I would never assume that everyone watching these videos has all of their financial needs met,
because our reach is too broad for that. However, there are two assumptions that I typically make
when talking about money. Number one: that more people have their financial needs met
than think they do. The reality is that in our society the baseline of need is constantly being
revised upward. The items considered needs today would have been considered a luxury not that long
ago. The reality is that most of us have our needs met financially. The second assumption I'm making
today is this that minimalism provides greater financial flexibility to those who choose it.
When we remove ourselves from the pursuit of material possessions,
greater financial flexibility is one of the benefits experienced both in the short term
and the long term. And so I'm going to assume that many of you have made that decision.
Based then on those two assumptions, I want to talk about how to increase our happiness
and well-being with our money, or more specifically, how can we spend our money
in a way that improves our subjective well-being. Not based on conjecture,
but science. There's a fascinating study recently published in Advances in Experimental
Social Psychology by researchers from Harvard and a number of other universities, (I'll include a
link to the study in the description below,) but in the study, the researchers discuss
four possible uses of money. Three of the uses result in an increase in well-being,
and one does not. According to the study, once our needs are met, purchasing additional
personal possessions does not contribute in the long run to increased happiness.
But there are choices that we can make with our money that do increase our overall life
satisfaction. Three of them in fact. Two of them you can probably guess, the third one might be a
surprise, but let's jump in. Here's what the study said, three ways to spend your money
intentionally to increase happiness: number one purchasing experiences. Whether going to the zoo,
the ballgame, a nice restaurant, or a two-week train ride through Europe, spending money on
experiences shared with others brings more lasting happiness than physical possessions.
Here's how the study said it specifically, "the earliest and most well-developed line
of research treating money as a resource to be utilized shows that on average people experience
greater happiness when using money to purchase experiences as opposed to material goods."
Based on their findings, spending money on experiences rather than material goods results
in more positive feelings before consumption, during consumption, and after consumption.
A second way to spend money to increase happiness pro-social spending. Spending money on others,
whether supporting a charity, treating a friend to dinner, or buying a gift for another person,
brings more lasting happiness than buying physical possessions for ourselves.
Here's how they say it. "When we entered personal spending and pro-social spending into a regression
predicting happiness, we found that people who spent money on others reported greater
happiness. In contrast, the amount of money they spent on themselves was unrelated to happiness."
They were able to demonstrate that the joy of giving is not merely a feature of North America,
but rather a fundamental component of human nature,
detectable from the first years of life across a wide range of contexts.
Based on their findings, spending money on others enhances social connection,
provides opportunity to make a meaningful impact, promotes well-being and autonomy, and in each
regard delivers these results in more measurable and lasting ways than buying physical possessions.
And number three, the one that surprises the most number of people- but it makes total sense
when you hear it, buying time. Whether paying someone to rake your leaves, clean your home,
deliver your groceries, or even buying a house closer to work to reduce your commute time,
their research indicates that there is happiness to be found in not just purchasing positive
experiences but also purchasing the removal of negative experiences. According to the study,
people who regularly buy time report greater life satisfaction.
Now in the study, the researchers admit that this finding requires deeper analysis
and study. This is the way they say it: "although further experiments are necessary
to enable clear causal conclusions, this study provides the strongest evidence to date
that the broad inclination to prioritize time over money predicts subsequent well-being."
Based on their findings buying time provides more opportunity for people to choose relationships,
reduces daily stress, and helps navigate major life decisions.
Even across socioeconomic variables, these results were discovered.
Your specific financial circumstance is different from the person next to you because nobody is
exactly the same. However the studies do indicate some consistencies among us as human beings.
If you want to direct your financial resources towards pursuits that pay off in the long run,
choose to purchase experiences, pro-social giving,
or buying time. Spending your money on those three things is the best way to increase happiness.