levels of tension and stress, such as shopping, working and commuting.
We may be conditioned to think that ‘time is money’, especially those who are aware of their hourly or daily rate of pay. Yet this mind set limits happiness. The research showed that transforming decisions about money into decisions about time has a surprising benefit. Rather than seeing time as a vehicle to get more money, they suggest viewing happier time as an end in itself. Our choices about how we spend our time are deeply connected to our sense of self. Choices about money can lead us to think in a cold, rational manner. This cocktail of money and happiness is one that majority of us imbibe. Who can honestly say that they’ve never had some anxiety over money? Believed that life would be great with loads of money? Or felt the tension between spending time on what we want to do, compared with what we feel we ought to do?
Overall, Happy Money is light-hearted read offering key principles, backed up by extensive research to help you question and re-evaluate your spending habits and money mind set. For anyone who’s working and chasing the money, it provides guidance to increasing your contentment right here and now. Spend your money wisely!