Money Can Buy Happiness If You Spend It Wisely

Choose experiences over goods, delay gratification and remember that wealthy people are not any happier than the average Joe

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Great thinkers have often warned us: when seeking happiness, do not rely on worldly goods. Science bears out the advice—people with more wealth are not happier. Yet you spend your funds does matter. Research reveals a few strategies that increase long-term contentment.

Spend on experiences, not goods. Many studies support the fact that spending on activities such as dining, concerts or travel makes people happier in the long term than does purchasing goods. A paper published earlier this year by Cornell psychologist Thomas D. Gilovich and his colleagues posits that the benefits may derive from the fact that experiences inherently involve more social relationships and tend to be more entwined with a person's identity—there may a satisfaction in defining ourselves through . “In terms of ‘money well spent,’ experiences come out ahead on all measures,” Gilovich says.

Plan with abandon. It is well established that the anticipation of a reward often provides more joy than the reward itself. In ongoing work, Gilovich is further parsing the payoffs of expectation by asking subjects about their state of mind before and after making a purchase. He has found that the planning and anticipation of experiential purchases result in significantly more happiness and excitement than waiting for material purchases to arrive, which tends to be associated with edginess and impatience.

Delay gratification. Approaching an immediate reward—sex, drugs, your favorite cheeseburger—causes soaring levels of dopamine, a neurotransmitter that helps us feel good, whereas levels start to decline while receiving the reward. Gilovich thinks that perhaps the same dopaminergic dance is at play when we shop for presents for ourselves; the pleasure of seeking instant gratification is fleeting. He suggests we might gain more happiness from certain purchases by delaying them until a special date or occasion, so we have a chance to enjoy the buildup.

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