Money Can Buy You Happiness?

Bob Kagey


Money & HappinessIf you were to ask a group of people if money can buy you happiness, I expect about half of them would say, “Of course it can” (while speculating on what kind of idiot asks a question with such an obvious answer).

I think the other half would be just as convinced in the opposite direction: “Of course it can’t!” and they would point to those well-documented cases of people who were no happier with their lives after they won the lottery. (This might make an interesting study in personality differences but that is for another time).

In my counseling practice I have observed that money often becomes a major stressor as a result of holiday spending. My usual recommendation to clients has been to spend less so that you don’t carry the burden of credit card debt into the next year.

This year, thanks to an excellent article by Michelle Singletary, I can offer more nuanced and well-researched advice. The research suggests that money actually can buy you happiness if it is spent correctly. We are inclined to believe (incorrectly)that owning more luxury items will make us happier. In truth, money is much more effective in buying happiness when it is used to purchase experiences rather than things. (For and interesting take on this subject see my colleague Mark Sagor’s discussion of buying a couch versus buying a vacation.

In their book, Happy Money: The Science of Smarter Spending, Elizabeth Dunn and Michael Gordon offer five principles for successfully using money to increase your happiness:

1. Buy experiences versus buying material goods: experiences help us make connections with others.

2. Make it a special treat: having too much of any “thing” dilutes its positive impact

3. Buy time- spend your money on getting help to do jobs that are time consuming and unappealing

4. Pay now, consume later- by avoiding debt you also can avoid the anxiety that goes with it and is so toxic to our happiness.

5. Invest in others- helping others gives us a good feeling and can have a significant impact on our happiness.

So as the days are getting shorter and we approach another holiday season, remember to ask yourself: “Am I spending in a way that is likely to make me happier?”

Dr. Robert Kagey, a clinical psychologist, is a co-founder of Comprehensive EAP. He has extensive experience developing innovative approaches to fostering healthy, respectful and productive work environments.