Most people can admit they suck with money at some level. So, how about we change the game by highlighting why we make bad choices and how to use it to buy what we all thought was not for sale.
We know that money can be used to motivate us, trick us, satisfy us, and disappoint us; but can it really be used to buy us happiness?
If you are like me, when asked the question if money can buy happiness, the immediate knee-jerk reaction is “Nope!” That’s what has been programmed into our brains for who knows how long. The response comes out so fast the question isn’t finished being asked before we blurt out our response and proceed to pat ourselves on the back for a job well done.
Researchers have been able to test the influence of money on us, figure out why we make awful choices with it, and how we can change the way we understand and use money to make us happier.
For those of you who are protesting this, shaking your head, and wondering if you should reject this idea simply based on principle there’s still one thing money can’t buy…love.
Problem 1:
We believe the future is so distant that we have plenty of time before it will actually arrive.
So now that I have your full attention, let me explain some things. We do really dumb things with our money and that is why 9.9 out of 10, money does nothing for our happiness and is the source of our woes. We make irrational decisions and bad choices with money even in the face of terrible consequences. We generate bankruptcy, debt, Ponzi schemes, recessions, and create complicated financial structures that we struggle to fully understand and successfully use. On average, we save around 25% less money for retirement when compared to other comparable countries and take foolish risks despite alternatives that yield better results.
Why do we do that?
Researchers partnered with a corporation to take a closer look why we make these mistakes. The corporation had each of its employees come into a meeting to discuss their 401K contributions (aka a pre-tax retirement account). Employees were placed in one of two groups. Each of the two groups were asked, “How much of your salary would you like deducted for your 401K?” As the employees filled out the paperwork and decided on their contribution amounts, people in group 1 had a recent corporate picture of themselves in the top corner of their paperwork and those in group 2 had a digitally aged picture of themselves.
Guess who set aside more for retirement?
…did you guess yet?
If you guessed it was those that had to stare at the digitally aged picture of themselves, you got it right! Now take a moment to enjoy this small victory! They were able to attribute the difference in amount of future-oriented saving to the subtle nudge that was created in breaking the barrier between the present and future as distinctly different. The English language causes us to make a concrete and very distinct separation between the past, present, and future (e.g. It rained yesterday, it’s raining now, it will rain—as opposed to other languages that do not create that grammatical distinction—it rain yesterday, it’s rain now, it will rain). They went on to explain that any language requiring us to experience time as having distinct boundaries will have this effect on our ability to save for the future. Staring at a picture of your aged self seems to bring the future that appears distant into the here-and-now.
Problem 2:
We make emotional decisions regarding money and try desperately to avoid losses despite the actual probability of loss and reward.
Problem 3:
We get so excited about money, that when it’s offered as an incentive, it narrows our ability to be creative and solve hard problems.
If someone asked us to stuff envelopes, we would stuff more envelopes if we were paid per envelope and not per hour. This holds true for all simple tasks that don’t require a lot of our attention, like stuffing envelopes. We would make money but it wouldn’t add to our happiness. On the other hand, we are significantly happier with tasks that give us independence, mastery (getting better and better at something that matters to you) and purpose (doing something for a cause larger than you) even in the absence of being paid.
So, how can money be used to buy happiness?
The ANSWER…by giving it away!
Before I lose you, let me illustrate this point. In one scenario people were randomly stopped on the street and asked, “Would you like to be in an experiment?” Those who agreed were asked, “On a scale of 1-10 how would you rate your current level of happiness?” (10-being happiest). They were subsequently given one of two envelopes. Each contained 5 bucks and the directions, “By the end of the day spend this on yourself,” OR “By the end of the day spend this on someone else.” At the end of the day the researchers called each participant and asked them to rate their level of happiness. They found those who had directions to spend the money on themselves did not have a change in the rating of how happy they were (say a 7 out of 10 in the AM and a 7 out of 10 in the PM). Those who had directions to spend the money on someone else rated themselves as happier by the end of the day (say a 7 out of 10 in the AM and an 8 out of 10 in the PM).
This has been replicated all over the world and across different levels of income. Even when simply asked to think of spending money on oneself or someone else, those instructed to think of spending money on someone else consistently rated themselves as happier.
So yes, you can use money to buy happiness! Now, go out and do something small (or big) for another person and you will find that you’ll benefit from it yourself. Using your money for something different than the same ol’ cup of coffee or snack will create the subtle nudge that changes the way you think about your money, ultimately leading to more happiness.
Here Are Some Ideas!
- Give a few dollars to a charity, someone in need, or street performer
- Make food or gather goods to give to someone
- Make or give a small gift to someone
- Give strangers compliments, hold doors open, or help someone you see struggling to do something
- Buy someone a coffee/tea anonymously
- Donate some of your time for a cause or person
- While you’re already in line, buy an extra meal to give to someone who is hungry
- Donate to a shelter (money, goods, needed toiletries, specialty items such as formula)
- Go online and give someone positive or supportive feedback
- Use your social media to promote a cause, person, agency, or business you believe in
Now it’s your turn! Feel free to leave a comment on what you will do today to welcome a little more happiness to your life. Please add any other great ideas you come up with. More is better here!