We often wonder if money makes us happy. To answer this question, we invited Dr. Raj Raghunathan, Professor of Marketing at the McCombs School of Business at The University of Texas at Austin. He has been exploring the impact that people's judgments and decisions have on their own happiness and fulfillment. He also has penned a book called "If you're so smart, why aren't you happy?” which delves deeper into this subject.
Raj started his presentation by asking a hypothetical question to the audience, “What three things will you ask a genie?” The answers were pretty obvious - money, fame and career success. Raj then cited the findings of several studies that show that beyond a certain amount of money, happiness tends to reduce or diminish. He said that if money doesn’t make you happy then you are probably spending it the wrong way.
He gives us few tips to enhance our happiness.
Experience > Material goods
Material goods like cars or mobile phones tend to break or turn obsolete (remember Blackberry?) and are forgotten easily. Other people around you often feel that you are showing off or trying to act superior. On the other hand, the moments which you have spent with your loved ones are pleasant and tend to remain etched in your memory for lifetime. He draws an example of a person who boasts about his new fancy car and a person who has recently been to Himalayas for a retreat experience. The car may fade away from our memory while the experience lasts forever.
Buy time
We often crib about not having time for ourselves. According to a study, the things which reduce our happiness include cooking, cleaning the house, child care, working long hours and even commuting long distances. So you should hire someone to do your daily chores - cleaning the house and cooking. This way you will save some time for yourself which can be spent with your family and friends. We should spend minimum of 2 hours on the activities we love.
Invest in others
Try giving it away. Studies show that those who spend money on other people are happier than those who spend on themselves. If you have funded an underprivileged child’s education, it will indirectly increase your happiness. You will be the net contributor to his/her life.
To sum up, money alone doesn’t provide any guarantee of a good life. What matters is how people spend it. For instance, giving money away makes people a lot happier than spending it on themselves. And when they do spend money on themselves, people are a lot happier when they use it for experiences like travel than for buying material goods.