Spend money wisely for greater happiness, researchers advise

Money can buy happiness, but only if spent correctly. Research from Columbia University, led by Professor Elizabeth Dunn, suggests that while money doesn't significantly boost happiness on its own, the way it's spent can lead to increased well-being.

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If money doesn’t make you happy, then you probably aren’t spending it right.

The study outlines eight principles for spending money in ways that enhance happiness. A primary principle is to prioritize experiences over material possessions. Engaging in activities like traveling, attending concerts, or pursuing hobbies often leads to greater satisfaction than buying a new gadget. These experiences also foster social connections, a key component of happiness.

Another crucial principle is to spend money on others rather than solely on oneself. Gifting presents or donating to charity can increase happiness by strengthening social relationships. The research also indicates that frequent, small purchases, such as buying a daily coffee, bring more happiness than infrequent, large purchases like a luxury car.

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People are more likely to feel happier when they buy things they like frequently, rather than buying one expensive and good thing with a large amount of money.

Furthermore, the study advises reducing spending aimed at preventing future misfortunes, such as buying insurance or solely focusing on health benefits. Instead, spending money on activities one enjoys, like exercising for pleasure, leads to higher happiness levels. Finally, paying for purchases upfront, rather than using credit, reduces future anxiety and contributes to greater contentment.

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Spending money to prevent future misfortunes has no correlation with happiness.