Three Simple Tips to Turn Money into Happiness

Dec 3, 2014 -

According to a study conducted by Princeton economist Angus Deaton and famed psychologist Daniel Kahneman, the magic salary number whereby additional amounts would have no measurable effect on day-to-day contentment is $75,000 a year. If you make more than that, you don't gain any more happiness than if you made $75,000. Now whether or not we choose to believe this is another story. How did we pinpoint this amount? Why not $70,020 or $80,500? In any event, what is more important is how we decide to spend the cash we make.

You can always earn more money, but can't buy more time.
Time is money and money is time. Isn't that how the saying goes? They say we trade time for money when we are young and when we get older, we trade money for time. On weekends, my friends and I will frequent nightclubs or bars. Now in Los Angeles and in New York, there usually is a line for the more popular clubs. Sometimes the line is an hour and a half long or sometimes it's 45 minutes. Regardless, in the interest of time, we usually slip the bouncer $20 per head to get in. The way you go about doing this is you go up to the bouncer and tell them you have a reservation. At the same time, slip him the cash. We figure, we make more than $20 bucks an hour, so skipping the line is worth more than $20. Remember we can always earn more money, but we can't turn back the clock.

Buy more experiences vs. material possessions.
This one is less intuitive then you would think. Suppose I gave you a hundred dollar bill, would you rather buy these bluetooth speakers you've been wanting for your Vegas room pre-game party or spend it on a day at Universal Studios with your buddies or girlfriend? Your friends of course would have to pay for themselves. At first we might be more inclined to go for the speakers because after we spend the day at Universal Studios, all we would have left is a bunch of pictures and nothing to take home. Whereas, if we bought the speakers, we'd have the speakers for as long as we decide to keep them.

Now the problem with going for the speakers is that we'll start to compare the speakers to what other people have. If theirs is better than ours, we start to feel bad about our purchase. With activities, it is much harder to compare our experience with that of others. The reason being we may be with different people when we go or perhaps you go for different occasions.

Learn to give away your money.
Professor Elizabeth Dunn at the University of British Columbia discovered that those who spent money on other people were happier than those who treated themselves. This was even in the case where people had very little for themselves. This is an interesting paradox because one would think that the more money you have the happier you would be. But that is not the case! This sheds new light on the saying, "It is better to give than to receive.".

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