It’s said that making more money won’t make you happier. We find it hard to believe that winning the lottery wouldn’t make us happier because we could fulfill all of our dreams – the big house, luxury car, exotic vacations, cool “toys,” etc. But then we hear the stories of lottery winners going bankrupt and wishing they’d never won the grand prize. According to a Forbes article, lottery winners experience a spike in happiness but eventually they return to pre-winning happiness levels. Lottery winners aside, we can probably all think of people who make loads of money, and their lives are train wrecks.

Indeed, most studies show that making more money doesn’t necessarily equate to more happiness…at least after a certain point. A 2010 study out of Princeton University showed that people were happier making more money up to about $75,000. After that, people don’t get much happier making more money.

Perhaps how much money we make isn’t the problem. What if the real issue is how we spend our money? Over Christmas break I read Happy Money: The Science of Smarter Spending by Elizabeth Dunn and Michael Norton. Based on scientific research the authors show five things we can do to derive more satisfaction from our spending. I’ll share their five basic points and a few thoughts on each. If what you read intrigues you then I encourage you to pick up a copy of the book for yourself.

Buy Experiences

Whatever things we buy, we quickly get used to them. For example, studies show people driving a BMW are no happier with their car than those who drive a more economical car. However, positive experiences do make us happier. Think about your home or car then think about some of the great vacations you’ve taken or major events you’ve been a part of. Odds are you’ll have much fonder memories of the experiential events.

Make it a Treat

As noted above, we get used to things. It’s human nature. People can learn to endure horrific things to the point where they are not shocked by the experience. On the flip side we can easily get used to the nice home or car so neither elicits much feeling one way or another. Or how about this – if you visit Starbucks every day for your fancy caffeine fix, odds are you don’t appreciate at it nearly as much as when you’ve gone without it for some period. The authors contend if we voluntarily cut back on certain things, making them more of a treat when we do partake, we’ll be happier as a result.

Buy Time

We all have an opportunity to make more money. The amount we could make might be unlimited but not so when it comes to time. Studies show spending money on things that might save us time so we can participate in more experiential things will make us happier. We can probably all think of a time when we missed an event because we had to work or do chores. Paying someone to cut the grass or fix the house so you can attend your kids’ events might be a better use of your money. You’ll be happier for it and so will your family.

Pay Now, Consume Later

Wouldn’t life be grand if we didn’t have to worry about money? It might be but that’s not the case and we hate the pain of paying. Paying as you go is the worst approach because you might nickel and dime yourself out of things that could make your purchase or experience much better. And you have the worry of paying tacked on constantly as you go.

Alternatively, you could just charge it and not worry about it. However, throwing caution to the wind and living it up still means paying the piper when the credit card bill arrives. At that point you begin to wonder if it was all worth it, which leads to less satisfaction with your purchase and possibly regret.

Studies show that bearing the pain of paying up front reduces the stress during and after the purchase, which leads to more happiness. For example – think about going on a vacation where you constantly worry about the price of food, drinks, and activities vs. going to an all-inclusive resort where you paid up front. At the all-inclusive you’ll probably throw caution to the wind and live it up much more thereby creating a better experience and happiness.

Invest in Others

Jesus told his followers “’Tis better to give than receive.” It turns out science validates His ancient wisdom. Whether people were given money or asked to spend their own, those who spent money on others rather than themselves tended to be happier. And it doesn’t have to be large amounts of cash. It could be as simple as paying for someone’s coffee. So next time you’re out, look for a way to make another person’s day a little brighter and your day will brighten too.

The tie to influence

When you experience positive things with others you build on the principle of liking because we like those with whom we share common bonds. If buying time, making it a treat, and paying up front make you a happier person, people will enjoy being around you more.

In addition to liking, when you invest in others you tap into the principle of reciprocity. Some people you invest in, you might not see again, but then you never know. Good deeds have a way of making their way back around to those who initiate them. Giving to others might just come back in an unexpected form at some point in time. Some people call that karma.

So, my encouragement is to give the five spending pointers a try and see how you feel. You might just be happier as a result and be a little more influential to boot.