While many of us go through life with the pursuit of money on our minds, we’re often told that money can’t buy happiness. But what truth is there in the saying? Is there a correlation between money and happiness? And if so, how can we use it to our advantage?


  Humans are very sensitive to change. When we get a raise or commission, we really enjoy it. But we adapted an incredible speed to our new wealth. Some studies have shown that in North America, additional income beyond 75,000 dollars a year ceases to impact day to day happiness. In fact, people who win the lottery often report becoming extremely unhappy. They often end up spending all the money, going into debt, and experience ruined social relationships.


  So surely money can’t really buy happiness. Well, recent studies suggest that the problem may actually be in the way that we spend money. Instead of buying things for yourself, try giving some of it to other people and see how you feel. Studies show that people who spend their money on others feel happier. And while people who spend on themselves don’t necessarily become less happy, their happiness is unchanged.


  The same principle has been tested on teams and organizations as well. One experiment showed that instead of an organization writing a large check to a charity, dividing the amount up amongst employees, allowing them to contribute to a charity of their choosing, increased their job satisfaction. Similarly, individuals that spend monetary incentives on each other, as opposed to themselves, increase not only job satisfaction, but improve the team performance and sales. This has been seen in both sales and sports teams.


  Almost everywhere we look in the world, we see that giving money or gifts to others is positively correlated with happiness. Interestingly, the specific way the money is spent on others isn’t important, from trivial guests to major charity efforts, spending something on others is the important aspect of increasing your happiness.


  The emotional rewards of pro-social spending are even detectable at the neural level. If you are gonna spend the money on yourself, try to go after experiences as opposed to material things. Traveling or going to an event is more impactful for the vast majority of people in the long run. And while you’re saving up for these biggest experiences, don’t forget about the daily joys in life. Many small, frequent pleasures help to get you through the days and encourage change, which stimulates the brain.


  Instead of buying a 3,000 dollar rug that provides a one-time experience for the next ten years, a 5 dollar latte with friends will be different each time, offering unique access to happiness opportunities. Though money is unlikely to be the main source of happiness in our lives, it certainly has the potential to make some things easier, and complicate others. But at the end of the day, it can buy happiness, if spent in the right way.



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