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Review: Happy Money – The Science of Smarter Spending

happy moneyThis review first ran in the June 17 edition of The Hamilton Spectator.

Happy Money: The Science of Smarter Spending

By Elizabeth Dunn and Michael Norton

Simon & Schuster

$25

Anyone who says money can’t buy happiness is lying, denying or not being smart in how they spend their disposable income.

Money is buying me and my kids a three-day stay at Darien Lake to kick off the summer. During our 2013 No Parental Supervision Summer Road Trip to the amusement and water park, we’ll aim to set endurance records on the motorcycle roller coaster, river rafting ride and swinging pirate ship. We’ll turn self-serve slushies into a food group. And we’ll stay up way past our bedtimes.

I’m jazzed than the kids and not just because the price is right, the park is spotless, the staff are friendly and the line-ups are short.

I’m banking on happy roadtrip memories to carry me through the fast-approaching,  door-slamming teenage years where I’ll get recast as       the clueless and uncool dad who denies my kids their fun and freedom and totally ruins their lives.

Springing for experiences like summer roadtrips is one of five principles put forward by Elizabeth Dunn and Michael Norton, associate professors and authors of Happy Money: The Science of Smarter Spending.

When it comes to happiness, it’s less about how much we make and more about how we spend our hard-earned dollars. “Around the world, income has surprisingly little influence on whether people smile, laugh and experience enjoyment on a typical day,” say Dunn and Norton.

According to the research, once we earn around $75,000 a year, making more money has zero impact on our day-to-day feelings of happiness.

“Before you spend that $5 as you usually would, stop to ask yourself is this happy money? Am I spending this money in the way that will give me the biggest happiness bang for my buck?”

To get more bang for your buck, incorporate these five research-backed principles into your day-to-day spending habits:

Buy experiences.  Most of us already know what the research shows. Material things like 80-inch flatscreens, monster homes and luxury SUVs deliver less happiness than experiential purchases, like roadtrips, family vacations, concerts and events. The rush we might get from buying stuff fades fast while the experiential high lingers. “Experiential purchases not only provide us with entertaining anecdotes but also add texture to our broader life stories.

Make it a treat.  “If abundance is the enemy of appreciation, scarcity may be our best ally,” say Dunn and Norton.  Routinely drinking a Caramel Ribbon Crunch Frappuccino from Starbucks every day won’t make you as happy as having it once a week or month. “While there is no convincing evidence that reducing consumption provides a panacea for increasing happiness, a growing body of research suggests that altering consumption patterns can provide a route to getting more happiness for less money.”

Buy time. Wherever possible, outsource the tasks you dread so there’s more time to do what you love. “People who feel they have plenty of free time are more likely to exercise, do volunteer work, and participate in other activities that are linked to increased happiness.” And think long and hard if you’re considering a longer, happiness-killing commute just to earn more money, live in a bigger house and drive a bigger car.

Pay now and consume later. We tend to get more joy from things coming to us in the future than from things that we’ve already received.  Delay builds positive expectations. This is why planning a vacation is often just as exciting as the trip itself.

“Spending money on others can increase your happiness even more than spending your cash on yourself.” Look for ways to make it a choice, make a connection and make an impact. The authors sing the praises of Spread the Net as a nonprofit that lets donors make a clear impact by giving $10 to buy one net and save lives.

“Fifty years of psychological research has shown that most of the action in human thought and emotion takes place beneath the level of conscious awareness – and so trying to uncover the causes of your own happiness through introspection is like trying to perform your own heart transplant,” say Dunn and Norton. “You have some idea of what needs to be done, but a surgical expert would come in handy. Consider us your surgical experts.”

While there are stacks of books and armies of experts ready to tell you how to make more money, Dunn and Norton show you how to spend smarter and buy yourself more happiness.  They also show how companies can apply the five happy money principles to win the loyalty of customers and employees.

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