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Money can’t buy you happiness, but it can put it on lay-by

The fact that that money can’t buy you happiness is generally well accepted. Happiness, it appears, is more about meaning and satisfaction than the acquisition of more stuff. But money isn’t all bad. It…

Wanting things can make you happier than purchasing them straight away. Shutterstock

The fact that that money can’t buy you happiness is generally well accepted. Happiness, it appears, is more about meaning and satisfaction than the acquisition of more stuff.

But money isn’t all bad. It can feed your family and pay off your mortgage, so it has its upsides.

Reflecting this reality, research consistently demonstrates a non-linear relationship between money and happiness. It shows that those of us who earn too little are unhappy, but so are those of us who earn too much.

The most up-to-date figures on this relationship suggest that, in Australia, A$100,000 is the income “sweet spot” for maximising happiness.

So, money in moderation appears to promote the most happiness. Still, perhaps it’s not just how much money we have, but also how we value and spend it that matters for happiness.

The pursuit of happiness

It is now well accepted that materialism – the love of things – tends to have adverse consequences for well-being.

People who hold these values tend to be less happy, depressed and less satisfied with their lives. This fact is best remembered when sitting at the traffic lights in your Toyota Corolla next to a much younger person driving a rather swish looking Mercedes sports convertible.

Shutterstock

We also know that what people spend their money on is an important determinant of happiness. Money tends to reduce happiness when it is spent on more stuff for ourselves.

But money can bring happiness when we spend it on experiences rather than things, use the money to benefit others, and perhaps unsurprisingly, don’t waste it on insurance policies.

When we spend money in less materialistic ways, it may actually promote eudaimonia - a sense of well-being and the feeling of flourishing and excelling in life.

But is there any hope for those poor materialists? A recently published study suggests there may be.

Wanting vs. having

Marsha Richins of the University of Missouri examined whether buying things may actually promote happiness.

In three studies, consumers were asked about the emotions they experienced when contemplating an important purchase, while shopping for an important purchase, or when using the product after it was purchased.

After grouping the sample according to whether consumers reported either high or low levels of materialism, Richins found materialists experienced more positive emotion when contemplating a future purchase, and a decline in positive emotion after the purchase had occurred.

Money can often bring us happiness when it is spent on experiences rather than things. Shutterstock"

Richins also found that the experience of positive emotion when contemplating a new purchase was related to how transformative materialists thought the new purchase would be.

That is, whether they thought the product would make them more likeable, more attractive and closer to their friends. Whether it would mean that they would have more fun and enjoyment in life, and would they be more effective and efficient in their lives.

This experience of pre-purchase increases and post-purchase decreases in positive emotion was not evident for lesser materialists, who appear to be emotionally ambivalent about acquiring more stuff.

The findings of this research demonstrate that, for materialists, happiness lies in the anticipation, rather than the outcome of spending money on things.

Maximising return on investment

nateog/Flickr

How can we use this to improve our daily levels of happiness? Here are a few pearls of wisdom (well, at least, for the materialists among us):

1) Don’t rush into a purchase. Spend time contemplating how much of a better person the new product will make you first.

2) Buy lotto tickets a week before the draw. That’s seven days of happy expectation and probably the only return on investment you will ever receive!

3) Revive the lay-by. Putting something behind the counter and paying it off over time should maximise its happiness pay-offs.

4) Don’t buy now and pay later. It will not only contribute to the pain of debt, but will rob you of the joy of contemplating the purchase while you diligently save for it.

Can money buy happiness? Well, maybe it can.

If we don’t have too much of it, spend it on a good meal out or presents for our loved ones, and spend more time contemplating our purchases than shopping for them, we just may be able to maximise the happiness returns on our investments.

Join the conversation

20 Comments sorted by

  1. Terry Reynolds

    Financial and political strategist

    Money may not buy you happiness, but it sure stops you from laying in bed at 3am ever morning with a huge knot in your stomach worried sick about how you are going to pay this months, gas, electricity or mortgage bills to stop being thrown on the street of have the service cut off.

    These things are multi-dimensional, not singularly dimensional. I am sure most Aussies would prefer to be financially comfortable and bored rather thrilled by being unable to feed and secure their family.

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    1. Terry Reynolds

      Financial and political strategist

      In reply to Terry Reynolds

      Oops! I meant "rather than thrilled by being unable to feed and secure their family".

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    2. Mike Stasse

      retired energy consultant

      In reply to Terry Reynolds

      Aged 42, I suddenly realised I didn't need to be any wealthier.... I had everything. Lucky to be in Australia of course.

      So I sold everything, including my successful but now struggling business in the recession we had to have.

      I downsized everything, taught myself to live sustainably, and in the last 20 years only 'worked' for six months (bad mistake...)

      We have no power bills, no water bills, no debts, no worries. I live on ~$150 a week. Our biggest overhead is the $140 a month phone/mobile/internet habit.

      I could never go back to "laying in bed at 3am ever morning with a huge knot in your stomach worried sick about how you are going to pay this months, gas, electricity or mortgage bills to stop being thrown on the street of have the service cut off".

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    3. Terry Reynolds

      Financial and political strategist

      In reply to Mike Stasse

      Mike. loved your comment. Sadly the greatest pain most women will suffer is not childbirth, but the constant anxiety of finding the money to pay next months bills.

      In the sixties young couples sought a house in the outskirts of our major cities, in line with their incomes. Today, the grizzle that the baby boomers closer in are hogging all the best houses.

      I saw a retirement village of relocatable homes near the river mouth at South West Rocks on the beautiful NSW north coast a few years ago all occupied by oldies who kept their village immaculate. The homes at the time cost $50,000 to buy and site rent was $5,000 a year. The town centre, supermarket, shops RSL, and bowls club, was just several hundred metres walk as was the beach. The are is one of great beauty.

      The only issue is it is 50kms from Kempsey and a long way from medical treatment in Sydney if you want your life prolonged.by a specialist unit.

      Good on you Mike, where do you find heaven?

      .

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    4. Peter Blackwell

      Supply Chain Consultant - realist

      In reply to Terry Reynolds

      Money provides comfort, which is a fundamental element underpinning happiness. Without adequate money happiness is unlikely.

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    5. David Thompson

      Marketing Research

      In reply to Terry Reynolds

      Terry, not only are those things multidimensional, but they have a knock-on effect right throughout the whole of society.

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  2. Mike Stasse

    retired energy consultant

    I live on $150 a week. Never been happier.

    The thing I find really distasteful about money is that today nobody will do anything for nothing. Everything's about money, the "what's in it for me" syndrome.

    And people have forgotten that money is not a store of wealth..... it's a means of trading. You're supposed to spend it, not hoard it.

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  3. Janeen Harris

    chef

    Someone needs to tell the miners, bankers and other random fat cats that they'd be happier if they contributed to society a bit more.

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    1. Terry Reynolds

      Financial and political strategist

      In reply to Janeen Harris

      Janeen, I like your posts. One moment Abbott is mocking Greece, Spain, Poland and Mexico and the next he wants to use them as examples of good policy..

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  4. John Crest

    logged in via email @live.com.au

    But lack of it WILL cause you unhappiness.

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  5. LP Hock

    Retired

    I like the Aussies adage "if you have it, you spent it.." There is no such thing in my country, there is compulsory self-saving from your past earnings. You are encourage to own your own home which is expensive and probably demised rich by world standard but poor in many situations. Living in retiree home of $50k with annual rental $5k near the wonderful amenities and civilised people is dreamy, at least, for 69 old chap in the humid tropic.

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  6. Keijo Musto

    CEO Engineering Co'

    I mentioned this article to my daughter (26)
    She said "Dad, if I'm going to cry, I'd rather cry in a Porsche than a Hyundai"

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  7. Matt Stevens

    Senior Research Fellow/Statistician/PhD

    Money can by better health and poor health is often associated with unhappiness. Money can also buy you more options in life. Sure you can reduce your expectations on what life ought to give you or what you get from life, but ultimately, having money is better than being broke or scrounging...doh!

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  8. Chris O'Neill

    Retired Way Before 70

    "Money can’t buy you happiness"

    Money is not sufficient, but it's necessary.

    Do people really not understand that concept?

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  9. David Thompson

    Marketing Research

    This research finding the 'sweet spot' at $100,000 per year just sounds very spot-on to me. The really interesting 'sweet spot' to find would be at what level of inequality does marginal wealth start tasting sour? I reckon folks are generally happy to live in an unequal society, so long as their own ABSOLUTE comfort is increasing. But at some level, those on the lower income levels start to feel crappy in a society with a lot of folks so obviously richer and more powerful than they are. I'd say Australia is still within the 'sweet spot' range, but the US has gone way too far. The level of inequality in the US has become a social poison, for which even real income increases are not an antidote. Australia has taken the right path in spending a lot of energy in cushioning the lower levels. The working poor class of Americans, trying to live a dignified adult life, let alone raise a family on the minimum wage of $7 per hour, with no health insurance just so really, really sucks.

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    1. Peter Blackwell

      Supply Chain Consultant - realist

      In reply to David Thompson

      David, I agree that from a social equality point of view I would happily see low income earners supported more to minimise their anxiety; I would also want to eliminate welfare fraud and get people working for the dole or required to do community service for the handouts they receive unless unable to work.
      Money may not buy happiness but is a fundamental for comfort, without which happiness is not possible.

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    2. David Thompson

      Marketing Research

      In reply to Peter Blackwell

      Peter, I also should have added that the more unequal a society becomes, even those in the wealthier/richer classes start to fell 'icky' about the world they live in.

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  10. Jull Sanders

    logged in via Facebook

    I should admit that if I am pressed on money very much it can cause a kind of depression to me, but if I have "just enough" may be with occasional <a href="http://personalmoneyservice.com/short-term-loans/">short term loans</a> it does not prevent me from being as happy as earning rather a good salary. My life goes in stripes and I often know that the next white stripe will be even better than the previous one, that is why it's important to have happiness inside. For me...

    report
  11. Jull Sanders

    logged in via Facebook

    I should admit that if I am pressed on money very much it can cause a kind of depression to me, but if I have "just enough" may be with occasional short term loans (I sometimes use this online service http://personalmoneyservice.com/short-term-loans/) it does not prevent me from being as happy as earning rather a good salary. My life goes in stripes and I often know that the next white stripe will be even better than the previous one, that is why it's important to have happiness inside. For me...

    report