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Key points
- People often spend money to impress others with expensive purchases.
- Instead, money spent on social connections increases happiness.
- When buying gifts for yourself and for others, focus on what makes you feel connected.
As the holiday season is unmissably upon us, many of us are wondering how to deal with the onslaught of promotional emails and retail promises coming our way. Should we go all in and splurge on coveted items finally being on sale? Or should we join those who abstain, making the holidays no-spend days to save money and resources?
We should focus on spending our money in ways that actually increase our happiness. Neither splurges nor shopping sprees necessarily make us happy in the long run. Indeed, many of us have made the experience of buying something that we desired, only to find it turn old and boring within days. And not buying anything for a few days only to catch up on shopping later also defeats the purpose. However, I believe there are better ways to spend our money this holiday season that bring us more lasting happiness.
Research shows that spending money in a way that fosters meaningful social connections can bring us happiness. After all, meaningful connections to other people, whether that’s family, friends, or other communities, are what give us support, love, and happiness. Spending money on such meaningful connections doesn’t have to mean buying expensive gifts for loved ones. It can also mean buying experiences together, such as going out for meals or concerts or buying something that signals knowledge about the other person and appreciation. Much more meaningful than an expensive but impersonal gift is to give an unusual wine to the wine lover or a personal favorite novel to the avid reader.
How spending habits affect happiness
Ironically, people often spend money on others in ways that don’t foster connection but rather undermine it. For example, people spend lots of money on luxury products that are so exclusive that many people cannot afford them. By doing this, people try to impress others and show their status and wealth. Yet, it is precisely this desire to impress that sabotages the potential for meaningful connection and ultimately undermines the happiness we get out of such exclusive products. Research shows that connection stems from being relatable and warm to others, not exclusive and status-focused.
Thus, happiness comes from spending money not on impressing others but on strengthening the social connections we share with others. This is true for the gifts we give to others, but the same goes for purchases we make for ourselves. Many of us have a favorite mug that reminds us of a treasured vacation with a loved one or a t-shirt from a concert that we went to with a close friend. These seemingly small items can be much more meaningful to us than expensive clothes or jewelry because of the feeling of social connection attached to these items. Also, when we spend money on ourselves, the same money will buy more happiness if it’s spent in a way that reminds us of our loved ones.
So, if you do go shopping, do so in a way that makes you feel connected to those you care about. If you abstain from shopping, seek connections in non-material ways by calling a friend or inviting a loved one for a walk and a coffee. And, most importantly, enjoy the holidays!
References
Aknin, L. B., Sandstrom, G. M., Dunn, E. W., & Norton, M. I. (2011). It's the recipient that counts: Spending money on strong social ties leads to greater happiness than spending on weak social ties. PLoS one, 6(2), e17018.
Dunn, E. W., Aknin, L. B., & Norton, M. I. (2008). Spending money on others promotes happiness. Science, 319(5870), 1687-1688.
Steinmetz, J., Sezer, O., & Sedikides, C. (2017). Impression mismanagement: People as inept self-presenters. Social and Personality Psychology Compass, 11:e12321.
