Updated: July 5, 2020
Can money buy happiness? Will becoming rich make you happy? How does a person’s amount of wealth affect their general well-being?
These are some of the questions that Dr. Ryan T. Howell tried to find out.
An assistant professor of psychology at the San Francisco State University, he conducted a study to find out the role of finances and consumption in people’s happiness and general quality of life.
Below are five facts that his research discovered after analyzing thousands of participants in the Personality and Well-Being Lab at the university.
1. Credit card debt is an enemy of happiness.
There’s joy in buying something we like. However, that happiness is short-lived if the purchase would later put us in debt.
According to Dr. Howell, the financial stress of having unpaid credit card debts will always overpower the momentary enjoyment of experiencing retail therapy.
Thus, if you want to become happier, it’s a good idea to focus on paying all your credit card debts first.
2. Spending on others creates happiness.
People who spend a portion of their income towards charities and buying gifts for loved ones have a happier disposition than those who don’t.
Indeed, money can buy happiness, but only if you spend it on other people.
Several studies have also arrived at the same conclusion. One of them is Michael Norton, who conducted a social experiment, whose results he shared in this TED Talk.
3. Happy people invests on experiential purchases.
Happy people spend more on meaningful life experiences than buying stuff that have no other purpose but to satisfy their desire of owning it.
For example, enrolling in a dance class with your spouse would make both of you happier than buying a flat screen TV because you simply want to impress your neighbors or friends with it.
Dr. Howell notes that buying stuff that will help create meaningful experiences with your loved ones are also good. As such, purchasing that television so you can have movie bonding sessions with your spouse is acceptable.
4. Never buy something just to impress others.
A lot of people make unnecessary purchases because they have this weird expectation that it will impress their friends and consequently, get compliments for it; and thus making them feel good.
This mindset of your putting your happiness in the hands of others often leads to disappointment because people don’t always react the way we want or expect them to.
The research shows that those who are true to themselves and draw their happiness internally have a better disposition in life than those who expect happiness to come externally.
5. Tangible goals make saving money easier.
When asked, people say that it feels good when they’re able to save money. So why can’t more people save? Because spending money also feels good.
Thus, Dr. Howell advises that if you want to have a stronger motivation to save, you need to set a clear financial goal. This way, you can visualize that future purchase to fight off the temptation of an impulsive purchase.
For example, let’s say that you want to save money for a one-week family beach vacation.
When you’re tempted to buy a pair of shoes because it’s on SALE, imagine buying plane tickets instead. Then imagine your whole family having a good time at the beach. The craving to buy those shoes on impulse can quickly go away.
Becoming rich cannot guarantee happiness. However, practicing good financial habits, learning the proper mindset about wealth, and spending your money on the right things can help you find long-lasting joy and contentment in life.