How to spend money to squeeze more joy out of life

Zac Freeland/Vox

Simply having a lot of it won’t automatically increase your sense of well-being. “But using it well can,” says one expert.

It was early February in Los Angeles, and Andra Izgarian, 29, had reached a career high point: As the director of media operations at Condé Nast, she had scored an invitation to the 2019 Grammys.

In the company’s VIP box, executives in tuxedos and floor-length dresses sipped champagne from the open bar as artists including Lady Gaga and Alicia Keys performed. “It was a great chance for me to network,” Izgarian says. “These were some of the smartest people that I’d encountered at that point, really amazing people to look up to.” But as she surveyed the scene, all she could think was: “I can’t do this for the next 30, 40 years.”

Izgarian felt like a cog in a machine. Restless, she’d taken an interview with Outpost, a network of coliving and coworking locations in Southeast Asia, to run media relations for its new location in Bali. On Grammys night, she made up her mind: If Outpost offered her the job, she’d accept.

Less than two months later, she’d sold most of her stuff and moved to humid, chaotic, staggeringly beautiful Bali. The decision meant putting more than 8,000 miles between herself and her family, taking a pay cut, and focusing on her lifestyle rather than chasing traditional professional success.

Overall, she says, she’s happier: No longer weighed down with an hour-long commute and rigid routine, she has an easier time living in the day-to-day. “If I didn’t take a chance and leave corporate America to see what else was out there and really get out into the world …” she says, trailing off. “That’s what I would regret.”

Money is good at fostering fulfilling experiences, relationships, and a sense of community

Many of us can relate to Izgarian’s feelings of dissatisfaction and stagnation, the stubborn sense that the path in front of us is neither enjoyable nor leading to lasting well-being. (Having the luxury of worrying about this, of course, is a considerable privilege.)

Moving to Bali seems to have worked for Izgarian, but it isn’t the only antidote. A growing body of research shows we can reliably boost well-being by reframing the way we think about money and making financial decisions that lead to long-term gains in life satisfaction.

Researchers divide happiness into two general categories: the level of positive emotions, such as pride, joy, contentment, and curiosity, which we experience on a day-to-day basis, versus an overarching sense of contentment and fulfillment. “It’s being happy in your life versus being happy with your life,” says Sonja Lyubomirsky, a psychology professor at the University of California Riverside and the author of The How of Happiness: A Scientific Approach to Getting the Life You Want.

Both components are typically measured through self-reported questionnaires. Longer-term life-satisfaction “tends to be pretty sticky,” says Michael Norton, a professor of business administration at the Harvard Business School and the co-author of Happy Money: The Science of Happier Spending. Meaning: If you’re asked to rate your happiness on a 10-point scale, he says, “If you are a seven kind of person, you often stay around seven.” How happy you are on an immediate basis is far more variable, capable of fluctuating widely by the day or even hour.

Broadly speaking, there is a linear pattern between money and life satisfaction. “You think your life is better the more of it you have,” says Ashley Whillans, an assistant professor at Harvard Business School whose research focuses on trade-offs between time and money. Up until a point, that is, after which the correlation flattens and then decreases slightly, perhaps because previously unfathomable comparisons emerge when you’re keeping up with the one percent. (This threshold is squishy and dependent on a range of variables, such as the cost of living in your region, whether you live in a democratic society, and how rich your neighbors are.)

Money is a powerful predictor of well-being in large part because it protects against stressful, negative experiences, from the fundamental (financial insecurity, a lack of basic necessities, such as food and shelter) to the secondary (layovers, having to go grocery shopping in bad weather). When used strategically, it’s also good at fostering fulfilling experiences, relationships, and a sense of community — all reliable ways of boosting well-being.

With that in mind, here’s what experts have to say about the spending decisions that can increase happiness — along with those that can’t. While many of these strategies work for people across income levels, as you can imagine, the less money you have, the harder some of these tips are to adopt, or adopt regularly.

At the same time, “Just having money doesn’t necessarily translate into greater happiness,” Whillans says. “But using it well can.”

Buy time

Much of Whillans’s work has focused on the benefits of outsourcing unpleasant or disliked tasks on well-being. She’s co-authored a number of studies on the topic; in one of the most widely reported, participants who were asked to spend $40 on time-saving purchases were in a better mood and less stressed at the end of the day than when they were instructed to buy something material. In another, couples who reported making the same sorts of purchases together were happier in their relationships.

Outsourcing’s impact on happiness seems obvious. Who wouldn’t be happier if the unpleasant or tedious, time-sucking tasks in our lives (cleaning, laundry, public transportation) were taken care of for us, and we were magically gifted hours that could be diverted toward more meaningful and enjoyable activities, such as visiting friends or going to a movie?

Unfortunately, we’re not great at valuing time over money, Whillans says. There are powerful societal forces pushing us towards this mental trade-off, including the tendency to equate busyness with status, and the expectation that success requires managing every area of our lives without assistance. On a small scale, this can make taking a taxi to the airport or ordering takeout — services that save time — feel more extravagant than purchases that result in something tangible, like a new coat or couch. On a larger scale, it can lead to a series of escalating decisions that preserve our money at the expense of our time.

For women, these societal currents can be particularly strong. Whillans has spoken to professional women over the course of her research who still view outsourcing child care, laundry, or cooking as a personal failing. In addition to a demanding, full-time job, Lyubomirsky, 52, of the University of California Riverside, has four kids. When the youngest two were small, she hired a night nanny.

“It was so worth it,” she says, buying her time and, perhaps more important, sleep. Still, she had to justify the decision to herself in the way she rarely did for expensive material purchases. She also fielded questions from other people who, she sensed, were implicitly judging her for outsourcing any aspect of motherhood.

To change spending habits, it helps to think about — and value — time more like money, Whillans says. This can apply to small purchases, such as going out to eat rather than cooking in order to spend quality time with a partner. It can also impact significant decisions, such as seeking out a job for its flexibility rather than the salary and prestige, as Izgarian did, or a house for its proximity to work rather than the square footage.

Spend money on experiences

If you have the choice between going to dinner with a friend and buying a new TV, the latter might seem like a wiser investment. Unlike the impermanence of a meal, TVs stick around.

Physically, that is. Psychologically, the effect of buying stuff is less substantial, says Tom Gilovich, a psychology professor at Cornell University. Humans are tragically skilled at hedonic adaptation, the process by which we adjust to upgrades so thoroughly that they cease to exist in our consciousness, eliminating any lasting gains in happiness.

Experiences are often the better investment. “Even though, in a material sense, they come and go, they live on in the stories we tell, the relationships we cement, and ultimately in the sense of who we are,” Gilovich says. Experiences are also great at filling a primal need: meaningful relationships with other people. Even low-key activities have the potential to shape our sense of identity through new memories and connections. “In an important respect, we are the total sum of our experiences,” Gilovich says.

And unlike disappointing purchases, experiences can be recast as something we wouldn’t change. “It’s hard to romanticize a bad material thing,” Gilovich says. “It’s pretty easy to romanticize bad experiences.”

For Izgarian, moving across the globe confirmed her suspicion that she’d fallen into the privileged trap of owning too much. Before leaving LA, she donated or sold more than 90 percent of her possessions. Today, everything she owns fits in two suitcases. There are tradeoffs, of course: convenience, comfort, roots. And yet the ability to pack up and move at a moment’s notice is an “inexplicable feeling,” she says. “There is nothing weighing me down.”

A life decentered from stuff has realigned her days around experiences. Some of her favorite memories in Bali are simply getting from point A to point B. “You’re with your friends in a little scooter gang driving through all these lush green fields,” she says. “It’s just as fun as the destination itself.”

Give money away

An associate philosophy professor at the University of Oxford, William MacAskill helped found the effective altruism movement. The majority of his time and annual income (anything above $34,000) goes toward using his scarce resources to do the most good and getting other people to do the same.

MacAskill credits effective altruism with helping him emerge from a sustained bout of depression. He initially sought out treatment because his productivity had flat-lined, and he felt a moral responsibility to continue working toward a purpose larger than himself. “I don’t know if I would have had the same motivation otherwise,” he says.

The act of spending money on other people could be beneficial in itself. Harvard’s Norton contributed to a series of experiments that found people are happier after spending money on others versus on themselves. He’s also co-authored a survey that showed a correlation between life satisfaction and spending (as a percentage of annual income) on other people. The same effect does not exist when people spent more money on themselves.

This has yet to turn us into a nation of donors. In the US, people give, on average, between 2 percent and 5 percent of their income to charity each year, which remains fairly consistent across income levels, Norton says.

As anyone who has booked a vacation or experienced the heady dopamine rush of unboxing a new purchase can attest, “it’s not that spending money on yourself doesn’t feel good,” he says. “The issue is that it doesn’t seem to last for very long.”

Since discovering Norton’s research, Gilovich, the Cornell psychology professor, has made a deliberate effort to donate more to charity and be generous with people in his own life. Recently, he and his wife sent a food delivery to a friend going through a particularly hard time. Clicking the button to place the order gave Gilovich more pleasure than he’d ever experienced ordering food for himself, he says.

“It’s hard to find a more charming finding than that by giving away money, you not only make someone else happier, you make yourself happier.”

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Laura Entis is a writer and editor focusing on health, business, and science. Her work has appeared in Fortune, Fast Company, Time Health, GQ, Consumer Reports, and Outside Magazine. She previously covered the monetization of human connection for Vox’s The Highlight.

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