After examining the correlation between wealth and happiness, Harvard Business School professor Jon Jachimowicz concludes that while affluent individuals do encounter challenges, possessing wealth enables them to address and resolve issues more expediently. Jachimowicz’s study involved 522 participants spanning income brackets from $10,000 to over $150,000, who were tasked with maintaining a 30-day emotional diary to document their reactions to various events.
Increased financial means grant individuals greater command over their daily affairs, potentially enhancing overall happiness.
Jachimowicz’s research yielded several key findings:
- Money mitigates significant stress, particularly in response to adverse circumstances.
- Enhanced financial resources offer increased autonomy in daily life.
- Individuals with higher incomes often report greater life satisfaction.
- Ultimately, effective management of wealth can positively influence well-being, especially when employed judiciously. Significant alterations or expenses are not necessary to enhance happiness.
In their influential 2011 paper, “If money doesn’t make you happy, then you probably aren’t spending it right,” American scholars Elizabeth Dunn, Daniel Gilbert, and Timothy Wilson outlined strategies to optimise spending habits, such as prioritising experiences over material possessions and cultivating anticipation prior to purchases.
Moreover, there exist additional evidence-based methods to maximise the utility of existing expenditures.
Invest your time and resources in others instead
Research conducted by Dunn and her fellow happiness researchers, Lara Aknin and Michael Norton, indicates that allocating money to benefit others brings greater happiness compared to spending the same amount on oneself.
In their study, participants were given a $20 note and instructed to either use it for personal expenses or to gift it to someone else before the day’s end. Those who chose to spend the money on others reported experiencing a more significant increase in happiness that day compared to those who kept the money for themselves.
Fortunately, reaping the benefits of this phenomenon doesn’t require a substantial financial investment.
Nurture your relationships
If you’re on a tight budget, explore ways to show generosity and enhance your relationships without jeopardising your financial goals, such as getting out of debt or building your emergency fund. This could involve inviting friends over for coffee instead of going out or using your time to assist a family member in assembling furniture.
Such actions also contribute to enhancing the quality of our relationships, which, according to the Harvard Study of Adult Development, is a major determinant of our happiness.
Running for over 80 years and spanning four generations with more than 2000 participants, this study, overseen by director Robert Waldinger, challenges the notion that fame, wealth, and external markers of success lead to happiness. Instead, the accumulated data suggests that prioritising our most significant relationships is paramount.
Reclaim your time
Studies indicate that the more control we have over our time, the happier we tend to be.
While we all have the same 24 hours each day, how we experience that time varies based on our circumstances, obligations, and values.
Ashley Whillans, a researcher at the University of British Columbia, discovered that individuals who prioritise having more time over accumulating more money generally report higher levels of happiness.
Taking her research further, Whillans examined the effects of using money to delegate undesirable (and time-consuming) tasks such as household chores or meal preparation. She provided 60 participants with $80 over two weekends, instructing them to spend half on a material purchase for themselves and the other half on a time-saving service.
Interestingly, investing in a time-saving service resulted in a greater increase in participants’ happiness levels compared to spending on material goods.
However, there’s a caveat to this trade-off. Whillans’ findings suggest that there’s a threshold beyond which outsourcing tasks can undermine our pursuit of happiness.
Finding the right balance can be challenging.
So, what are the key takeaways from research on using money to boost happiness? Spend your money intentionally on activities that resonate with you, bring joy to others, and create lasting positive memories, both in the present and the future.
DISCLAIMER: The content provided in this article is solely for informational purposes and does not constitute formal advice. It is recommended to seek guidance from a qualified financial advisor and mental health counsellor for personalised assistance.
