Money and Happiness: It's Not Just About the Size of Your Paycheck
We've all heard the saying, "Money can't buy happiness." But is there some truth to it? A fascinating article in the Harvard Business Review, "Does More Money Really Make Us More Happy?" by Elizabeth Dunn and Chris Courtney (September 14, 2020), delves into this very question, offering some surprising insights. Dunn and Courtney, both affiliated with Happy Money, a financial technology company, explore the complex relationship between money and well-being, and their findings challenge some common assumptions.
The article begins by highlighting a study of recent university graduates. Interestingly, those who prioritized money over time actually reported lower levels of happiness a year after graduation compared to those who valued time more. This suggests that the pursuit of wealth, at the expense of our free time, can paradoxically undermine our happiness. It's not about shunning a raise, but rather understanding that simply having more money doesn't guarantee happiness. It's how we think about, spend, and save our money that truly matters.
One key point the authors make is that our perception of our financial situation plays a significant role in our happiness. A study they cite found that the amount of money in our accounts impacts our happiness more than our income. Seeing a low balance can be disheartening, even if our income is relatively high. This highlights the importance of financial security and the peace of mind that comes with having even a small financial cushion. Dunn and Courtney point out that even having $500 in savings can significantly increase life satisfaction.
The article then shifts its focus to how we spend our money. They suggest several strategies for maximizing happiness through our spending choices. One of the most compelling is the idea of prioritizing experiences over material possessions. The authors' research indicates that experiences, such as travel, concerts, or even a special meal, tend to bring us more lasting happiness than material goods. This is partly because experiences are less easily compared to others' possessions, reducing the tendency for social comparison and dissatisfaction.
Another key strategy is "buying time." This might sound counterintuitive, especially in today's economy, but the authors argue that spending money on time-saving services can significantly boost happiness. Whether it's grocery delivery, a cleaning service, or even something like paying for a closer parking spot to save time walking, these small investments in convenience can free up time for the things we truly enjoy. Dunn and Courtney's research has shown a strong correlation between buying time and increased life satisfaction, even for those with lower incomes.
Finally, the article emphasizes the importance of investing in others. Acts of generosity, whether it's a small gift for a friend or a donation to a charity, can bring us a "warm glow" and boost our mood. However, the authors stress that it's not just about giving; it's about how and why we give. Giving should feel like a choice, not an obligation, and it's most rewarding when we can see the impact of our generosity.
Dunn and Courtney acknowledge that individual preferences play a role in how we spend money and find happiness. However, their research provides valuable insights into the general principles that connect spending habits to well-being. "Does More Money Really Make Us More Happy?" offers a fresh perspective on the relationship between money and happiness, reminding us that it's not just about accumulating wealth, but about using our resources in ways that align with our values and bring us genuine joy. It's a must-read for anyone who wants to make the most of their money and live a happier, more fulfilling life.
