What am I supposed to do with all this money? That’s not a lottery winner asking. It’s what University of British Columbia psychology professor Elizabeth Dunn asked herself when she scored her first job. She scanned the research that revealed money often fails to buy happiness, yet she wondered if there was a way to spend money that could increase happiness. She teamed up with fellow psychology Ph.D. and HBS professor Michael Norton to look into it. They published their findings in Happy Money: The Science of Smarter Spending, which figured prominently in Laurie Santos’ The Science of Happiness course. They uncovered that what we do with our money matters more than how much we make, and we can indeed use it to help us be happy.

The book is packed with research, implications for national policies, and five nuggets we can put to work in our everyday lives.

Buy experiences

Experiences are more likely to make us feel connected to others, and give us great stories to tell — the story of buying a car doesn’t have the shelf life of the it-almost-didn’t-happen romance that blossomed between you and your partner. And, our nostalgia provides what they call an “existential resource,” a powerful reserve to get us through those tough times.

This isn’t a call to abstain from material wants, it’s a nudge to keep in mind that a “material rush will likely fade, while the experiential high lasts much longer.”

Make it a treat

We get used to our pleasures, making them less pleasurable over time. Dunn and Norton also found the more resources we have to acquire and experience things, the less joy they bring. One simple hack to thwart this is to do less of what we enjoy so we can enjoy it more — the switch to coffee most days makes the occasional latte special. Take breaks from your favorite shows to make them more enjoyable. Take time to savor your food and everyday joys. Experience those places where you live that you haven’t seen in years (or ever) and enjoy them as if you were visiting your city for the first time.

Buy Time

People who prioritize time to do what they enjoy exercise more, volunteer more, and do other things that make them happier than people who prioritize money. So, the author’s advice is to factor time into decisions — is it worth saving $100 for a flight that’s going to have you sitting through a four hour layover vs. a direct flight?

Three areas in our western lives that offer the biggest opportunity for time affluence are (1) addressing our commutes (the pandemic has opened our eyes to the real cost of our commutes and what WFH has given us back), (2) reducing TV (and social media) time, and (3) dialing up our socializing.

Workplaces are on to this — adopting “no meeting” days, offering time off instead of bonuses, wi-fi equipped busses for commutes, sabbaticals, allowing people to spend some time working on what interests them, and reigning in time-sinks like email, Slack, and Asana.

Pay now, consume later

Our brains don’t like to pay for things. “The pleasure of consumption is the purest without the experience of paying for it, so anything we can do to separate payment from consumption can enhance the pleasure of a purchase,” according to Dunn and Norton. And, we’re wired for deriving pleasure from anticipation: of a trip, a new home, or an upcoming celebration.

Paying in advance allows us to get the pain completely out of the way, bask in anticipation, enjoy the actual experience, and savor the memory.

When we pay cash at the time of purchase, say, at the grocery store, the pain causes us to spend less, buy healthier food, and enjoy it without seeing the subsequent credit card charge.

Paying later may increase the pleasure of consuming now, but it only delays the pain of the credit card charge, and “. . . if the credit card balance fills you with dread, the happiness boost of paying it off may be greater than just about anything else you could do with your money.” Wow.

Invest in others

Spending even small amounts of money on others makes us feel happier than spending money on ourselves, even in impoverished countries, and evidence of this shows up very early in life: “. . . the proclivity to derive joy from investing in others might just be a fundamental component of human nature.”

Dunn and Norton offer three strategies: “Make it a choice, Make a connection, Make an impact.” We feel better about giving when it’s our individual choice, not a “should.” Receiving a note from teachers and students when we donate to a classroom, or using that Starbucks gift card to treat someone to a coffee creates a feeling of connection. When we feel the impact of our giving — that our donation directly helped send a student to college — it supercharges the happiness effect.

It all seems so simple. And takes so little.

Thoughts are welcome