Thursday, August 8, 2013

More Money Doesn't Always Bring More Happiness

Yahoo Finance shares a fasinating book, "Happy Money: The Science of Smarter Spending," written by two behavioral scientists: Dr. Elizabeth Dunn and Dr. Michael Norton. Within this book are five ways to make you a happier individual in the long run.

1. Buy more experiences and less material items.
"Research shows experiences provide more happiness than material goods in part because experiences are more likely to make us feel connected to others," Dunn and Norton write. With that being said, before you go buy a brand new iPhone, realize that a dinner with friends could bring you more satisfaction than the phone purchase.

2. Direct your focus on buying more time and less on getting more money.
"Wealthier individuals tend to spend more of their time on activities associated with relatively high levels of tension and stress, such as shopping, working, and commuting." It is important to incorporate things that you enjoy doing into your hectic schedule. You will find yourself being much happier if you better balance your work and personal life.

3. Realizing you can be house rich and happiness poor.
Studies have shown that people that buy a bigger house are happier with their house but not happier with their lives. It may be time to rethink such a large purchase if it doesn't contribute to our overall happiness.

4. Overindulgence can make the good things lose their sparkle.
When you have more financial resources available, why not indulge whenever you want? If you had your favorite ice cream cone every single night after dinner, you might just get sick of it! As with bigger material items, over indulgence can make those purchases lose their sparkle. "This is the sad reality of the human experience: The more we're exposed to something, the more its impact diminishes," Dunn and Norton write.

5. Focus more on others and less on yourself.
You will actually feel happier in the process of helping others. "In [a study] of more than 600 Americans, personal spending accounted for the lion's share of most people's budgets," the authors write. "But the amount of money individuals devoted to themselves was unrelated to their overall happiness. What did predict happiness? The amount of money they gave away. The more they invested in others, the happier they were." You might not feel as good as you thought you would after making a monetary donation. The reason is you might not be physically seeing your money be put to use. Make sure to stay in the loop with the organization you are donating to so that you feel more engaged!

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