The relationship between money and happiness has gone under psychology's microscope time and time again, resulting in a never-ending debate of supposed magic numbers and countless conclusions.
Though a recent wave of research suggests we shouldn't be concentrating so much on how much money we have, but how we use it. Regardless of the figure in our bank accounts, these five spending principles (first proposed by Elizabeth Dunn and Michael Norton in their book Happy Money) have been proven to boost our happiness, fulfilment and sense of purpose.
After calculating your budget and making sure to cover all your priority spendings (such as debt or council tax) you may find that you have a bit left over at the end of the month. Provided you keep enough in your bank to act as a safety cushion for unforeseen expenses, why not try applying these principles to your spending? You might find that you're happier for it...
Studies have shown that people tend to be happier when they direct more money towards experiences than material objects. Living in a fast-paced, consumer-oriented society can make it easy to fall into the trap of always wanting the flashiest car, the biggest house or the latest phone, though it doesn't take long before the novelty wears off.
While the thrill of material purchases will always fade, the joy and happiness that we gain from good experiences can last a lifetime, right from small encounters to big adventures. Consider putting your disposable income towards taking up a new hobby, joining a gym or hosting a dinner with friends and family. Experiences that allow you to connect with others are closely linked to higher levels of happiness, since they help us to feel supported, valued and loved (and indeed support, value and love others).
There is of course a crossover between material objects and experiences - it'd be hard to take up running without a pair of trainers. The trick is to weigh up how much you spend on the object against how much it will add to the experience.
Take a person who wants to buy a yacht; they won't be buying it for the maintenance costs or utility bills - they'll want it for the joy of travelling around and lounging in the sun. If the person rented a yacht instead, they would reap all the benefits and spend a great deal less.
The more you are exposed to something, the less impact it will have. If you do your favourite things every day or constantly treat yourself to your favourite food and drink, it won't feel special anymore.
You'll get more bang for your buck if you turn your purchases into occasional treats - and save more money from it too. It could be as simple as instead of buying coffee out every day, making it at home and only occasionally going to cafes.
That doesn't mean that you have to take it to extremes: minimalism doesn’t always equal bliss. The most important thing is your mindset, and your ability to enjoy and appreciate even the small pleasures in life.
Time is the currency of life, and most of us spend a great deal of our time making money. That's not always a bad thing, mind - it'd be pretty hard to live without it, and more money can give us more financial freedom. But making money shouldn't come at all costs. In fact, choosing time over money can greatly reduce stress and improve wellbeing.
"Across studies, we find that the happiest people prioritise time over money. People who are willing to give up money to gain more free time - such as by working fewer hours or paying to outsource disliked tasks - experience more fulfilling social relationships, more satisfying careers, and more joy. Overall, people who prioritise time over money live happier lives. Importantly, the benefits of choosing time over money emerge for the wealthy and less wealthy alike. Even spending as little as $40 to save time can significantly boost happiness and reduce stress" - Ashley Willhams, in interview with Gretchen Rubin
Whether you want to spend extra time reading a good book, going for a walk or socialising with others (you're the expert on what brings you pleasure in life), consider how much you'd pay to be able to access these things more, and how you could free up some time.
Bear in mind that you shouldn't spend money to buy a few minutes that you'll just fritter away, and only use this method if you are making enough money to feel financially secure and have paid all your priority spendings.
The benefits of paying in advance are twofold. Take for example a holiday where you've planned and paid for everything in advance.
Firstly, you get to enjoy planning your trip and looking forward to it in the run-up. Half of the fun will come from getting excited for all the fun you'll have.
Secondly, paying up-front means that you won't spend time worrying about spending decisions when you get there. The holiday will even feel free.
Not only can paying in advance bring benefits, but delaying payments can also be incredibly damaging.
With the rise of Buy Now Pay Later schemes like Klarna and Clearpay, spending habits are going in the opposite direction, with 5 million people using the schemes in the last year. The schemes make it much more tempting to buy things you can't actually afford, and the burden of debt can take a huge toll on happiness and wellbeing.
Try thinking of ways to make 'pay now, consume later' work for you. Buy tickets to a concert or a sports match in the future. Pay for a holiday in advance. Save up for a big purchase over time. Using this principle should not only result in happier spending but might also help you to spend less.
Finally, spending money on other people (known as prosocial spending) can bring you more happiness than spending on yourself. The amount doesn’t necessarily matter - what’s important is the happy feeling you get from benefitting others. In her study on prosocial spending and wellbeing, Elizabeth Dunn found that those who spent $5 on someone else reported more happiness at the end of the day than those who spent it on themselves.
Whether it means buying a friend a cup of coffee, treating a friend to dinner, donating to charity or buying food for a homeless person you pass in the street, investing in others also means investing in yourself.
Try tracking your spending for one week, keeping these five principles in mind. See what falls outside of these categories, and what you can move around to spend more in line with the principles.
Remember that priority spending always needs to be dealt with first, and make sure to have enough in the bank for emergencies.
With time, following these spending habits (as well as looking after yourself in areas where money's not involved) will help you to boost your happiness levels and lead a more purposeful, fulfilled life.