If Money Doesn't Buy you Happiness, Then You Probably Aren't Spending It Right

[Major Tom]

I don't suppose that the main findings of this article will surprise the stalwarts around here, but it's interesting to see these things in print. The main findings represented in this research article, if you want to maximize the amount of happiness your money buys you, are to -

1) Buy experiences instead of things
2) Help others instead of yourself
3) Buy many small pleasures instead of few big ones
4) Buy less insurance
5) Pay now and consume later
6) Think about what you're not thinking about
7) Beware of comparison shopping, and
8) Follow the herd instead of your head

Oh, the article is here and oddly enough, I came across it while I was reading a blog about street photography.

 

[REWahoo]

The only one I found surprising was #7. "Beware of comparison shopping." After reading the rationale behind the statement, I think a more accurate title for that principle is "Stay focused when comparison shopping" or "Use caution when comparison shopping."

Using "beware" implies it may not be a good idea to comparison shop, which isn't the case.

 

[crtreedude]

Pretty interesting. I have heard it said as you get older, time flies, but I haven't found that to be true since our lives are so eventful. I think time slows down when you can look back and see so many different experiences. I think though, when you look back on a year and everything looks the same - it seems like the year flew by...

I have always taken mini vacations, I start to not enjoy the vacation after about 4 days - and it doesn't take much to enjoy a few days off.

I really agree with the insurance thing - one can use so much money due to fear. I came up with a quote (or forgot the source!) "I would prefer to die while living, than be dead while alive"

 

[MichaelB]

The only one I found surprising was #7. "Beware of comparison shopping." After reading the rationale behind the statement, I think a more accurate title for that principle is "Stay focused when comparison shopping" or "Use caution when comparison shopping."

Using "beware" implies it may not be a good idea to comparison shop, which isn't the case.

+1

 

[donheff]

I would take a small issue with number 4. All it really proposes is avoiding extended warranties. The same considerations may not apply to catastrophic insurance like life insurance, umbrella policies, etc. In all of those the average person will do better forgoing insurance but the consequences can be devastating unlike the demise of a PC hard drive or dish washer.

 

[tryan]

"follow the herd" spending didn't make sense .... given the "herd" doesn't have 2 nickels to rub together.

But upon reading the article, they are referencing movies/experiances. Do what others have liked ... makes more sense.

 

[Bestwifeever]

Great article, Major Tom. Now go buy that camera.

 

[daylatedollarshort]

Good article, but we've actually begun to question even the purchasing experiences idea. Especially in the Bay Area, there are a ton of meetup groups, park and library activities, beaches, public gardens, bike trails, campgrounds and outdoor activities that are completely free or very low cost.

I like buying products that free up my time, appreciate in value or save money in the long run.

 

[W2R]

Good article, but we've actually begun to question even the purchasing experiences idea. Especially in the Bay Area, there are a ton of meetup groups, park and library activities, beaches, public gardens, bike trails, campgrounds and outdoor activities that are completely free or very low cost.

I like buying products that free up my time, appreciate in value or save money in the long run.

+1 Perhaps it is difficult for those of us who have already experienced a great deal in life, to find something new and interesting that is also expensive. I love products that make my home and immediate environement more user-friendly, so to speak. Like, a new side door that doesn't stick, with a numeric keypad to make spur of the moment walks that much simpler. Now, if only I could get my handyman to start on that project.

 

[mickeyd]

Thanks Major Tom...

This one caught my eye...

4) Buy less insurance

This also implies (to me anyway) DIY investing and LBYM as you can do this stuff w/o help (insurance).

 

[Gumby]

Interesting paper, although it does seem like these are things that any reasonably observant and self-aware person would have long ago concluded.

My only real quibble would be with #8 "Follow the Herd", in which the authors concluded that we are more likely to be happy with something if others have been happy with it before. It seems that a form of confirmation bias may be at work here. If others said they enjoyed something, and we based our decision on their reports, we feel a compulsion to say that we enjoyed it too, even if we really didn't. (perhaps the more accurate term is "bandwagon effect")

 

[NW-Bound]

...
7) Beware of comparison shopping...

The article warns that some different attributes that we compare between products may be a don't-care for our particular case, or not make that much of a difference for a disproportionate higher cost.

In The Paradox of Choice: Why More is Less, Barry Schwartz mentioned another peril. Faced with a bewildering array of alternatives, the modern consumer may spend an inordinate amount of time to compare between products to ensure the choice of that "perfect" item, while in reality it might not matter that much. And then, when he has bought an item, he may still have nagging doubts that perhaps the other make or brand might be better. This second-guessing may keep him from enjoying his purchase.

 

[daylatedollarshort]

+1 Perhaps it is difficult for those of us who have already experienced a great deal in life, to find something new and interesting that is also expensive. I love products that make my home and immediate environement more user-friendly, so to speak. Like, a new side door that doesn't stick, with a numeric keypad to make spur of the moment walks that much simpler. Now, if only I could get my handyman to start on that project.

Exactly. I love my little turbo convection oven. We can make roast meat and chicken in it without defrosting, so it has saved us quite a bit on fast food. For last Thanksgiving I bought frozen Cornish hens and cooked them when they were still frozen rock solid.

I bought the oven and a chest freezer so I could stock up on bargain food and then cook simple meals without planning ahead or having to defrost anything. And it is so easy to use DH has taken over quite a bit of the cooking.

I enjoy buying good value products like that save us time or money or both every day for years and cost less than the price of a couple of play or concert tickets.

 

[walkinwood]

Thanks for posting.

I find that "buying" extends even to things that are "free". You spend your time & attention to take part in a free event, or you spend your time & effort to care for a free good that you bring home.

I find the experience/material distinction to be fluid. I am still enjoying the enhanced video on my HDTV years after I bought it (my first LCD/HDTV) so I think of that as buying an experience. On the other hand, if I were to just buy a bigger TV to replace the perfectly functioning one I now have, I think it would be buying a material thing & the added joy would quickly fade.

Dan Gilbert is a wonderful writer.

 

[scrabbler1]

I agree with Donheff about #4 and Tryan about #8. After I ERed, I upped my liability limits of my personal auto insurance policy (to protect my vast portfolio which provides for my livelihood) and considered buying personal umbrella (I don't really need it because I live in a co-op apartment complex which has lots of liability insurance for the grounds). I do agree that not buying extended warranties for small items is a good idea. With #8, not following the herd (i.e. being an outlier) plays a big part on why many of us are able to ER.

 

[foxfirev5]

I am finding myself wanting things less and less as time goes by. For about the last 5 years these feelings have accelerated. Today I splurged and spent about $100 at Home Depot for Spring chore supplies. Not exactly an exciting purchase.
However DW, kids and grandkids are managing to keep the spending level up to par with prior years.

 

[Walt34]

I am finding myself wanting things less and less as time goes by. For about the last 5 years these feelings have accelerated.

I've noticed that about DW and myself too. Perhaps a lot of it has to do with having to do the bulk of the work of cleaning out FIL's house, seeing him go to a nursing home and die a year later. And we have all the stuff we want.

So I find myself thinking I don't want to leave a lot of stuff for somebody else to have to dispose of. But a lot of it is stuff I or we use on a frequent basis so... not yet.

But we are going on a thorough purging phase here, if "it" hasn't been used in the last year or two out "it" goes.

I have a lot of tools and such in the basement and use them enough to justify keeping them at least for now. DW asked years ago "What do I do with all that if something happens to you?" My response was "Go through the house and decide what you want to keep. Then call an auctioneer and say 'make the rest go away'".

 

[NW-Bound]

The title of the thread is "If Money Doesn't Buy you Happiness, Then You Probably Aren't Spending It Right".

It is not the intention of the OP, but this reminds me of the following quote.

“Whoever said money can't buy happiness simply didn't know where to go shopping.” -- Bo Derek

Heh heh heh...

 

[robnplunder]

Yesterday, I've bought a $25 ticket to an LPGA event. $5 for parking, another $30 for other stuff spent on the course. But ... I was 10 feet away from #1, #3, #4 players in the world. It was a great experience!

 

[EastWest Gal]

I agree with Donheff about #4 and Tryan about #8. After I ERed, I upped my liability limits of my personal auto insurance policy (to protect my vast portfolio which provides for my livelihood) and considered buying personal umbrella (I don't really need it because I live in a co-op apartment complex which has lots of liability insurance for the grounds). I do agree that not buying extended warranties for small items is a good idea. With #8, not following the herd (i.e. being an outlier) plays a big part on why many of us are able to ER.

As a card carrying introvert, I found #8 a bit strange. But all it means is be social. This forum is an example. We just found a different, and smaller, herd!

 

[CaliforniaMan]

As a card carrying introvert, I found #8 a bit strange. But all it means is be social. This forum is an example. We just found a different, and smaller, herd!

+1
Very good point! We get to pick the herd! We get to pick! The problem I think is that many feel they are forced into one by peer or family pressure or advertising, increasing their stress and for certain not increasing their happiness. When I was a kid my mother used to monitor who my friends were, and when I had kids I did the same. Later in life the ones who hung out in the "good" herds tended to do better than the ones who hung out in the "bad" ones. Maybe picking our herd is one of life's most important decisions.