How Spending Can Make You Happier
How Spending Can Make You Happier
Especially when every dollar counts
My family is taking an international trip this summer, and I’ve been knee-deep in planning mode (I have wayyyyy too many browser tabs open right now).
This trip has been a long time coming. We first got our kids their passports in the Fall of 2019 (when they were six and four) in anticipation of taking an international trip the following year. We all know how that turned out!
Earlier this year, we renewed those passports and — fingers crossed — booked tickets to Spain.
This is not only the first international trip we’re taking as a family, it’s the longest since Ross and I both repotted our careers.
It’s one thing to plan a big trip when your paycheck is direct deposited into your bank account regularly; it’s another when you’re working for yourself and your income is less predictable.
But you don’t need to have made a career pivot to be feeling less than flush these days. With prices up significantly in recent years due to inflation, a dollar simply doesn’t go as far as it used to.
Which is why I was intrigued to come across Happy Money: The Science of Happier Spending by Elizabeth Dunn (a psychology professor) and Michael Norton (a business/behavioral economics professor). The book outlines five research-backed principles to ensure you’re getting the biggest happiness bang for your buck, which is exactly what all we want to do, especially now.
I found these principles enlightening, so I’m sharing them along with how I’m using them to rationalize guide our vacation spending.
All Practically Deliberate subscribers will receive four tips. Paid subscribers will get a fifth tip (a counterintuitive one that’s caused me to change my planning approach!).
Tip #1: Buy experiences, not things
In the recent course I taught on Big Life Decisions, the concept of home ownership as an aspirational life milestone came up. Despite the fact that home ownership is out of reach of many, it’s still held out as an important marker of adulthood (at least in the United States).1
But the data suggest that this highly anticipated purchase doesn’t necessarily make us happier.
So what does?
Experiences.
Dunn and Norton cite study after study finding that spending on experiences leads to more happiness than spending on material goods — even homes. For example:
“One ongoing study has tracked how much money adults over age 50 spend on just about everything, from refrigerators and rent to alcohol and art. When researchers link these spending choices to happiness, only one category of spending matters. And it’s not refrigerators, or even alcohol. It’s what the researchers label “leisure”: trips, movies, sporting events, gym memberships, and the like. People who spend more of their money on leisure report significantly greater satisfaction with their lives. Not surprisingly, the amount of money these older adults reported spending on leisure was dwarfed by the amount they spent on housing. But housing again turned out to have zero bearing on their life satisfaction.”2
The specific study they cite (linked in footnotes) attributes this happiness boost partially to the fact that leisure activities often increase our levels of social connectedness.
My personal experience confirms the study’s findings. Last year, we spent a considerable sum to install new front windows and paint the exterior of our house, which has had little bearing on my own life satisfaction.
However, my weekly tennis class has given me a huge happiness boost (for a fraction of the cost).
This finding validated our decision to spend money on this trip now, even though our first instinct may be to invest in some other aspect of home maintenance that feels more “responsible.”
Tip #2: Make it a Treat
It’s been a few weeks since my younger son’s birthday. The gifts he received from friends at his party, once captivating, now remain mostly untouched (until, of course, his older brother shows even mild interest in them).
We acclimate quickly to what we have or do regularly. Many studies underscore how once we have greater access to something — whether that something is chocolate or an expensive car — the novelty quickly wears off. Dunn and Norton assert, “abundance, as it turns out, is the enemy of appreciation.”3
The guidance here is to limit our access to indulgences because the “little treats of daily life may provide a purer source of pleasure than people realize.”4 By adding a dose of novelty, we end up appreciating those treats more.
At home, we alternate between “fruit nights” and “dessert nights.” On vacation, that rule goes out the window and every night is dessert night. However, upon reading this research, I’m thinking that maybe we shouldn’t eat gelato every day (though this may make me very unpopular with my family).
Tip #3: Buy time
I’ve long been a proponent of buying time through outsourcing. Dunn and Norton don’t discuss outsourcing (unless you count an anecdote about a family that loves roombas), but they do remind us that “purchases that reduce or eliminate the worst minutes of our day can provide a big happiness bang for our buck.”5
They discuss three activities in detail: commuting, watching television, and socializing, citing studies that conclude:
Long commutes make people unhappy (but taking the train is better than driving)
Watching more than 30 minutes of TV/day is correlated with lower life satisfaction
Spending time with friends and family is a significant contributor to happiness
I read this chapter as we were strategizing about how we’d travel to different destinations within Spain. Reading about how driving makes people disgruntled reminded me of the epic argument Ross and I once had after a particularly stressful drive in Provence (pre-kids).
I promptly booked us high speed train tickets, feeling confident that my train-loving kids would see this as a treat and we’d get the benefits of buying ourselves time.
What are some specific ways you’ve spent money to buy yourself time? I’d love to hear if you’re willing to share!
Tip #4: Invest in others
Given the volume of research on how social relationships contribute to our well-being, I wasn’t surprised to learn that one of the recommended approaches involves spending money on others.
One study found that people who used $10 Starbucks gift cards to treat a friend to a caffeinated drink were happier than those who gifted the $10 card to someone else (but didn’t spend time with them) or spent it on themselves (even when a friend came with them to Starbucks).6
As Dunn and Norton note, ”You’re likely to get the biggest happiness bang for your prosocial buck if you invest in others in ways that help you connect with people, especially people you care about.” 7
The impetus for going to Spain was to visit some dear friends who have been living in Madrid this past year. As luck would have it, we’ll also get to see some other friends who have spent this past year in Barcelona. So we were already investing in spending time with people we care about.
Now we know we should treat them to un café con leche when we see them!
Abby’s Latest
When traveling internationally for the Money and Love book tour last year, our non-stop events left no time for jet lag, so I relied on an app called Timeshifter. You enter your flights and it shows you how to combat jet lag, including when to get or avoid bright sunlight; when to have or stay away from caffeine; and when to go to sleep.
It also has other unexpected benefits. Last year, a friend tried to input her flight info into Timeshifter a few days before a family trip to Italy — only the app said the flight didn’t exist. It turned out her airline had changed the flight, moving it up by several hours (they’d emailed her about the change, but as any busy working parent knows, it’s easy to miss an email). If she hadn’t used Timeshifter, her family would have showed up at the original time, missing their flight.
Your first itinerary is free on Timeshifter, then after that there’s a per-trip charge or an annual charge. Showing up at the airport at the right time sans jet lag? Priceless.
And now, for tip #5 — the bonus tip for paid subscribers. This tip is counterintuitive, and it’s changed the way I’m approaching travel planning (now and in the future)!