4 Ways Spending Money Increases Happiness

According to my good friend and colleague at the University of Georgia, Professor Matt Goren, we can spend money strategically on things that actually improve our quality of life, while spending less on things that don’t provide as much bang for our buck.

We know that meeting minimum needs is essential to happiness. This applies to needs like rent and food, as well as needs like emergency expenses. If your car breaks down or you have to have a tooth pulled, unexpected – and often very expensive – costs suddenly arise. If you have enough savings, you can avoid this stressful event and the negative emotions associated with it. But many people pay a large mortgage to live in a nice house or pay large sums of money to drive a nice car. We think these things are essential for a high quality of life, but we quickly get used to the lifestyle and no longer feel happiness. Once the lure of the big house or nice car wears off, those things don’t really make us any happier on a daily basis than we would have been without them. If purchasing a larger home requires a longer commute, we will likely be less satisfied despite the higher cost.

The same goes for other fixed costs like television and pizza delivery. Once we get used to certain benefits, they no longer make us happy – but the costs remain. When it comes to our happiness, we really don’t pay for anything. And with increasing pressure on our budgets, our situation could even get worse.

By spending money on the right things we can achieve this increase our happiness.

Below we discuss four ways to spend money to increase happiness.

• Sign up for a credit card that gives you 3% back on groceries or gas, and suddenly those fixed costs are reduced by 3%.
• Team up with a few friends and sign up for a family phone plan, and suddenly your phone payments drop by more than 50%.
• When you switch to an online savings account like Ally, you suddenly get 1% interest that you can use for other things.

• Understand what coverage you get through your work and fill in the gaps with your own policies.
• Open a savings account and set up automatic monthly contributions until you have about four to six months of emergency living expenses saved.
• If you have unexpected and inconvenient expenses, try to pay them in advance. Every time you get paid for something you’d rather not pay for, you become depressed.​

• Pay up front for something you receive over time. For example, you could purchase a season pass to an amusement park or ski resort. Every time you go you will be able to enjoy it without having to pay again, almost as if it were free.
• Spend money on experiences like vacations or casual dates.
• Spend money on others by planning a fun birthday party or surprise gift.
• Spend money on meaningful things, like donating to your favorite charity or school. Gifts to friends, family and charities make us especially happy.

• Spend more money on experiences. They make you happier, feel more connected, and don’t end up in landfills.
• Buy for others. Donate money, buy gifts for your loved ones or buy food for the homeless to increase your happiness.
• Focus on the meaning. If a particular product, book, or object brings meaning to your life, then “buying it all” means it’s worth it.