Every day more and more people are trying to understand the relationship between money and happiness. My research team and I just completed a study to examine the differences in how happy people live their lives compared to people who are unhappy. Because we were interested in several characteristics of happy people, we examined the predictors of happiness from 30 different surveys. These surveys measured people’s spending habits, consumer choices, values, and personality traits. Results indicated that happy people make five little decisions every day that improve their well-being.
What are five importance differences between happy and unhappy people based on our recent consumer behavior studies?
Happy people manage their money well. Something that anyone can do every day is to make a budget and track their financial transactions so they don’t make impulsive purchases. Research suggests that individual will manage their money better when they have a clear goal—your money management goal could be to pay off a credit card, save for a comfortable retirement, or to start saving towards an emergency fund. Our data shows that if you manage your money better today, you will be happier tomorrow.
Happy people spend their money on life experiences instead of material items. Almost ten years of research has investigated the effects of investing money in life experiences, as opposed to material items. There is now robust evidence that when people spend their money on life experiences they are happier than when they spend their money on material items. However, our data shows that people who habitually spend their money on life experiences are happier than people who tend to buy material items.
Happy people think about the past fondly. Perhaps unique among all animals, humans have the capacity to travel backward and forward in time—to use the “specious present” both to relive past life events and to think about the future. Our data shows that happy people appear to live in the past, reliving the ecstasy, but ignoring the agony, of days gone by. When happy people think about their past they focus on their good memories instead of dwelling on the negative parts.
Happy people “catch” the emotions of others. Some people are vulnerable to experiencing others’ emotions--they are sensitive “catch” others’ emotions during joyful (and sorrowful) experiences. Our data shows that when someone smiles warmly at happy people, they smile back and feel warm inside. Therefore, if you pay more attention to the emotions of other people you will be happier.
Happy people live in a great community. A person is happiest when three basic psychological needs are satisfied: autonomy, competence, and relatedness. Literally thousands of studies demonstrate the positive effect of psychological need satisfaction on happiness. Our data shows that these psychological needs can be met by one’s community. Happy people say that they feel belongingness where they live and that they look forward to coming home when they have been away.
Beyond The Purchase is a website dedicated to understanding the psychology behind spending decisions and the relationship between money and happiness. We study how factors like your values and personality interact with spending decisions to affect your happiness. At Beyond The Purchase you can take quizzes that help you understand what motivates your spending decisions, and you’ll get personalized feedback and tips. For example:
How do you score on the five fundamental dimensions of personality? Take our Big Five personality test and find out.
How do you feel about your past, present, and future? Take the Time Attitudes Survey and learn about your relation with time.
How happy are your Facebook updates? We can analyze your last 25 Facebook status updates and determine how happy you have been.
How happy is your subconscious? Take our Happiness IAT and find out.
With these insights, you can better understand the ways in which your financial decisions affect your happiness. To read more about the connection between money and happiness, go to the Beyond the Purchase blog.