When Spending Money Makes Us Happy

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Money may not be able to buy you love, but it can buy you happiness if you spend it the right way.

Obviously, we don’t get much joy from spending money to get our taxes done, but what about buying a new car or splurging on a vacation? According to PsychologyToday.com, a study published in last month’s issue of the Journal of Consumer Psychology found that spending money can boost your happiness if that money goes toward “purchases designed to create positive experiences.”

That may sound vague (it is), but essentially this encompasses all the times you pay for activities and “experiences,” rather than just spending on the necessities. In fact, after polling 5,000 households, the study found that consumers get the most pleasure by spending smaller amounts on multiple activities rather than dumping tons of money into one big event. The example that PsychologyToday offers is that people claim to be more satisfied when they attend a few cheaper concerts by local bands rather than just going to one expensive concert during the same period of time.

“It is better to spread the positive experiences out than to try to achieve one ‘peak’ experience,” PsychologyToday notes. There are a couple common sense reasons for why this may be. From my own personal experience, the bigger the price tag is for an event, the more I’m likely to be consumed by money worries before and after and sometimes during the activity. That can seriously affect my ability to enjoy it. Plus, you’ll generally feel more satisfied with your life from week to week if you’re doing something small for yourself, rather than slaving away for months to afford that one big splurge. After all, would you rather take one nice vacation a year, or take a bunch of little ones every month?

In the past, several studies have pointed out that wealth does not correspond to happiness. According to Newsweek, one study rated people’s happiness from one to seven (with seven being the highest), and found that millionaires had an average rating of 5.8, but so did poor Inuits in Greenland, and even “slum dwellers” in India rated relatively well, with 4.6. Some have explained this by saying that wealthier people have too many choices to make, which affects their happiness, while others argue that there is only so much money we can spend and any income above that becomes meaningless.

Yet in a way, this newest study does not contradict those facts. Instead, what it implies is that you don’t need to be a millionaire to be happy. You just have to know when it’s a good time to open up your wallet.

Check out MainStreet’s article about how counting money can improve your mental and physical health.

—For a comprehensive credit report, visit the BankingMyWay.com Credit Center.

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