Money can’t buy happiness, right? Well, sort of. It depends on how you spend your money. It turns out happiness is fickle. It’s not very logical. But understanding the relationship between money and happiness can help your freelance career.
Researchers Elizabeth Dunn and Michael Norton explore how money makes us happy in the book, Happy Money: The Science of Happier Spending. The basic idea is that all our ideas about money and how it can make us happy are wrong. Making more money doesn’t make you happy. Buying a bigger house or a better car won’t make you happy.
So what does make you happy?
- Spending money on experiences instead of stuff.
- Paying now and consuming later (basically the opposite of debt).
- Making purchases a treat (scarcity increases our appreciation).
The bottom line is that our happiness is completely subjective. It’s kind of stupid that way. The things you’d expect to make us happier really don’t. It’s why so many lottery winners end up bankrupt.
But by understanding these insights and tweaking how we spend our money, we can make ourselves happier. And it has some especially interesting insights for freelancers.
Happy Money In Action
We’ll summarize the Happy Money ideas and talk about how they apply to freelancing over the next few weeks.
But first, it might help to get a taste of what we’re talking about. Here’s Michael Norton, co-author of Happy Money and professor of business administration at Harvard Business School, giving a Ted Talk on money:
“If money can’t buy happiness, you’re spending it wrong. Stop spending it on yourself and spend it on other people.”
To go even deeper, check out this one-hour PRX interview with Michael Norton. He explains how more money makes you happier up to a point ($75,000 is peek happy) and then gets into why spending money on a vacation instead of a TV will make you happier (Spoiler alert: Peek vacation happiness comes the day before you leave on vacation).
We’ll apply these insights to freelancers over the next few weeks, but let’s start with one simple lesson.
Want a sure fire way to be happy? Give your money away.
Donating makes people happy. Dunn and Norton found that “donating to charity had a similar relationship to happiness as doubling income” (113).
Giving money away makes us feel richer. While much of this research is subjective, this is down right logical: If we have enough to give away, we reason we must be pretty well off.
So how does this insight help freelancers?
Do some good and feel good doing it.
One interesting facet of the research: It doesn’t matter how much you give away. You don’t have to give away a lot of money to feel good. In Dunn and Norton’s research they saw the same increase in happiness when people gave away $5 as when they gave away $20.
So if you’re strapped for cash and feel like you can’t give much, every little bit helps. Even small amounts will make a difference at nonprofits, and that will still make you happy.
For the most impact, make your giving an experience. Don’t just sponsor an event, attend the event and see your donation in action. Don’t just make a donation, volunteer and interact with the people in need.