We’re really asking the wrong question.
Because the answer is, yes, of course money can buy happiness.
Money can get you out of debt, into a nice home, and on your dream vacation. It can change your status, improve your social life, transform your appearance. Money can buy you freedom from the job you hate and change almost any undesirable situation. So to say money can’t buy happiness is silly.
But of you course you also know that money makes people miserable and that once you have a certain amount of money you won’t notice an improved level of happiness beyond that point. Love, acceptance, and accomplishments certainly make people happy, and they are impossible to purchase.
So what do we make of it all? Should we continue to pursue wealth as our answer to health and happiness? Or should we look elsewhere?
We can start by asking a few meaningful questions.
First of all, what is happiness?
Happiness is complicated, and it depends on many individual preferences. But ultimately, it comes down to fulfillment of basic needs, purpose in a career, gratitude, human interaction, and generosity.
There are two forms of happiness. One is being happy about the status of your life and the other is being happy in the moment. So before you go asking such a generalize question as, “can money buy happiness” you must first define what kind of happiness you’re searching for.
It’s important to have both long and short term happiness, and the way that you spend your money cultivates either one or the other.
How are my money habits standing in the way of my happiness?
It’s simple. You take stuff for granted. There is someone in the world who would love to have what you have, and at one point, that person was you. That was before you purchased the items that you now take for granted.
Let’s go with the example of shoes. Pretend you love shoes. Or sunglasses. Or watches. Or iTunes albums. Or whatever. Pick something you love and consume frequently. I’m choosing shoes.
Buying a new pair of shoes every once in a while is fine and it’s fun. It’s good to have moments of instantaneous happiness, as this will make for a fun day. However, buying a pair of shoes every week will do two things.
First, it will compound over time. This instant gratification of spending goes from boosting your mood to destroying your long term financial goals. Not even necessarily that a pair of shoes each week would break the bank, but rather, adapting this concept into one area of your life makes it much easier to adapt to other areas as well. Being entitled to constantly consume and “treat yourself” on a regular basis is not the recipe for financial success.
Secondly, you’ll get used to having brand new shoes, and the level of happiness it once brought you will wither away. You’ll simply get tired of them and they will cease to give you the pleasure of the initial purchase. When this happens, you turn to the next greatest thing. Slowly, your life gets rolled up into a massive snowball of accumulation.
In psychology this concept is called the hedonic treadmill, which is the idea that regardless of a good or bad change, humans have the tendency to revert to a baseline level of happiness. Martin Seligman, the author of Authentic Happiness explains it this way,
“Another barrier to raising your level of happiness is the ‘hedonic treadmill,’ which causes you to rapidly and inevitably adapt to good things by taking them for granted. As you accumulate more material possessions and accomplishments, your expectations rise. The deeds and things you worked so hard for no longer make you happy; you need to get something even better to boost your level of happiness.”
To counteract the effects of the hedonic treadmill you can choose to go without the item that initially made you happy. For instance, stop wearing your favorite pair of shoes for a month and then reintroduce them to your wardrobe. Wearing less comfortable/less stylish shoes for a month reminds you that you have it good with those kicks you rock on the regular. Distance makes the heart grow fonder, and in this case, makes you happier too.
What should I be buying in order to attain happiness?
There is a lot of research that says you should be buying experiences because they last longer, they are harder to compare to someone else’s experiences, and no one can ever take them away from you. Not to mention that there is a ton of “free happiness” that Dan Ariely describes in his book, Predictably Irrational that comes along with the anticipation of an experience.
But there is also research from San Francisco State University now suggesting that spending money on experiences also leaves us wanting.
This fascinating research suggests that ⅓ of consumers are highly materialistic. This cohort derives as much pleasure from spending money on material items as they do from purchasing experiences. So you have a 1 in 3 chance that this is you, and if it is, you have to consider whether or not the “buy experiences, not things” concept is a good fit for you.
The Sure Way Money Can Buy Happiness…
So if the advice, “buy experiences, not things” is not always best, what is a sure way you can buy happiness?
Step 1: Get out of debt, gosh darn it.
Having debt leads to massive unhappiness. When you’re in debt, you’re stressed, overwhelmed, and unable to build wealth. In fact, there is a ton of information saying that being in debt is a 1 way ticket to the land of misery. Debt robs you of peace of mind, intimacy with loved ones, and freedom, which are all essential ingredients to happiness. So first things first, get out of debt.
Step 2: Set your happiness priorities.
Figure out how you like to spend (or save) money by figuring out what means the most to you. Pay attention to what makes you truly happy. Figure out where your priorities lie and how much money you should allocate to boosting your long term happiness versus your instantaneous happiness.
For example, if your current job brings you misery. Money is the answer for that. Start saving right now so that you can build enough cash to find freedom. When you don’t rely on the monthly paycheck to make rent and eat, you can quit your job and find another that you enjoy.
Step 3: Give some of it away.
It’s a proven fact that giving money away is a great way to grab some of the happiness the world has to offer. According to a study done by psychologists Elizabeth Dunn and Lara Aknin, and Michael Norton of Harvard Business School, it doesn’t matter if you’re rich or poor. Giving money away will make you happier. In a remarkable 120 countries, out of 136 countries studied they discovered “a significant relationship between giving and happiness”.
Step 4: Be grateful for what you have.
Gratitude is important for happiness. Appreciating little things, stopping to savor the sweet parts of life, and taking a break from your day to day routine to say ‘thank you’ to yourself and others has been proven to make you a happier person. However, it’s important not to generalize. For instance, don’t say “I’m thankful for my husband,” but instead to be detailed in your gratitude, such as, “I’m grateful that my husband is so diligent with our finances.”
Now we’d love to hear from you. Can money buy happiness?