Money and happiness: Here's how to get more joy out of each buck, according to science
More money, more problems? Maybe, but most people would take that extra cash and run. Not having enough money seems way more stressful, whether you are paying bills or worrying about the future. Just a little more green and perhaps your everyday problems would go away.
Indeed, research shows wealthier people tend to be happier than poorer people when they judge their lives overall. But while science also suggests more money is correlated with more positive daily emotions, there is a limit. One researcher found that more money is correlated with greater emotional well-being — but only until you reach an annual income of roughly $75,000. After that, the daily happiness you feel begins to level out, even if you're richer.
Indeed, it's possible that money might not even buy happiness at all, and it may simply decreases unhappiness — by making it easier to feel in control when life throws you curveballs. That might be why, at a certain point, getting richer and richer has diminishing returns.
To be sure, $75,000 is a fortune to a lot of people — the median U.S. household income in 2015 was $56,500 a year, according to Census data — but it's also a lot less than you'd think. That's because as your income goes up, odds are your spending will start to go up too. Your fancy job requires some fancy new clothes, public transit starts turning into private rides, and before you know it, you're burning through that raise you got over Christmas.
While some lifestyle inflation might be inevitable, you don't want to spend so much that you end up broke in retirement. And, moreover, as you spend those hard-earned dollars, don't you want to make sure you are spending them on the right things — buying what will actually make you happy, as opposed to junk that you'll quickly regret?
Never fear. Here are seven research-proven ways to increase the happiness bang for your buck.
1. Skip the long vacation. Seriously.
Now, it's not hard to see how a week of sipping Mai Tais might be good for your mental health, but when it comes to maximizing happiness, not all vacations are created equal: One study of Dutch vacationers found that only people who had an extremely relaxing vacation were found to have a prolonged boost to their happiness, making a strong case against any vacation with a packed itinerary. Sometimes less is more — so don't try and feel like you need to see everything there is to see.
Most importantly, the same study found that most people who just got back from vacation aren't all that much happier than those who didn't. People who did have a vacation in the pipeline, by contrast, reported being much happier.
Putting this all together, if you've only got $2,000 a year to put towards a vacation, science suggests you'd be better off spacing those dollars out — think: lots of long weekends instead of a big one- or two-week trip — so you've always got something to look forward to.
2. Move your body.
If you want to increase your happiness return on investment, research has long suggested that it's better to invest in experiences than things. When we invest in experiences, we're essentially "buying" good memories, and these memories have been shown to stick with us longer than the admittedly bubbly feelings you also get when you spend money on material items.
But good experiences also cost money, and it's important to be strategic about the kinds of experiences you're buying. Dragging your friends to whatever's cheapest isn't going to be a happiness silver bullet.
If you're looking for experiences that are more likely to increase your joy, then try looking for experiences that will make you be physically active, since exercise has been linked to psychological benefits — like greater happiness.
Why? One study of skiers offers a clue: Researchers found that people who love a sport tend to really lose themselves when engaging in that activity, and that this sensation, known as "flow," has a marked effect on overall happiness.
3. Don't let frugality make you irrational.
If having more money can make us happier, then it makes sense you'd want to work as hard as you can to avoid wasting any of it, right? Not necessarily.
One study actually found that price comparison sites can be a double-edged sword, since they distract us from the other attributes of a product. It doesn't make sense sense to save a few bucks choosing one product over another, for example, if the more expensive one is higher quality and lasts longer.
When we comparison shop, we're looking for the best deal, and research suggests that this can make us go with a more cost-effective option even if it isn't necessarily in our best interest.
In fact, humans can be pretty self-defeating in our pursuit of a good deal. In one experiment, scientists offered people two pieces of chocolate, one of them shaped like a heart and one of them shaped like a cockroach. More than two-thirds of the people chose the cockroach, because it was four times bigger and thus seemed like a better deal. Once they got their cockroach, only half the subjects actually wanted to eat it.
A surprising alternative? Instead of just trusting your gut or the data, try following the herd instead.
One study of speed-daters found that people liked their dates more when they knew their date was well-received was previous person. What that suggests is that what other people say about an experience or thing might matter more to us than its objective qualities.
In other words, don't be too afraid to follow the herd every once in a while. Sometimes, the herd is right. (Time to buy those Hamilton tickets?)
4. Get something off your chest.
Mental health has a far bigger impact on our happiness than how much money we make. In fact, one 2009 study in the United Kingdom found that in order to experience the mood-lifting effects of just £800 worth of therapy, you'd need to increase your earnings by more than £25,000 (roughly $41,250 at the November, 2009 exchange rate).
The researchers estimated that dollar-for-dollar, therapy is 32 times as effective as straight cash when it comes to making us happier.
Even though the benefits of talking to a psychologist have been well-documented, many avoid therapy due to the stigma, or avoid seeking it out until a major difficulty or life transition. Instead, psychologists recommend thinking of therapy as an investment in your future wellbeing, as opposed to a remedy when things get rough.
5. Make the right kind of move.
Even people who like their jobs can be tempted to move to another city where the jobs are more plentiful and the wages higher. There's good reason to think this makes sense economically: One study found that recent graduates of top schools made an extra $23,000 a year on average than those who stayed put.
The problem is that even if moving leads you to greater earnings, going too far afield may not lead to any additional happiness: One study of people who migrated from Eastern Europe to Western Europe found that even though migrants made more money, they didn't necessarily report being happier.
The researchers assume that more money doesn't make you happier if it means moving somewhere where you're lower in the overall pecking order. Sigh!
In addition to unexpected expenses, moving means we're farther away from our friends and family, which has a bigger effect on happiness than money does. One study found that each happy friend that lives within one mile of you increases your odds of being happy yourself by around 25%. And a researcher estimated in 2010 that making up for all the friends and family you leave behind requires a seriously big pay day —$180,000 per year or more — in order for moving to be worth it.
6) Ditch the rat race.
That pecking order thing rears its head again! People can be pretty petty, as it turns out. So petty, in fact, that it might be worth taking a job where you make less money — if it means making the same as the colleagues around you.
In fact, uneven salaries doesn't just make us unhappy, they also makes people work more, according to a study of workers in Spain. Researchers also found that the more money we make, the more important it feels that we're making more money than others.
The "keeping up with the Joneses" effect obviously happens outside of the workplace as well. One 2005 study from the Quarterly Journal of Economics, for instance, found that people reported lower levels of happiness when their neighbors had higher incomes regardless of what they made themselves.
This is all to say that people care a lot more about how they stack up than they would care to admit. In fact, one 1998 paper suggests that people will happily forgo up to 50% of their income if it means having a high relative income.
Whether it's rational or not, it's a compelling psychological argument for getting out of the rat race, or relocating away from competitive cities that tend to have higher income inequality.
7) Keep less of your money.
Really. Giving money away has long been one of the most cost-effective ways to increase your happiness; even toddlers seem happier when they're giving away treats than they do when they're gorging by themselves.
Other studies have found that giving is good regardless of how much money you make. In one experiment, givers in countries as diverse as Canada and Uganda were actually healthier, with lower blood pressure even controlling for factors like age, income and exercise. Still not convinced?
In yet another experiment, people who who were directed to spend between $5 and $20 on someone else reported feeling happier than people who were told to spend the money on themselves, regardless of the amount.
In other words, even when you get a free pass to feel selfish, you should still consider giving a couple of those extra dollars away instead. If you're looking to get more for your charitable dollars, try and keep it close to home: Some evidence suggests that people get a bigger happiness payout when they're giving to charities when they know someone involved.
Of course, when you're dealing with something as subjective as happiness, it's difficult to come up with hard and fast rules. If you're deathly allergic to trees, for example, you probably don't want to rearrange your life to get closer to green spaces, as some studies would have you do to boost your joy.
But some of the things that we spend money on — like being closer to friends and family; or taking two mini-vacations as opposed to one big one — can have an outsized effect impact on our happiness.
By keeping a few of these rules above in mind, you can quite possibly buy a whole lot more happiness — for less.
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