Money doesn’t buy happiness. In fact, for most people, money buys UN-happiness. That’s the upshot of the new book "Happy Money: The Science of Smarter Spending," written by financial behavior experts, Dr. Elizabeth Dunn and Dr. Michael Norton. Here’s their take on the money mistakes that can make big spenders feel bad:
Buying things instead of doing things. Studies show that spending $50 going to dinner with friends makes us happier than spending that same $50 on a new pair of jeans. That’s because stuff is just, well, stuff. While experiences connect us to other people, and create positive memories we can revisit.
Trying to save money instead of time. People who are focused on making and saving money spend most of their waking hours on stressful activities, like working and commuting. But the happiest people tend to skip the overtime, and spend at least an hour a day doing things they enjoy. So if spending $20 to pay a neighborhood kid to do yard work will buy you an extra couple of hours of free time, it’s worth the investment.
Moving into a McMansion. A study of first-time homebuyers found that owning a place didn’t make them happier than renting. And when researchers looked at people who had moved up in the housing market, they found that buying a larger home had NO effect on overall life satisfaction.
Spending money on yourself. Psychologists say the only time spending money really boosts happiness is when we spend it helping other people. And the biggest boost comes from seeing your money at work. So, instead of just donating a few bags of clothes, for example, find out what your local homeless shelter needs in the way of groceries and other items, and shop for them.