How money can buy you happiness

... but not by simply spending it

Felicity Hannah
Friday 21 December 2018 16:27
(Getty Images/iStockphoto
(Getty Images/iStockphoto

The next few days will be particularly positive for many people, thanks to all the giving and sharing and time spent with family. The saying is that money can’t buy happiness, but at Christmas the extra spending can feel worth it for those lucky enough to spend the days wrapped up indoors with their loved ones.

So could money help buy happiness for the rest of the year? Here are a few ways it might, even if it doesn’t involve spending it on mince pies and presents.

Giving it up

A considerable chunk of full-time workers believe they have a poor work/life balance, with 44% telling the LifeSearch Health, Wealth and Happiness Report 2018 that they work too much.

However, 60 per cent of workers said they would consider sacrificing some of their salary in order to have more free time.

In fact, almost half of those questioned said they would be willing to give up 5-10 per cent of their salary to do so. With the UK’s mean average income just £25,417, that means 48 per cent of the country would be willing to give up as much as £2,000 a year to spend more time with their families and hobbies.

Giving it away

Research carried out in 2008 by scientists at the University of British Columbia in Vancouver showed that giving money away actually makes people happier.

As long as there is enough money to meet people’s essential needs, hoarding extra cash did not increase the happiness levels, the researchers found.

Professor Elizabeth Dunn, who led the research, said then: “One of the most intriguing explanations for this counter-intuitive finding is that people often pour their increased wealth into pursuits that provide little in the way of lasting happiness, such as purchasing costly consumer goods.”

They tested volunteers by giving them cash and asking them to spend it on themselves or on others, and found that those who spent their windfall on other people felt happier by the end of the day than those who spent it on themselves.

Protecting what you’ve got

This one isn’t so much about finding happiness as protecting the happiness you already have. Many people worry about what might happen if disaster strikes or if they can’t pay the bills.

Paying for insurance products that protect your lifestyle can help alleviate the worry everyone feels at times, but it can also ensure you’re not left unable to manage if you lose a wage earner or fall sick.

It’s a particularly important issue for women, who are more likely to be without such essential protections for their families. Tom Baigrie, chief executive at LifeSearch, said: “Becoming unable to pay bills was cited as a concern by nearly one in five women …yet 60 per cent of women say they have no life insurance cover at all.

“With men, the number who said they’re not protected is much lower, with just over a half saying they have no cover in place.”

Saving more

There is genuinely a link between being a regular saver and feeling good. Research carried out by Lloyds Bank found that almost three-quarters of regular savers said they felt happy over the previous month, compared to just 36 per cent of non-savers.

And more than half of those who did save said having a savings plan had a positive impact on their mental health.

Mark Rawcliffe, head of savings at the bank, said: “Getting into the savings habit can not only help your finances, but it can also ease financial worries and reduce stress for many.

“Having savings provides peace of mind that there is a financial buffer for any unexpected costs arising or reassurance of the ability to pay for something if you are saving up for a longer-term goal. Putting a small amount away each month in a regular savings account is often a good first step on the path to building your savings pot.”

Increasing your spare income

There’s a strong link between the amount of spare cash a person has and how happy they are – but only up to a point.

Research carried out by Sunlife showed that you didn’t need to be a millionaire to be happy; the happiest people had an average of £82 spare a week.

That gave them sufficient financial freedom to feel happy and content, whereas higher incomes after that made very little difference to their feelings of joy.

If you’re living on a tight budget then there’s no instant way to magic up some extra cash. However, many UK households can free up more money by spending a small amount of regular time going over their bills and finding better deals.

On insurance products, on gas and electricity, on the mortgage; there are often many ways to save and keeping an eye on them all really adds up.

Just to take one example, research carried out this month by Which? showed that broadband customers who don’t switch end up paying £220 a year more on average than those who regularly move to a better deal.

The money isn’t just better in your pocket than theirs, keeping more of your income spare could help make you happier overall.

Doing more with it

Many of us have more stuff than ever before – the booming chains of self-storage units can attest to that. But there’s evidence that spending more money on experiences rather than possessions can boost happiness.

Research from San Francisco State University suggests that people who spend their money on experiences rather than new belongings were happier and felt their money had been better spent.

People seem to place greater value on the memories and joy they gain from their experiences than on items they buy, even high-value items that they have longed for.

And those experiences don’t necessarily need to be expensive days out; just spending time with friends is valuable. Several different studies have shown that frequent social interactions can help people live longer, healthier and happier lives.

So maybe that’s the answer: save more money where you can so that you can spend more having fun and doing good for a happy and healthy 2019.

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