Happy Money

The question of what makes a happy life has been talked about a lot lately thanks to the release of the book, “The Good Life,” which summarizes the 85-year-long (and counting) Harvard Study of Adult Development. What the book says, and the study found, is that good relationships are the “one crucial factor…for the consistency and power of its ties to physical health, mental health and longevity.”

While looking over the study, I was reminded of a book that came out years ago titled, “Happy Money: The Science of Happier Spending.” Released in 2014 and written by Elizabeth Dunn and Michael Norton, it lays out five principles of spending money that, if followed, can lead to greater happiness. They are:

    1. Buy Experiences
    2. Make It a Treat
    3. Buy Time
    4. Pay Now, Consume Later
    5. Invest in Others

The authors do a wonderful job elaborating on each of these, and I highly recommend the book if you’re interested in bringing more meaning to your spending. That being said, it’s the first one we’ll focus on today.

Imagine, for a moment, that you’re faced with a choice: buying a beautiful new home, or spending $200,000 on a trip to space that lasts a measly six minutes. At first, spending $555 a second to leave earth’s atmosphere seems silly. Of course we’ll take the new home! We’ll be in it for years, not minutes. While the majority of people would certainly choose the new home, research tell us the greatest amount of happiness would be derived by traveling to space, even at such an exorbitant price, even for such a short period of time:

“Between 1991 and 2007, researchers tracked thousands of people in Germany who moved to a new house because there was something about their old house that they didn’t like. Immediately after settling in to their new abodes, these movers’ reported being much more satisfied with their new homes than they’d been with their old ones. . . . (I)n the subsequent five years, movers’ remained significantly more satisfied with their new home than they’d been with their old one.”

Not only did they like their new homes a month or two out, the feelings persisted. It’s this sentence, however, that struck me: “While movers’ satisfaction with their houses increased substantially, their satisfaction with their lives–their overall happiness–didn’t improve at all.”

What they’re saying is it’s not that you can’t experience happiness from material things–a nice house, a new car, a vacation home, a boat–it’s that the happiness from the thing itself doesn’t bleed over into other areas of your life. I’d go further and argue that material things can sap happiness from our lives if too much of our resources are spent on them. If too much is spent on “stuff”, there isn’t enough left to put towards the meaningful things.

So what are the meaningful things? The authors tell us:

“One ongoing study has tracked how much money adults over age fifty spend on just about everything, from refrigerators and rent to alcohol and art. When researchers link these spending choices to happiness, only one category of spending matters. And it’s not refrigerators, or even alcohol. It’s what the researchers label: “leisure”: Trips, movies, sporting events, gym memberships, and the like.” 

They go on to say, “(Y)ou’re likely to get the biggest bang for your buck if:

    • The experience brings you together with other people, fostering a sense of social connection.
    • The experience makes a memorable story that you’ll enjoy retelling for years to come.
    • The experience is tightly liked to your sense of who you are or want to be.
    • The experience provides a unique opportunity, eluding easy comparison with other available options.”

Without intending to, Mrs. Dunn and Mr. Norton link their book and the Harvard study not only with the first bullet point, but also by saying: “Research shows that experiences provide more happiness than material goods in part because experiences are more likely to make us feel connected to others.” Experiences help cultivate good relationships, and good relationships are the “one crucial factor” in a healthy, fulfilling life. 

Again, this isn’t to say a nice(r) home can’t foster experiences and deepen relationships. I grew up in a big house with a big yard, and hosting friends and church events brought my parents incredible joy. I also spent countless hours with my buddies in our large backyard playing football and baseball, jumping on the trampoline, shooting hoops, and swimming in the pool. These are wonderful memories. The questions we all need to ask ourselves are: how much (house, car, boat, etc.) is enough? And how many of our buying decisions are the result of peer pressure (i.e., what our friends drive, where they live, the “toys” they and their kids have), rather than an effort to increase our happiness?

You probably aren’t surprised to learn that we spend a lot of time talking about money and happiness in the hallowed walls of the Beacon house. In fact, though we phrase it a little differently, it’s the lynchpin of our mission statement: “Real Planning, Sensible Investing, and Meaningful Advice, so Money Can Be a Blessing.” Everything we do is in the pursuit of making your money a blessing so you can lead a happier, fuller life, however you define it.

If that’s your pursuit, too, we hope you’ll allow us to help.


The content above is for informational and educational purposes only. The links and graphs are being provided as a convenience; they do not constitute an endorsement or an approval by Beacon Wealthcare, nor does Beacon guarantee the accuracy of the information.




Ryan Smith
[email protected]

Born and raised on the North Shore of Massachusetts, I moved to Raleigh in 2011 to marry my wife, Emily. We have two kids, Jack and Gwen, a golden retriever named Olly, and are members of Church of the Apostles. I have been a Financial Advisor since 2005 and earned a Master’s of Science in Financial Planning from Bentley University in 2007. I became a CFP® professional in 2009, a Retirement Income Certified Professional® in 2015, and a Certified Tax Specialist™ in 2023.