When clever people, like Benjamin Franklin say clever stuff like this…
‘Money has never made man happy, nor will it…’
…there is an assumption that they are speaking a higher truth.
But they’re not! Something like 76% of the time, they’re communicating out of their bottoms – and this, Mr Franklin, was one of those times.
Not only can money – or, more specifically the spending of that money – make you happy; a series of psychological experiments has effectively told us how we should spend it.
So, relying (for once) on actual science, here’s…(*fanfare*)…’Mouthy Money’s Scientific Guide to Spending Yourself Happy.’
RULE ONE: Spend money on experiences, not stuff
Psychology professor Dr Thomas Gilovich, of Cornell University, says shopping for material objects will only put you on the hippy train to happy land for a limited time. The good doc, who has been studying money and happiness for over 20 years, claims experiences – like going to watch Arsenal play (editor’s note: surely not that) – are where the good times reside.
Yes, this is somewhat counter-intuitive; objects nearly always last longer than experiences, right? True, but it’s all to do with our identities, according to Dr Gilovich’s experiments. Material purchases, while exciting at first, fade into the background, becoming part of the ‘new normal’. Experiences, on the other hand, become part of your identity pretty much forever. As the doc says, we are the sum total of our experiences. All that said, I still want this six pack beer belt for my next birthday.
RULE TWO: When you have to buy stuff, buy stuff that fits your personality
Next time your mum lectures you about how money can’t buy you happiness, tell her she’s probably barking up the wrong department store. Boffins here in the UK have discovered that spending can increase our happiness when it is spent on things that fit our personalities, thereby meeting our subconscious, psychological needs.
Partnering a British-based multi-national bank, the men and women in white coats matched the spending data of 625 customers with personality questionnaires they had completed. The subjects were ascribed personality types and checks were made into who were the happiest.
It turned out that if one of the guinea pigs was said to be, for example, extroverted and impulsive – and their bank account indicated dozens of visits to Sweaty Betty’s strip bar – they were likely to be happy (all other things being even). Obviously, I’m interpreting and paraphrasing to the limits of fair reporting here. Have a look yourself.
The gist is: the more you spend on what you like, the happier you will be. WARNING: this might not work well as an excuse when your other half opens your bank statement.
RULE THREE: Take the sting out of your self-imposed ‘moral tax’
Different boffins (they’re everywhere!) have discovered something else that can spoil the enjoyment of a good splurge – and have found a sneaky way round it. I think this might be related to what other people (people other than me, I mean) call a ‘conscience’. Nope, me neither.
Anyway, Drazen Prelec, associate professor of marketing at the Sloan School of Management, says we spend according to a series of deeply-ingrained, internalised rules, such as ‘I never buy high-priced gourmet foods’ or ‘I won’t get a taxi if I can get a bus’. When we break them, say by buying a £30 gourmet cheese and scoffing it in the back of an Uber, we feel guilty and this ruins at least some of the enjoyment.
Prelec calls this the ‘moral tax on consumption’ and he proposes a way of getting round it: pre-payment (source – p.141). An example might be a holiday you save up for over a period of months. By the time the event itself has come round, you’ve done the hard yards – you’ve legitimately earned the reward. So the guilt – or the moral tax – is greatly diminished.
Of course, in the case of the six can beer belt, there is much shame and guilt still to come.
RULE FOUR: Spend money on others
You can hear your mum nagging you again, can’t you? Well I’m sorry to say she’s right this time. Yes, giving to others makes us feel good about ourselves. And there are plenty of experiments to back this up.
This is because being nice to others helps reinforce the view most of us have of ourselves that we are good people. Spending on ourselves just doesn’t do that.
Giving is great. Sharing is caring.
*Calls out to wife*
‘Darling, would you like a tasty beverage from my brand new six pack beer belt?’
[Pic credit: ‘Sympaty‘ by Mario Mancuso]