Three researchers recommend ways of spending money to make one happy
By Goh Eng Yeow, The Straits Times, 6 Jan 2013
Most of us spend our time trying to make more money - whether by chasing the next promotion or business deal, or devising a sure-fire investment strategy.
But one question I've pondered over the years, after writing countless articles advising readers on how to invest profitably, is that old chestnut of whether more money makes a person happier.
Certainly, some of the happiest moments in my life have not revolved around money.
Some have been simple experiences like doing taiji in East Coast Park early in the morning, with the gentle sea breeze caressing my face, or a spectacular sunset I saw once at Hangzhou's West Lake, as the sinking sun lit the water a golden glow.
It leads to another question: Why doesn't having a whole lot more money make us a whole lot happier?
In a thought-provoking article, three researchers - University of British Columbia's Elizabeth Dunn, Harvard University's Daniel Gilbert, and University of Virginia's Timothy Wilson - offer an explanation after spending decades studying the subject.
Their conclusion: "If money doesn't make you happy, you are probably not spending it right."
They note that people fail to realise that having more money allows them to live longer and healthier lives, buffer themselves against worry and harm, have more leisure time to spend with their friends and family as well as control the nature of their daily activities. These are sources of happiness which tend to be taken for granted.
But they make another observation worth highlighting: "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."
True, I know of people who never fail to flaunt their wealth at every possible opportunity, and show off their flashy cars and the posh condos they live in. But I wonder if they are truly happy, or if they have simply become slaves to their own material pursuits.
Come Chinese New Year, some of them even skip town, leaving the impression they want to avoid giving hongbao, or red packets, to their younger relatives and friends. It is a stark contrast to the millions of much less well-off Chinese workers who trudge back to their home villages just to be with their loved ones and enjoy the bliss of the family reunion.
It is interesting to note what the three researchers have to recommend on how to spend money in order to maximise our happiness.
Help others instead of yourself
One trait they observe is that people feel significantly happier when they reflect on a particular time they spent money helping others.
Their research shows that receiving a gift from a romantic partner strengthens the likelihood that the relationship will continue over the long term and lead to marriage. Giving to charity evokes similarly positive feelings.
"Given how deeply and profoundly social we are, almost anything we do to improve our connections with others will improve our happiness as well - and that includes spending money," they say.
Buy experiences, instead of things
The three researchers also note from their study that people are often happier when they spend their money on experiences rather than things.
It certainly applies in my case. I cannot recall how I felt when I got the keys to my first car, or the condo I bought many years ago.
But to this day, I can still recollect the pleasure in trying to catch the first snowflakes I saw as a student in England over 30 years ago.
"One reason why experiences make us happier than things is that experiences are more likely to be shared with other people, and other people are our greatest source of happiness," they say.
Buy many small pleasures, instead of a few big ones
The researchers observe that people are happier when they get frequent small pleasures like having coffee with friends at Starbucks or a getaway with loved ones over the weekend, rather than pouring money into large purchases such as a sports car or a dream vacation.
That is not to say that there is anything wrong about having big purchases.
"But as long as money is limited by its failure to grow on trees, we may be better off devoting our finite financial resources to purchasing frequent doses of lovely things, rather than infrequent doses of lovelier things," they advise.
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