But there are some more surprising findings to be explored, and one of them is that spending money can, in some ways, make you feel better. University of Cambridge psychologist Sandra Matz and her research team did an in-depth analysis of six months’ worth of transactions for 625 customers at a UK bank—that was over seventy-six thousand bank transactions. They grouped the transactions into fifty-nine different categories—for example, spending at garden centers, dentists, or coffee shops. Each of the categories was scored according to traits on the Big Five personality scale. As an example, charity spends might be highly associated with the traits of conscientiousness and agreeableness, and spending at nightclubs would correlate with extroversion. All 625 customers were given personality tests and asked separately to rank their satisfaction with life. Matz and her colleagues crunched the data and tried to see how well matched the spending habits were with the personalities of the people. For example, they noticed whether a person who measured as extroverted tended to spend on activities or items that aligned with that extroversion or not.

2. Spend money to benefit others rather than yourself (yes, this really will make you happier). 3. Spend money on small things rather than big things (the happiness, it would appear, is equivalent). 4. Forget about spending money on extended warranties or complicated insurance—they won’t make you the slightest bit happier! 5. If in doubt, delay spending or postpone consumption—you may decide in time that you don’t really want something after all. 6. Avoid comparison shopping since it creates false urgencies and distorts your perception of value. 7. Focus ultimately on other people’s happiness rather than your own. Again, it would appear that our assumptions about how money and happiness relate are not often grounded in the reality of what makes us happy day to day. People may believe that owning a coveted gadget or expensive item may be the thing that makes them feel better despite consistent evidence that it is sharing and social participation that has the most reliable effects on our happiness.

The sense of satisfaction and happiness she derives from the activity is significantly heightened compared to her solitary hike. The collective experience enhances the enjoyment, deepens the connection with her friends, and creates a sense of shared fulfillment. Through this real-life example, we can see how the study's findings hold true. While solitary experiences may provide some level of happiness, the inclusion of others amplifies the satisfaction derived from an event or activity. In this case, the shared experience of hiking with friends enriches the moment, highlighting the importance of social connections and meaningful interactions in enhancing overall happiness and fulfillment. Recalling what we’ve already learned about the power of memory and anticipation and how important it is to cultivate happiness as a social and contextual phenomenon, this makes sense. Experiences can be talked about later or made into shared memories. On your deathbed, you’re less likely to talk about a fancy watch you once bought than you are to fondly recall adventures, holidays, or fun experiences with loved ones.

If we consider, then, what the best spend of any sum of money is, we can probably derive the most happiness by focusing on what that money can help us do and with whom. Granted, there are gray areas. Splashing out on an expensive treat may create no extra happiness for us but incredible amounts of joy when we gift it to someone else. A TV may just be a TV for one person, but for another, it’s a powerful tool that enables countless cozy nights shared with a loved one as they watch movies together (maybe sad ones?!). This is why Sandra Matz’s study came to the conclusion it did—there are no fixed rules for what counts as a “possession” and what counts as an “experience”—instead, it comes down to the degree of alignment between the money spent and what that individual values most in life. Remembering the PERMA model, we can see that anything that cultivates our feelings of achievement, meaning, or relationship to others will increase our well-being. So, buying a new sofa may not make you as happy as investing in a challenging but rewarding bike ride with your family, the people who matter most in your world. Okay, so the lesson is to spend wisely and spend in accordance with your personality and values.

Park informed fifty participants that they would receive money in four weeks, before being split into two groups—one deciding to spend on themselves and the second to spend on others. Then, the participants were asked to perform a decision-making task while their brain activity was analyzed. The people who committed to spending on others actually showed differences in brain function, with more activity in areas associated with both generosity and happiness. Importantly, merely the thought of being generous had this effect. There are some caveats, though. Some studies have shown that the happy feelings are exaggerated when the recipient is closer to you, which makes evolutionary sense. But it may also be down to the fact that when people are closer to home, we can see the effect that our generosity has on them, which turns out to be an important factor. Lara Ankin, who worked extensively with both Dunn and Norton, conducted research that found that people were happiest with their charitable donations when they could see and appreciate the effects they had.