The Happiest Uses of Money

The Greek philosopher Aristotle, writing more than 2,000 years ago about the search for happiness, noted that wealth “is not the good we are seeking.” Having money is “useful,” he said, but it is “for the sake of something else.”

Indeed, the correlation between greater wealth and greater happiness is relatively weak. A research study published last year found only modest differences in median happiness between people with a household income of $120,000 and those with a household income of $30,000.

If more money isn’t the avenue to happiness, what is? The key is in Aristotle’s observation that wealth is useful “for the sake of something else.” When he spoke of happiness, he didn’t mean simply being in a good mood or enjoying a fleeting diversion. As Brian Portnoy notes in his book The Geometry of Wealth, Aristotle “regarded happiness as something weightier, encompassing reflection over whether [individuals live] up to their potential over the course of their lives. The ‘good life’ is not the tweak of ephemeral pleasure, but engagement with more meaningful, virtuous pursuits.”

Wise ways to spend

University researchers Elizabeth Dunn and Michael Norton examined data from many studies of human behavior to identify specific approaches to using money that tend to foster heightened personal happiness. Below, we’ve listed several of those approaches, drawn from their 2013 book, Happy Money: The Science of Smarter Spending. In addition, we’ve included money uses Dunn and others have highlighted in the Journal of Consumer Psychology.

• Prioritize experiences over stuff. Dunn and Norton note that material things — even good and useful things — typically yield less happiness than experiential things such as taking a vacation or attending a concert. Further, they note findings suggesting that the happiness derived from a particular experience is likely to be even greater if the experience “brings you together with other people, fostering a sense of social connection.” An experience can also yield significant emotional satisfaction when it “makes a memorable story you’ll enjoy retelling for years to come.”Of course, purchasing certain material things can facilitate enjoyable experiences. Examples would be buying a camera or a musical instrument. Purchasing books can also lead to ongoing enjoyment.
• Buy many small pleasures rather than a few big ones. Expenditures don’t have to be large to bolster happiness. Small-yet-strategic expenditures can enhance the happiness a person feels day by day, week by week. For example, you might derive great emotional satisfaction from buying a simple lunch for a friend or taking your children or grandchildren to an ice cream parlor. A related “small-scale” idea: Use your vacation money for several mini-vacations — such as day trips and weekend getaways — rather than spending it all on an extended vacation.
• Buy time. Researchers Dunn and Norton suggest using money to “outsource [your] most dreaded tasks,” potentially freeing up time for more fulfilling pursuits, such as volunteering in your church or community. Those dreaded (and time-consuming) tasks could include preparing your taxes, cleaning gutters, or running regular errands. Is there someone you could hire to do those jobs?
• Pay now, consume later. You’ll recognize this as the opposite of the “buy now, pay later” approach used by credit cards and “BNPL” apps. Dunn and Norton note that paying now (i.e., paying into a savings account in advance for a big-ticket item) and purchasing it later is more emotionally satisfying than buying the item immediately and making payments later. In part, that’s because of the growing sense of anticipation one feels when pressing toward a goal, along with the feeling of accomplishment when the goal is reached. The researchers also note that most people “are less prone to overspend” when they save before making a purchase. Therefore, the “pay now, consume later” approach “can put them on a path to decreasing their debt, which…provides one of the best routes toward increased happiness.”

Generously happy

One use of money has a greater effect on personal happiness than any mentioned thus far. In Happy Money, Dunn and Norton describe this as “investing in others.” Other descriptors would be “generosity” or “giving.”

The authors cite a multi-year Gallup World Poll that surveyed residents of 136 nations. It found that people who had donated to charity shortly before being surveyed reported greater overall life satisfaction. “This relationship emerged in poor and rich countries alike, and held up even after controlling for individuals’ income,” Dunn and Norton noted.

Other research — focusing on why people give — uncovered an undeniable connection between financial generosity and an active religious faith. In his book Gross National Happiness, Arthur Brooks cites research showing that “people who attended a house of worship were 21 percentage points more likely to donate money each year than those who did not attend, and they gave away 3.5 times more money.... They gave significantly more to both religious and secular charities, and also gave far more in informal ways such as volunteering.”

True life

The connection between faith and giving, and, in turn, between giving and happiness, will come as no surprise to anyone familiar with Jesus’s words found in Acts 20:35: “It is more blessed to give than to receive.” Or, as one translation puts it, “There is more happiness in giving than in receiving.”

Although money cannot produce lasting happiness in itself, it can serve as a tool for enriching our lives with enjoyable experiences, meaningful pursuits, and the blessings that flow from generosity.

Paul’s instruction in 1 Timothy 6:17-19 sums it up well. “As for the rich in this present age, charge them not to…set their hopes on the uncertainty of riches, but on God, who richly provides us with everything to enjoy. They are to do good, to be rich in good works, to be generous and ready to share, thus storing up treasure for themselves as a good foundation for the future, so that they may take hold of that which is truly life.”

Image used with permission.