8 Psychological Keys to Spending Wisely

In these economic times we could all use a little advice on how to spend our money wisely.

Help comes from a new survey of research on money and happiness gloriously titled 'If Money Doesn't Make You Happy Then You Probably Aren't Spending It Right' (Dunn et al., 2011).


They are trying to explain this paradox:

"Wealthy people don't just have better toys; they have better nutrition and better medical care, more free time and more meaningful labor—more of just about every ingredient in the recipe for a happy life. And yet, they aren’t that much happier than those who have less. If money can buy happiness, then why doesn't it?"

Their answer is that we tend not to maximise our money because the human mind is surprisingly poor at working out what will make it happy. The conclusions they reach aren't just useful for wealthy people, they can help all of us.

Here are the 8 pieces of advice:

1. Why Many Small Pleasures Beat Fewer Larger Ones
2. The Dangers of Comparison Shopping
3. Why Spending Money on Others Promotes Your Happiness
4. Buy More Experiences and Less Stuff
5. Buy Less Insurance
6. How to Get More Pleasure from Your Money
7. The Impressive Power of a Stranger's Advice
8. How to Dodge Buyer’s Remorse

Image credit: iChaz

→ This post is part of a series on the the psychology of money:

• Avoid The Relativity Trap – How Thinking Globally Can Save You Money
• Social Versus Financial Thinking – When Money Makes People Lazy and Selfish
• FREE! But at What Price?
• 6 Quirks of Ownership: How Possessions Bend Our Perceptions
• The 3 Reasons Money Brings Satisfaction But Not Happiness
• Do Big Money Bonuses Really Increase Job Performance?
• Money and Self-Control: The Battle Between Thoughts and Emotions
• Why Money is Part of Human Nature: Money as Both Tool and Drug
• Why We Buy: How to Avoid 10 Costly Cognitive Biases