This sentiment that money can’t buy happiness is lovely, popular, and almost certainly wrong:
Money allows people to live longer and healthier lives, to buffer themselves against worry and harm, to have leisure time to spend with friends and family, and to control the nature of their daily activities—all of which are sources of happiness (Smith, Langa, Kabeto, & Ubel, 2005).
Wealthy people don’t just have better toys; they have better nutrition and better medical care, more free time and more meaningful labor—more of just about every ingredient in the recipe for a happy life. And yet, they aren’t that much happier than those who have less. If money can buy happiness, then why doesn’t it?
Because people don’t spend it right. Most people don’t know the basic scientific facts about happiness—about what brings it and what sustains it—and so they don’t know how to use their money to acquire it.
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.
So how should you be spending it? According to the study, you should be sure to do eight specific things:
- Buy more experiences and fewer material goods;
- Use your money to benefit others rather than yourself;
- Buy many small pleasures rather than fewer large ones;
- Eschew extended warranties and other forms of overpriced insurance;
- Delay consumption;
- Consider how peripheral features of their purchases may affect your day-to-day life;
- Beware of comparison shopping; and
- Pay close attention to the happiness of others.