Sometimes, money can buy happiness.

photo credit: Unhindered by Talent via photopin cc

When it comes to being happy, it’s not how much money you have, but how you spend it. And by making the right decisions with your hard-earned paycheck, it appears you really can buy happiness — or at least make yourself a little bit happier than you were to start with.

In the book Happy Money: The Science of Smarter Spending, authors¬†Elizabeth Dunn and Michael Norton looked at a number of studies on spending habits and happiness. And they found that buying more stuff — even things as life-altering as a new house — didn’t make people happier. The best purchases for happiness? Experiences and gifts.

The authors also performed a study of their own. They sent volunteers an envelope that either contained $5 or $20, along with a set of instructions. Some people were told to spend the money on themselves or pay bills with it. Others were told to spend the money on someone else or donate it to charity. At the end of the day, the givers were happier, and the keepers weren’t. And happiness didn’t depend on whether they got $5 or $20.

So instead of buying a sporty car or pair of new shoes, take a trip to the beach, give to the World Wildlife Fund or treat your best friend to dinner and drinks. Or be extra kind and make a donation in your friend’s name. Because despite what TV commercials tell you, products will not make you happy, but giving will.

Buying Happiness is Good for the Planet, Too

Buying experiences is often better for the environment than buying stuff. The energy that goes into manufacturing contributes to global warming, chemicals used in production cause pollution and packaging ends up in landfills. So enjoying a dinner out may be far easier on the planet than buying a new iPad, assuming you don’t order steaks served on disposable plates.

If you go the donation route, even better. The Earth will thank you for giving to the Sierra Club or The Nature Conservancy rather than buying a new pair of jeans. Say no to the free gift, and everyone will be even happier. Sweet.