“Money is an opportunity for happiness, but it is an opportunity that people routinely squander because the things they think will make them happy often don’t,” says Elizabeth W. Dunn, PhD, associate professor of psychology at Canada's University of British Columbia.
As a young academic, Dunn had a personal stake in figuring out how to best spend one’s money. “I went from being a graduate student, making around $20,000 a year, to being a faculty member. While most people don’t think of professors as being wealthy, I suddenly found myself like ‘the nouveau riche,’ with a lot more money than I had previously,” she tells WebMD.
Being a psychology researcher, she sought scientifically based advice on how to spend her money -- not in terms of making financial investments, but to boost life satisfaction. “I was surprised to find out there was actually very little research on that topic,” she says.
As she delved into the subject, she discovered that people often misjudge purchases on three counts: “People mispredict what will make them happy, how happy it will make them, and how long that happiness will last.”
Puddles of Pleasure, Peaks of Presumption
Other experts agree with Dunn’s view. Purchases, such as a remodeled bathroom or a new couch, may bestow delight, but the pleasure often vanishes faster than people expect -- “like a springtime puddle evaporates under a stifling summer sun,” says Sonja Lyubomirsky, PhD, a psychology professor at the University of California, Riverside, and author of The How of Happiness: A Scientific Approach to Getting the Life You Want.
Take that remodeled bathroom, for example. At first, it’s a joy, but those positive feelings dwindle until the bathroom becomes ordinary and “completely fades into the background of one’s conscious experience," Lyubomirsky says.
Furthermore, all those sparkling, new bath fixtures may heighten expectations and desires, creating a “lofty peak of presumption” that drives people to become dissatisfied and strive for more and more, Lyubomirsky says. “After one finishes remodeling one’s bathroom, the living room and bedroom now seem drab by comparison. People’s rising aspirations render rooms eyesores that were previously normal.”
Now, no one is saying that money and spending play a negligible role in happiness. In fact, wealthy people have better nutrition and medical care, more meaningful work, and extra free time, Dunn says.
“And yet, they aren’t that much happier than those who have less,” she writes with co-authors Daniel T. Gilbert and Timothy D. Wilson in an article to be published in the Journal of Consumer Psychology. The article’s title: “If Money Doesn’t Make You Happy, Then You Probably Aren’t Spending It Right.”
So how can you spend your money to maximize happiness? Try these tips, experts say.