Imagine that someone gives you a cash gift and tells you that, instead of saving or investing it, you need to spend it right now. What should you put your money toward if you want to make yourself happiest?
According to past research, we’ll be happier if we spend money on an experience than if we buy a material object—like traveling or going out for a meal instead of buying the latest product we see on social media. For example, people report more gratitude when they spend on experiences rather than possessions.
On the other hand, we can all probably think of times when we’ve spent money on an experience that ended up not being worth it. Maybe you bought pricey event tickets to avoid missing out, only to realize on the day of the event that you’d much prefer a cozy night at home. Or perhaps you went out to dinner with a friend at a fancy restaurant, only to find that your friend was more focused on posting the meal to Instagram than having a deep conversation.
It turns out that there might be another factor at play beyond whether we spend money on an experience or a material item: According to a new study published in the British Journal of Social Psychology, it may also matter how our purchases align with our goals.
In the study, researchers asked 452 participants in an online survey to describe a recent purchase. They were asked to write about something they had spent money on in the last three months (ranging from about $60 to $1,200), excluding everyday expenses such as bills and groceries. After describing it, people were asked to indicate the extent to which the purchase helped to fulfill different goals. They also noted how much they felt the purchase contributed to their happiness and life satisfaction.
According to self-determination theory, goals reflect our intrinsic and extrinsic motivations. Extrinsic goals are things that other people expect for us: for example, working hard at a job not because you’re passionate about the work, but because you need the money or want a high-status job to impress others. Intrinsic goals, on the other hand, are ones that we have a strong internal motivation to pursue. In the survey, extrinsic goals included gaining wealth or social status, whereas intrinsic ones included cultivating relationships, helping other people, and contributing to growth, learning, and development.
The researchers found that, the more a purchase reflected people’s intrinsic goals, the more they thought it improved their well-being. In other words, the greatest well-being occurred when people spent money on something that was personally important to them.
To compare this finding with past research, the current study also asked participants to indicate to what extent their purchase was an experience or a material item. As in past research, participants did report higher well-being from experiences. However, when the researchers looked at both factors together, they found that how much a purchase reflected intrinsic goals explained more of the differences in well-being than whether something was material or experiential.
So, what does this research mean for our spending habits? Olaya Moldes Andrés, lecturer at Cardiff University and the study’s author, points out that we’re under a lot of pressure to spend money these days; just think about the number of targeted ads you see each time you open social media. However, this pressure to spend has a downside: In past research, Moldes Andrés has found that people who are exposed to more materialistic messages have lower well-being.
Before purchasing something, she recommends pausing to think about the reason for our purchase, and what use we will get out of it. If we’re spending money on trying to impress people or project a certain image (in other words, extrinsic goals), the purchase may not actually be worth it.
So, next time you’re planning to buy something, take a moment to think about whether it’s something you’re buying because you feel it’s what’s expected of you—or whether it’s truly something that you want.
FAQs
It Depends on Why You're Spending It. According to new research, our purchases may make us happier when they're motivated by goals we care about. Imagine that someone gives you a cash gift and tells you that, instead of saving or investing it, you need to spend it right now.
Can money buy happiness depend on how you spend it? ›
Research shows that using money to buy experiences rather than things, using it to help others, to develop or deepen relationships, and buying time by hiring others to do things you don't like to do will add to your overall psychological well-being.
Can money really buy happiness explain your answer? ›
Money contributes to happiness when it helps us make basic needs but the research tells us that above a certain level more money doesn't actually yield more happiness. Not only did earning more money make participants happier, but it also protected them from things which might make them unhappier.
Do you believe that money can buy happiness why or why not? ›
Sure, we can purchase things and experiences that contribute to our happiness. But this still means the individual needs to take action towards achieving happiness. Money alone won't buy or bring you happiness — it has to be managed. Money can buy things that can lead to happiness, but it cannot guarantee happiness.
Can money buy happiness essay 150 words? ›
According to me, although having lots of money will surely provide us lot of ways to entertain ourselves but it can't buy love and happiness. Money can't buy love and a happy life comes from having good friends and family who care about us. Our life becomes meaningful and happy when we are around loved ones.
How do you explain money can't buy happiness? ›
The saying means that true happiness comes from within, not from possessions that can be bought. Beyond the ability to pay your bills, happiness is a state of mind that is short-lived when you base it on physical objects and the numbers in an investment portfolio.
Is it true money can't buy happiness? ›
Some studies have found that more money is always related to greater happiness. Others report that money does make you happier, but only up to a certain amount, and then once you have enough to live comfortably, more money doesn't necessarily make you happier.
Can money always bring happiness? ›
“In the simplest terms, this suggests that for most people larger incomes are associated with greater happiness,” says Killingsworth, a senior fellow at Wharton and lead paper author. “The exception is people who are financially well-off but unhappy. For instance, if you're rich and miserable, more money won't help.
Can we be happy without money? ›
Yes, it is absolutely possible to feel happy without having money. Happiness often comes from factors like meaningful relationships, personal fulfillment, good health, and positive experiences, which aren't solely dependent on wealth.
Does money give a true sense of happiness? ›
While money can certainly contribute to happiness up to a certain point, true joy is derived from a combination of factors beyond financial wealth. The pursuit of happiness is multifaceted and involves cultivating strong relationships, pursuing personal growth and fulfillment, and finding meaning and purpose in life.
Yes, if you're strategic in how you use it. Simply buying more stuff won't cut it. But using money to invest in extraordinary experiences, nurture relationships, support causes you believe in, gain more time afflunce, and create a secure future can most definitely increase life satisfaction and emotional wellbeing.
At what point does money stop buying happiness? ›
"The [Daniel] Kahneman and [Angus] Deaton paper in 2010 found that the relationship between income and happiness, or emotional well-being, flattens out at around $75,000," said Kostadin Kushlev, a happiness researcher and assistant professor at Georgetown University's department of psychology in Washington, D.C.
Can money buy happiness of real life? ›
But few would argue that having some discretionary income doesn't facilitate happiness to a certain degree. “This notion that money cannot buy happiness is just, like, patently false,” social psychologist Elizabeth Dunn recently told CNN Chief Medical Correspondent Dr.
How much happiness can money buy? ›
There is no magic number—especially not $75,000—that researchers agree on as a point where happiness stops rising with income. Some studies, such as those by Killingsworth, find that there is no such point, or at least they haven't found it in the available data.
Can money buy love and happiness? ›
While money can't buy you happiness, what it can do (via financial planning) is help you to prioritize your life by figuring out your goals and dreams, and then putting your money to work for you in order to help you attain those goals and dreams, in pursuit of that happiness.
Can money buy happiness disadvantages? ›
When we focus on wealth, we engage in social comparison, which lead to feelings of jealousy, low self-esteem, and inadequacy. Social comparison can effect our sense of well-being, causing us to act negatively and live an unfulfilled life. We must find ways to avoid comparison, and rather focus on what makes us happy.
At what point does money not buy happiness? ›
A new study from a group of scientists found that the limit in terms of whether money can buy happiness starts to max out once someone hits $500,000 a year. It's a far cry from past research, in which one study established the idea that happiness plateaus after $75,000.
Does it turn out money can buy happiness? ›
(NewsNation) — When it comes to happiness, it turns out more money is better. New research shows millionaires and billionaires are “substantially and statistically significantly happier” than even those making over $500,000 a year.
Does spending money on others increase happiness? ›
personal) spending memory reported greater happiness but differences were small. Taken together, these studies support the hypothesis that spending money on others does promote happiness, but demonstrate that the magnitude of the effect depends on several methodological features.
