Wednesday, August 18, 2010

Money for Happiness

Money obviously provides an opportunity for happiness. Money allows you to choose and sample a wide range of experiences, from vacations at luxury locations to fine dining in pleasant company and luxury travel including space travel. It allows you to have more leisure time.

However the link between money and happiness is not strong. The wealthiest people aren’t the happiest people. Maybe the way that the money is used has the potential to influence an individual’s level of satisfaction and happiness.

The recent AMP.NATSEM Income and Wealth Report, The Pursuit of Happiness, shows that although there are definite links between money and happiness, spending money wisely can bring greater contentment and make people happier.

According to the report, Australians with more money tend to be happier, while the least satisfied Australians are those on lower incomes. The median income for the two least satisfied groups was $15,000 and $22,000 dollars compared with $40,000 for those giving a higher rating for their level of happiness.

Interestingly, the relationship between happiness and money is also relative. The happier people tended to be those earning more than others in their peer group, while the more dissatisfied were earning less. This would mean that a person earning $70000 compared to his friends who earned $50000, would be happier than another person earning $90000 while his friends earned $115000.

The report mentions that particular types of wealth such as the family home, superannuation and savings are linked to greater happiness than other types of wealth. Spending money on home, home renovation or holidays is likely to provide more satisfaction than spending money on eating out, a new car or a new television. Having low or no credit card debt or no overdue bills is also likely to increase overall life satisfaction.

Factors like family and friends, health and work are significant contributors to happiness. The report shows younger and older generations are more satisfied than those that fall between. In their middle people experience an increase in their responsibilities, which can lead to stress. As people get older they have more leisure time and happiness increases. It is thus important to save for a comfortable retirement.

According to psychologist Sonja Lyubomirsky we should be able to wring out rewarding experiences by the judicious use of money, so as to increase our happiness. The most effective empirically-supported ways include:

1. Spending money on activities that help us grow as a person (acquiring a new skill, investing in an entrepreneurial venture), strengthen our connections with others (meals with colleagues, car trips with friends), and contribute to our communities (donating to the needy).

2. Spending money on activities and experiences (trekking, watching concerts) rather than material possessions.

3. Spending money on many small pleasures (regular massages, weekly purchase of fresh flowers) rather than on one expensive item (a new car or a LED TV).

4. Spending on something that we work extremely hard to get and have to wait for (whether it’s a trip or a gadget) and enjoy the feeling of anticipation as we wait and hard-won accomplishment.

5. Taking time to value and savour the objects on which we have spent the money (the vacation, gadget, concert or the smiles of people we have helped).

6. Taking efforts to inject novelty, variety, and surprise in our buying activities.

7. Strive to compare less with others (e.g., focusing on how much fun the play was rather than on the luxury car our acquaintance drove to the venue in).

Monday, August 2, 2010


It is a general impression that due to technology we are well connected to others and socially interacting more. However, despite the advance of technology-supported interactions there is a reduction in the quantity and quality of social relationships. More and more people are reporting that they feel that they have no confidant and that they feel lonely.

Loneliness is not the same as solitude which some people prefer. Loneliness is not being alone but a subjective experience of isolation. People who are lonely feel that they are disliked, are often self-involved and lack empathy with others.

Besides the obvious mental component, loneliness also adversely effects physical health. The influence of loneliness on an individual’s health is comparable with well-established risk factors such as smoking, alcohol consumption, physical inactivity and obesity. Persistent loneliness affects the individual via a deleterious effect on stress hormones, immune function and cardiovascular function.

Studies have shown that both introverts as well as extroverts are likely to get a mood boost from bonding with other people. Thus when feeling blue, the primary urge for isolation is to be avoided while connecting to family or friends is quite desirable.

If you feel like making a difference, the first small step is to reach out and reach out a lot. Reaching out can be a simple gesture of acknowledging another person’s presence by a smile or a greeting. When trying to connect don’t think how useful the other person is going to be, instead think about the value you are going to provide through the interaction.

As you prepare to think of all the warm or smart things you are going to say to drive away your neighbour’s loneliness, you might need to be reminded that some people need a listener.

Holt-Lunstad J, Smith TB, Layton JB, 2010 Social Relationships and Mortality Risk: A Meta-analytic Review. PLoS Med 7(7): e1000316. doi:10.1371/journal.pmed.1000316 [Full Text]