Can people learn how to spend their money in ways that increase their happiness? Some psychologists think so. Here’s the second part of a summary of serious research into the best ways of spending money. Drawn from a study by Daniel Gilbert (pictured) and others, it was published in the Journal Consumer Psychology. The full article If money doesn’t make you happy, then you probably aren’t spending it right is also available online as a pdf.
Principle 5: Pay now and consume later
Consume now and pay later is known to be bad, for obvious reasons. You satisfy your desires as fast as you can and don’t think about the future. That future, when it comes, can be awful, because of the debts you now have. But there is another reason why consuming first doesn’t make people happy. It eliminates anticipation, and anticipation is a source of “free” happiness. Planning a holiday, for example, may provide more pleasure than actually having it. People who devote time to anticipating enjoyable experiences report being happier in general.
Principle 6: Think about what you’re not thinking about
We have a tendency to blur details about proposed spending, in ways that mislead us about how happy it will make us. This is especially true of events that are far away. Having a regular job and a flat in a city might seem like a blissful condition. But those life circumstances don’t actually affect our happiness so much as the day-to-day life events. If getting a smart city flat means you have to work longer hours, and no longer have time for your old friends, it may not be such a good deal for you. Think carefully about a typical day in your life hour-by-hour and you’re likely to be more realistic about whether a single purchase item will really make you happier.
Principle 7: Beware of comparison shopping
Yes, you can pick up bargains and, sometimes, save money. But comparison shopping focuses attention on particular attributes of products, which may be very different from the ones that are important for your happiness. When you’re using a product that you bought, the ones you didn’t buy don’t figure too much in your thinking. So you could get an undisputed bargain, but be dissatisfied with it, because actually it wasn’t what you wanted.
Principle 8. Follow the herd instead of your head
The best way to predict how much we will enjoy an experience is to see how much someone else enjoyed it. Get used to listening to other people, and trust their reports on their actual experience rather than your own assessment in advance. Another odd discovery from research is that other people who pay attention to you, and who have your interests at heart, might be better at determining what you will like than you are yourself. One reason is that they can see your very revealing non-verbal reactions to the idea.
