Happy Money: The science of HAPPIER Spending

One of the 3 books I’ve been reading the past week. This book is a great read, and I would strongly recommend this book to everyone. Currently rated at 3.66/5.00 on Goodreads.

In short, the books offer 5 principles on how our money could make us happier.

The 5 principles include:

  1. Buy experiences
  2. Make it a treat
  3. Buy time
  4. Pay now, consume later
  5. Invest in others.

The main premise is this: Having money won’t make you happier but spending it might. The right spending habits can produce measurable changes in both our physical and emotional well-being. 

Among their finest tips:

Don’t buy stuff; buy experiences. You’ll get more happiness out of a trip overseas or a visit to a museum because you’ll connect with other people and accumulate memories. 

We can buy happiness – now?

Latest research shows that money can buy happiness. Well, that really doesn’t jive with what I’ve been told all these years. However, there’s a trick to that premise.

The idea is – we have to know what’s the right way to spend our money. Now, the old idea that money can’t buy happiness apparently still stand – that is, we can’t buy happiness through materialism. Even when new expensive gadget can give us happiness – it is only but for a moment.

Hence, we need to spend our money in the right way – a way to increase our happiness. How? Spend our money to seek experience that connects us to another human being, reinforce our sense of identity, buy ways to give us more free time and also – great memories.

By the way, the book also suggests that these 5 happy money principle also works in a corporate setting. A method to improve customer happiness. Nice.

1. Buy Experiences

We’ve been told that acquiring material goods doesn’t contribute much happiness in the long term. All that these material goods give us are – momentary pleasure.

Then, the make matter worse, there’s something known as buyer’s remorse.

So, what’s buyer’s remorse?

Well, as the name suggests, buyer’s remorse refers to the worry that we could actually make a better choice – which without a doubt will quickly extinguish purchasing pleasure.

However, buying an experience comes without this limitation which provides a much more lasting satisfaction.

For example, the more time that passes after a memorable holiday trip or special dinner, the more fondly you look back on it.

Experiences are so powerful, in part, because they cultivate connections with other people and memories that enrich your life which help define who you are. This appeal of exotic experiences explains the popularity of “ice hotels” in Sweden, Romania, and Quebec. The attraction is not comfort. The temperature in the hotels is below freezing, and the beds are made of ice. Yet people flock to these frozen lodgings in search of extraordinary experiences. I hardly imagine that these experiences were comfortable – but surely they are one to remember.

Research shows that satisfaction with experiential purchases tends to increase over time, while satisfaction with material purchases tends to decrease.

From a business point of view.

Businesses can satisfy customers and employees by emphasizing experiences.


2. Make It a Treat

Habituation is the enemy of pleasure.

For example, if you eat chocolate daily, it soon will seem less enticing. But if you limit your access, you’ll enjoy chocolate more when you do indulge. This analogy works for everything and every time. That’s why gratitude is important. At times we didn’t appreciate what we have, simply because we tend to forget how much it would mean if we were to lose it.

From a business point of view

Businesses can turn their services or products into desirable treats by rationing them. For example, a limited-time offer.

Pain of spending money

I’ve read in quite a number of social behavior books that we tend to overspend on credit card simply because we doesn’t feel the same magnitude of pain associated with spending paper money when we swipe our cards. Credit cards “provide anesthesia against the immediate pain of paying.”

We don’t get a $50,000 debt on credit card because we spend $50,000 on a single purchase, but rather we spend $50 on a 1000 purchases.

So, remember, always pay your credit card dues on time, every time.

3. Buy Time

Time is the only real currency, but the thing is, unless it’s our death day, we all get 24 hours a day. All of us. Hence, most of us trade our time for money – i.e. a day job, where we get paid on time spend in the office.

So, when we feel that we have plenty of time, we are more likely to involves ourselves in happiness activities – such as exercising, charitable work, or reading. But most of our days are likely spent on obsessing over the tasks we have to do. The fate of working-level I guess.

However, by simply focusing on the present even if the task is unpleasant can actually make us happier.

How can money help?

I’ve read somewhere this following statement – “when your blog is doing over a 1000 page views per month, consider hiring a freelance writier”

I guess that’s the ideal case – maybe during the time when the writer wrote that, you can actually make decent money with a 1000 page views. Since my blog doesn’t make enough money yet- to hire anyone – I still to the best of my abilities – write these posts myself.

It would be nice to have someone writing contents for me. Imagine all those time I would have for myself – maybe finally got time for exercise. Although the odds are – I’m more likely to sleep in rather than exercise. Well, a night of good sleep can help us become slimmer and healthier too.

Oh yes – before I forgot – one of the best ways to handle our financials is to view our money in terms of time spend.

For example, If I made $30/ month blogging, I most certainly won’t spend it on $30 hipster coffee, even if all my friends are buying one.


4. Pay Now, Consume Later

It hurts when money leaves my wallets, and it give me joys when I earned money. I guess it is the same for everyone. In short, paying for things can be painfull – the reason why we like the word ‘free’ so much.

Research found that high prices activate the physical-pain centers in our brain. Hence, the buyer’s remorse. So, most people try to avoid this pain by delaying the payment with credit cards or other payment plans (installments). However, we might replace that pain with a much worse monster – debt.

Debt anxiety is such a detrimental force to happiness – I hardly ever meet someone who is nose-deep in debt who are happy. Hence, paying off debts is indeed one of the best investment you can make to add to your wellbeing.

“There is almost no evidence that buying a home – or a newer, nicer home – increases happiness.”

Another dark side of credit cards

Even when we eliminate the pain of paying the deferred credit card bills, we are likely to spend more. And to make matters worse, because of lack of spending pain when we’re not using cash, it is easier to lose track of how much we spend.

Spend money in advance to avoid over-spending it? huh?

The book suggests a better tactic to avoid new debt and to spend wisely, that is – pay in advance, regardless of using cash or a debit card. When we pay in cash, we are less likely to spend on snacks – hence less money spend.

Furthermore, paying first – cash or debit – provides the pleasure of anticipation. Why? The waiting for a purchase can often be as enjoyable as the purchase itself and some time, it could even be better. Might be the reason for the recent uprising of online shopping.

Now, you might think that the anticipation could set you up for disappointment – but unless the purchase were distinctly different from the description – your pleasant picture of the future can help us enjoy our purchases more. Our brain tends to smooths over the cracks and our experience tends to conform to our vision of it.

That’s the reason why- for online sellers – it is highly important that the images for your product are clear from every possible angle, nicely taken, seemingly professionally taken, with nice product reviews from verified buyers.

From a business perspective

Business can use anticipation in order to increase customer satisfaction.

5. Invest in Others

Spend your money on others – in a productive way. Giving is and will make us happier.

A case study from the book – A researcher gave small amounts of money to random people in Vancouver, British Columbia. She told them to spend the money on themselves or someone else. Those who spent the money on others were “measurably happier” than those who bought something for themselves. Researchers studying more than 600 Americans found no relation between subjects’ happiness levels and how much they spent on themselves. However, their happiness positively correlated with how much they spent on others or gave to charity.

By this logic, Warren Buffett should be one of the happiest people in the country: The billionaire has pledged to give away 99% of his wealth. Buffett says he “couldn’t be happier” with his promise and he might be honest about that.

“People who report donating money to charity feel wealthier than those who do not, even controlling for how much money they make.”

“Taking the time to help others makes people feel effective…and these feelings of competence lead volunteers to feel less overwhelmed by the multitude of tasks in their everyday lives.”

Companies can harness the philanthropic impulse to build engagement with their employees and customers. I’ve seen companies who publicly make their charitable work known from the business they make tend to make more business. And their customers? They felt happier simply because they felt that they themselves contribute to such charitable work.

Closing remark

I’ve loved the book – not because of the practical advice – but rather for its humorous approach. Again, I recommend anyone who’s interested in personal finance or finding that extra bit of happiness to buy the book. Awesome read indeed. One I’ll treasure for years to come.

Book Rating



Author: Muhamad Aarif

A notorious book addict by night and an oil and gas executive by day. As Mark Twain said, "The man who doesn't read good books has no advantage over the man who can't read them." So, read, read, and read some more.

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