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How to Spend Money if You Want to Be Happy


How to Spend Money if You Want to Be Happy

Photo by  Christine Roy  on  Unsplash

Money can do a lot for us. When we don’t need to worry about the price of our next meal, how to afford a home, and how much we need to save for a well-earned holiday, we are certainly better off. But when it comes to the relationship between money and happiness, things get a little more complicated. There is no straightforward answer to exactly how money impacts life satisfaction. So when you next think about how much happier you’ll be if you get a pay rise, or when you next give someone the advice that “money doesn’t make you happy”, you should know that you are partly correct and partly wrong.

For anyone interested in how money affects happiness, the first evidence you probably want to see is the correlation between how rich people are and how happy people are. You can look at this across several levels. First, in the differences between countries. Whether you include developed countries, developing countries, or countries going through major political transitions, scores of life satisfaction do not seem to increase with economic growth across countries. At least, not over long-term averages. When you look at year-by-year patterns within a single country, for example during a political transition from communism to capitalism, you can spot similar changes in GDP and life satisfaction during those specific years. When the economy crashes, people get relatively miserable. As it recovers, life satisfaction recovers with it.

We can also look at how happiness relates to household income. In the US, there is a weak but significant correlation between a person’s household income and their level of happiness. If you look under the skin of the correlation, you can spot plateaus in how much your happiness increases as you get richer. In 2004, if you made over $90,000 a year, you were almost twice as likely to say you were “very happy” than someone who made less than $20,000. But you’d be practically no happier than someone who made between $50,000 and $90,000. Of course household income can grow a lot higher than $90,000, and you find much steadier growth in life satisfaction if you look at household income on a logarithmic scale (i.e. rising by orders of magnitude rather than linearly). But keep in mind, there is a difference between the typical long-term life satisfaction measures and daily assessments of your emotional experiences. Although the way you evaluate your life in general rises steadily with log income, the way you specifically felt yesterday stops improving after you make around $75,000 (at least in 2008–2009). Above this level of income, you’re probably not going to be any freer to do the things that really make you happy on a day-to-day basis, like seeing friends, enjoying hobbies, and staying healthy. But your general level of life satisfaction seems more sensitive to how much money you have available.

Photo by  rawpixel  on  Unsplash . Adapted by yours truly.

Photo by rawpixel on Unsplash. Adapted by yours truly.

So the relationship between money and happiness is complicated at best. But what exactly could the downsides of money be? One possibility is that money negatively impacts your ability to appreciate and enjoy the smaller things in life — the fresh air in the park or the taste of chocolate. In one experiment, participants who were reminded about wealth and money spent less time eating chocolate, and found it less enjoyable, than people without such a reminder. In general, money mindsets seem to make people less prosocial and more business-like. In addition, those who are making more money are likely to be working more, rather than doing the leisurely things they daydreamed about before getting rich. You can probably see why these kinds of mindsets might not be the happiest.

To add to our burdens, we are creatures who very quickly adapt to new gains and successes in our lives (one of my previous articles goes into our adaptive brains in more detail). This means that a pay rise might make us happier for a few weeks, but as our spending increases and our ambitions drift towards even bigger and better things, we begin to lose that brief spurt of happiness we enjoyed. Even worse, we love to compare ourselves to other people. In times of greater inequality in the community, those at the bottom are likely to feel cheated, which leads to an overall drop in happiness. And as we get richer, we simply find new richer groups to compare ourselves to, so our happiness can only ever last so long.

Perhaps happiness is less about how much money we have, and more about how we use it. When people receive a cash windfall at work, the more of it they spend on others (e.g. friends, charities), the happier they become. In some cases, this indicator of prosocial spending is an even stronger predictor of eventual happiness than the total amount of the windfall in the first place (of course within reasonable boundaries). This is even true in an experimental context when you give people money in the morning and ask half of them to spend the money on themselves, and the other half to spend it on others, throughout the day. At the end of the day, the people who buy gifts for others or give the money to charity gain greater happiness than the people who pay off bills or buy themselves a gift. And it doesn’t matter whether you’re given 5 bucks or 20 bucks, the strongest predictor of your happiness is still how prosocial you are in your spending, not how much you receive. The emotional rewards of sharing may even be universal and deep-rooted enough to apply to children. When children share one of their snacks with a cuddly puppet friend, they express more happiness than when they receive the treat for themselves. In fact, their happiness is greatest when they share one of the treats from their own stash rather than simply an extra treat they are handed by a researcher.

Photo from Pixabay. Adapted by yours truly.

Photo from Pixabay. Adapted by yours truly.

We all think we’ll be happy with more money, and there is certainly some truth to this. But it’s not the whole story. We quickly get used to new ways of living and new purchases we make, so our day-to-day happiness has its limits when it comes to income. However, with a little extra generosity and a stronger focus on using our time for activities that actually make us feel good, we can fully reap the benefits that money and life have to offer. Nobody likes to end on a cliché, but our happiness really does rest on making our money work for us, rather than the other way around.


Your Brain’s Battle Between Happiness and Greener Grass


Your Brain’s Battle Between Happiness and Greener Grass

Photo by  MI PHAM  on  Unsplash

Photo by MI PHAM on Unsplash

We all do what we can to feel good. When you consider what it means to feel good, you probably think of the immediate pleasures that life has to offer: excitement, laughter, and requited love. But most of us want more diverse experiences, including a sense of calm, gratitude, and purpose. In fact, sometimes the best feelings we ever have come from long or grueling challenges. For me, this includes a backbreaking (almost literally) process of learning to snowboard, and a gruesome mountainous cycling challenge in the Canadian Rockies. It’s almost as though the pain of a difficult challenge makes the pleasure of success feel that much better in comparison.

Our moods hang like a cloud over everything we do. Sometimes they change as an immediate response to a new event, while other times they are more like background feelings without any obvious cause. They have a clear impact on our quality of life, but we are generally bad at understanding exactly how or why we feel the ways that we do. Worst of all, we often fail to see what truly makes us happy in life. Without this knowledge, we’re like a hamster on a treadmill, chasing elusive good feelings but never quite reaching happiness.

If someone asked whether you want to implant an electrode in your brain directly targeting your pleasure centre and leave it switched on, what would you say? We could organize it so that it would be like the best drug in the world, but you would be protected from adapting to it or suffering from withdrawal symptoms or other negative physiological side effects. Even with these reassurances, we might hesitate. We don’t really want constant pleasure. Without life’s downs, the ups lose value. Would we be as productive, motivated, and appreciative of happiness, if we never really knew a life without it? Probably not.

Although negative emotions are practical in life, positive emotions are always the long-term goal. We direct any struggles or pains towards a future positive benefit in our life experiences. We often experience some fear before speaking to large groups or traveling to unfamiliar countries, but we don’t do these things because we want to feel the fear. We want the gifts at the end of the rainbow: enhancing our reputations and careers or broadening our horizons by meeting other cultures. We simply accept that fear is a central part of the journey towards gaining that positive outcome in our experiences.

When we are not afraid or nervous about what we are doing, we are unlikely to gain much at the end of the exercise. That may be because the activity is not scary in the first place, or because we have done it so many times already that we have adapted to it, and it’s no longer scary. Either way, we are unlikely to achieve anything life-changingly positive when we finish. We get nervous about new territories and public speaking precisely because they mean so much to us. We can all agree that we will have a more comfortable and pleasant life with less anxiety and sadness, but it is also true that tackling the occasional short-term drama can help us in the long term. We give ourselves the chance of entering a new realm of potentially greater mental well-being.

The optimal strategy is to find our personally ideal balance of creature comforts and novel excitements. This balance likely depends on our personality, especially on our level of openness, which relates to our desire to search for new experiences over familiar environments. A specific theory of animal behavior describes exactly this balance of explore vs exploit.

Life is full of decisions between sticking with what we know and exploiting the resources we already have, or riskily jumping at a new opportunity to potentially gain something much bigger. Humans and other animals need to deal with this challenge all the time. Antelope: “Do I stay here where it seems safe, and keep munching on this diminishing low quality grass, or do I move on and find some higher quality stuff while trying to avoid cheetahs?”. Human: “Do I go back to that restaurant I quite like tonight, or try this totally new one that I’ve heard about but might hate?”. We are not so different.

Photo on left by  Holger Bartholomä  on  Unsplash . Photo on right by  Zuza Reinhard  on  Unsplash .

Photo on left by Holger Bartholomä on Unsplash. Photo on right by Zuza Reinhard on Unsplash.

The brain is a prediction machine. It has a model of expectations about the world, and this model initially depends on our evolutionary genetics, but it also evolves as we live and learn new things about the environment around us. A human lives in a very different world than a whale, so each brain has its own individual preset models about how the world should look. As we navigate and act on the world, we naturally perceive new things around us, and we compare all of those new perceptions to our model of expectations.

When we find a big difference between them, something needs to change because uncertainty is dangerous. We either need to change what we are seeing, or we need to change our expectations of what we should see. If, as humans, we find ourselves lost in a dark forest or we are stuck outside on a cold night, we will spend all of our energy trying to get away from the darkness or the cold, given their inherent danger. We keep moving until our senses tell us we are in light or warmth again. But what if this is not an option? What if we have gone blind and we remain stuck in darkness for an extended time? Then we only have one other option for remaining sane: we change our expectations about the world, rather than continuing to try and change the sensory inputs themselves. In other words, we adapt so that the new world we find around us is no longer a constant surprise, and we find better ways of negotiating the world with the new model of expectations in our head.

We adapt our expectations in subtler ways in everyday life. For example, we might have a prior belief that raw fish is disgusting, and so we stay away from sushi. But then we might meet someone who encourages us to at least try it. The first time you try it might be a disaster. Your brain enters surprise mode, and kicks back to tell you to throw it away and never look at it again. But you might try a couple more times. The next few times are less surprising, and eventually you might even be quite comfortable with it. This process of becoming comfortable is the brain adjusting its expectations as new sensory experiences repeatedly show you that your predictions might be inaccurate. So your expectations for sushi might develop from ‘sushi = disgusting’ to ‘sushi = not so bad’, and perhaps eventually to‘sushi = awesome’. Because let’s face it, sushi is awesome.

Original pictures from Pixabay. Adapted by yours truly.

Original pictures from Pixabay. Adapted by yours truly.

You can see shorter term adaptation happening in the brain during brain scans. When you are repeatedly shown the same image, the parts of your brain responsible for processing that image reduce in their activity over time. For example, when you are shown the same person’s face multiple times, activity in the fusiform gyrus area of your brain (which is important in decoding facial identity) decreases each time. When you are shown the same emotional expression, activity in the anterior superior temporal sulcus (involved in processing emotional expression) reduces over time. So the brain has in-built adaptation functions. New information tends to be more important than old information, so it makes sense to devote less processing power to information as it becomes familiar. In fact, this adaptation mechanism is so deeply ingrained, that it’s one of the few methods we have for measuring the psychology of newborn babies. When newborns are interested in something, they look at it, and when they get bored, they look away. By measuring how long they look at different objects and images before adapting and looking away, we can understand some of the innate preferences that we are born with, like preferring biological motion (walking people) to non-biological motion (random movement).

Adaptation is both a blessing and a curse. It’s a blessing when we are working through an event that makes us fearful or anxious, because eventually we get used to it and calm our nerves. But we also face the same problem when we become especially excited or happy about a new event in our life. We never maintain the high for very long. Our energy and excitement when we start a new job dies down within a couple of months. Our passion and drive for going to the gym starts to fade after the first few workouts. And the romance and butterflies of a new relationship do not last forever either, even when we truly love someone.

It is a great revelation when we learn firsthand that we didn’t fully appreciate something or someone until we lost them. The loss snaps us out of the adaptation that took over, allowing us to more realistically appraise the object’s value and desperately want it back. One great example is good health. We live our lives taking good bodily health for granted and never thinking about it, until we develop an awkward cyst, infection, or goodness forbid, cancer that we need to get fixed. Then we spend our days praying for our good health to return, promising that we’ll better appreciate it this time. And often we do appreciate it more, at least for a week or so…

In one sense, adaptation to the good stuff in our lives also has an advantage. It allows us to develop new motivations and keep moving forward. In a world where we want to earn more, learn more, and experience more, it is not conducive to be fully happy with what we have. A little boredom gives us the push we need to climb up the ladder of life. But it is entirely obvious that most of us do not have this balance right.

This is why it’s important to make the most of what we have while we have it. One great way to do this is to strengthen your sense of awareness. Open monitoring mindfulness is just one technique for helping with this. Instead of getting lost in your thoughts, the aim is to attentively monitor all your thoughts and experiences as they appear, without reacting to them. You don’t necessarily need to sit cross-legged on a pillow to enjoy this mindset. You simply have to become more aware of how you’re thinking and feeling moment-to-moment in your everyday life. This level of internal self-monitoring requires practice, because it’s far from easy to maintain. But there is good evidence for the positive benefits of mindfulness, especially when it comes to emotional and relationship issues. So it’s worth the effort, and the effort can be enjoyable.

Whenever we break out of the ongoing buzz of annoying thoughts in our head, we tend to notice more of what’s going on around us. It might be as simple as noticing the freshness of the air in the park or the reckless abandon of a dog chasing sticks. These sound insignificant but have you ever noticed the experiential difference between walking through a park while paying attention vs walking while lost in thought? When you leave the park at the end of the first scenario, you feel as though you’ve had a full, rich, and meaningful experience. At the end of the second, you don’t have much of an experience at all, and you wonder where the time went. That’s if you don’t continue blindly scurrying all the way home without even noticing that you have left the park and the experience has ended.

These differences are far from trivial. Too many of us appreciate traveling vacations only in hindsight, because on the trip we get distracted by flight delays, baggage problems, too much heat, too much cold, overspending, uncomfortable accommodation, undercooked meat, foreign languages, and goodness knows what else. When we focus on the positives, we savor the best parts of the experience while we are actually there, rather than taking 500 rapid-fire photos to enjoy only once we are home.

Photo by  Jon Flobrant  on  Unsplash . Adapted by yours truly.

Photo by Jon Flobrant on Unsplash. Adapted by yours truly.

Outside of the most extreme hardships, the things that make us happy are usually within our reach. We just need to look for them. Ongoing gratitude and appreciation can be tough to cultivate because we are so inclined to push them away as we chase bigger and better things. But if we try, we can set ambitious goals and make progress, all the while appreciating what we already have.