To celebrate International Day of Happiness on 20 March, we conducted our own unique research* to understand how people just like you boost their happiness through spending.
From how much money you need to spend to achieve the most happiness, to what purchases really make us smile, we’re sharing some unique stats to help you make the most of your spending.
Experiences are king
The results are in, and the purchases that make people happiest are experiences with loved ones. Whether it’s a holiday, a trip to the theatre, a weekend away or a night camping under the stars, a whopping 93% of people say experiences make them very happy (at least eight out of ten on the happiness scale!)
Research suggests that 72% of millennials prefer spending their hard-earned cash on unforgettable experiences rather than material possessions, suggesting the trend is very much heading towards less tangible product purchases.
Perhaps surprisingly, donating to charity is the purchase that makes people the least happy. Though most of us know the saying that doing good makes us feel good, perhaps when we think about hypothetical happiness most of us don’t view giving to charity as the most pleasurable way to spend our cash.
41% of people say giving to charity doesn’t particularly make them happy (giving ‘donating to charity’ a 6 out of 10 or lower on the happiness scale), with just 38% of people saying donating to charity gave them that warm, fuzzy feeling of happiness.
Purchases don’t have to cost the earth to make people happy
Most people (64%) believe that it doesn’t matter how expensive an item is when it comes to bringing them happiness.
This is great news for those on a budget! You can still achieve maximum happiness without breaking the bank.
Buying things makes us feel good
We’re not shocked to find out that making purchases overwhelmingly makes people happier.
- 76% of people say buying things impacts their mood positively
- 22% of people say buying things doesn’t really impact their mood at all
- Less than 1% of people say buying things impacts their mood negatively
Whether it’s a new outfit or a drink with friends, we know that money does make the world go round (to an extent, anyway).
Will I be happier if I have more money?
It’s a question most of us will ask ourselves from time to time. Often, we believe that the more money we have, the happier we’ll be. Research does suggest that happiness continues to rise with income – however, there are some factors and negative life events that simply can’t be overcome by having more money.
It’s also worth noting that having access to more money doesn’t make you exempt from financial difficulties. In fact, if you aren’t confident managing money, having more of it could make life that little bit more stressful. It’s worth brushing up on your financial literacy to make sure you can squeeze every drop of happiness out of the money you do have!
Our research showed that, of those with a household income less than £50,000, 53% of people felt that the value of a purchase made a difference to their happiness. This differed significantly to those with a household income of between £50,000-£100,000 – just 35% of these people felt that monetary value impacted how happy a purchase made them. Finally, out of those with a household income of over £100,000, a whopping 69% of people felt that it didn’t really matter how expensive a purchase was when it came to making them happy.
How much money we have also impacts how much spending can change our mood. Around 80% of those with a household income of less than £100,000 felt buying new things impacted their mood positively, compared to just 56% of those with a household income over £100,000. It seems that the more money you have could impact the importance of buying new things.
Novuna Personal Finance’s top tips to buying happiness
1. Treating yourself and others can make you feel good… but only spend what you can afford
We know that splashing out on a new item or buying tickets for a fabulous experience makes us happy. But the amount of money we spend doesn’t necessarily impact how happy the purchase makes us!
Keep an eye on your budget and only spend what you can comfortably afford. While adding a new pair of shoes or festival tickets to your basket might give you a temporary adrenaline rush, you don’t want to end up feeling the pinch later down the line.
2. Spending time with friends and family doesn’t have to cost the earth
Shared experiences are often unforgettable, and you simply can’t put a price on spending time with loved ones.
You don’t have to be front of the queue for top-tier tickets or adventurous experiences that cost hundreds or thousands of pounds to have a great time. A DIY spa day, at-home movie marathon, a camping marathon or trip out on your bikes are all pocket-friendly alternatives that will bring you joy.
3. Buy the things that matter most
Using your money to keep up with the latest TikTok trends, or to flaunt your wealth, is unlikely to bring you as much happiness as purchases that mean something to you as an individual. Investing in your future or buying items that can make a big difference to your day-to-day life is more likely to make your money (and your happiness) go further.
Top tip: Think about how your purchases will impact your life. For example, instead of buying a new top just to stick in the back of your wardrobe, take some time to think about how you’ll experience the item. Imagine the adventures you’ll go on wearing your new outfit. This will help you to get the most out of the things you buy.
4. Give to others
Receiving a random act of kindness was the second-highest cause of happiness for our survey respondents. So it makes sense to imagine that those around us will love receiving a token gesture of appreciation too.
Why not make it your mission to carry out a random act of kindness each week? From sending a friend a handwritten letter or letting someone in front of you in the supermarket queue to simply offering a complement when talking to people, there are loads of ways you can make others happy without it costing much at all.
It’s also proven that giving to charity or other worthy causes gives us a wellbeing boost.
5. Set yourself spending goals
If you’re saving up for a big purchase or milestone, such as a family holiday or a wedding, it’s more important than ever to have a budget in mind and work towards your goal gradually. You don’t always have to make huge sacrifices to buy those big-ticket items you’ve had your eye on.
Think mindfully about your spending, and about your long-term goals. We’re often reminded that little savings do add up, and one of the most effective ways to save is to conduct a spending audit to help you tidy up your finances and understand where your money is going.
Take a look at how much money is leaving your account each month, paying particular attention to any subscriptions you don’t really use or any potentially poor spending habits (those cheeky takeaways can soon add up). You could find yourself more easily able to spend up to buy the big purchases you’re looking forward to if you cut down on several smaller purchases.
That said, research does show that small pleasures add to our happiness. Low-cost treats, from a morning latte to a pint in the pub with friends, can have a big impact on our overall sense of wellbeing. So make sure not to cut out every little indulgence even if you’re on a saving mission.
6. Know when to value time over money
So, we’ve discovered that spending money does boost our happiness. But putting too much focus on material possessions or extravagant experiences could end up doing more harm than good.
Spending money allows us to express ourselves, treat those we love and buy the things we desire the most. But don’t underestimate the power of enjoying the simpler things in life, too.
You could also use your money to give you a bit of time back (for example, paying a cleaner or buying extra annual leave at work if you can). Use that spare time to boost your wellbeing by taking part in an activity or hobby that really brings you joy.
7. Look after your future
Spending the bulk of your money now might give you instant gratification, but it’s a good idea to think about your long-term savings goals.
Don’t put off adding to your pension pot or building your savings funds for a rainy day. Experts recommend having at least three months’ worth of living expenses saved up in an easy-access savings account, giving you peace of mind that you have access to funds if you need them.
Looking to get to your goals sooner?
Would making an important purchase or completing a big project boost your happiness? Instead of waiting for funds to build, you could make your dreams happen much sooner by applying for a personal loan.
Borrow between £1,000 and £35,000 at rates from as low as 7.4% APR Representative (£7,500-£25,000), allowing you to spread the cost of your pricey purchases over a longer timeframe.
*We surveyed 130 people via an online survey to find out what purchases made people happiest