30: Five Principles to Spend Differently and Increase Your Happiness with Michael Norton

How did you spend your last $20?

Did it make you happy?

You might be interested to know that science shows money really can buy happiness.

And it’s not about amassing greater wealth.

Dr. Michael Norton, a member of Harvard University’s Behavioral Insights Group, says money can bring us increased happiness if we shift our focus from earning more to spending differently. 

His research shows we find happiness when we spend money on others. 

He and co-author Elizabeth Dunn wrote “Happy Money: The Science of Smarter Spending” with five principles to spend differently that lead to happier people.

In this episode, Dr. Norton shares those principles and how we can apply them in our own lives.

Show highlights include:

  • How to spend money the right way: Money is a vehicle for happiness, instead of its cause.
  • How do you spend your money? Categorize spending and identify level of happiness.
  • Why spending on others increases happiness? Sense of accomplishment and feeling good about yourself.
  • What predicts happiness? Doesn’t depend on how much money you make and spend, but percent of what you give to others.
    • Principle 1: Invest in others, not only yourself.
    • Principle 2: Buy experiences, not stuff.
    • Principle 3: Buy time by outsourcing what you don’t want to do.
    • Principle 4: Make it a treat.
    • Principle 5: Pay now, consume later.
  • Money and happiness: No surprise that results show people aren’t resistant to spending money on others.
  • Break barrier: Spending on others increases your happiness, yet you still don’t do it enough.
  • Top tip for finding and buying happiness: Next time you buy something, ask: will it impact your happiness?

Good words from Michael Norton in this show:

[04:02] “A huge chunk of our spending is buying stuff for ourselves.” 

[04:13] “The amount that you spend on yourself just doesn’t do anything for your happiness.”

[11:25] “What’s surprising is that we know these things, but we still don’t do them.” 

[14:45] “We buy things every day. Just take one beat and say, ‘Is this actually going to do anything to change my happiness?’” 

Additional resources:

Download this episode wherever you get your podcasts. Find show notes for this episode and more at Connect with Dr. Michael Norton via Harvard University

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