Psychologists have conducted research which shows that money can’t buy happiness. That is, once you have enough money to meet your basic needs, having more money will impact your level of happiness only slightly.
However, Elizabeth Dunn, an associate professor of psychology at the University of British Columbia, and Michael Norton, an associate professor of marketing at Harvard Business School, have set forth the proposition that this is only partially true. That is, how much money you have won’t determine your level of happiness, but how you spend it will.
Most people think that they can be happier by doing things such as the following:
Buying a faster, sleeker, more luxurious car.Moving to a bigger house.Purchasing a better version of whatever it is that their neighbors just bought (and making sure that the neighbors see it).
Nonetheless, research conducted over the past ten years shows that this way of thinking is wrong. Buying these things won’t make you happier.
In their recently published book, titled “Happy Money: The Science of Smarter Spending”, Dunn and Norton claim to have uncovered how you can buy happiness. They set forth five spending principles which they argue will transform your currency into “happy money”.
The five principles are the following:
Make It a Treat
Pay Now, Consume Later
Invest In Others
Each of these is explained after the jump…