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August 12, 2021

Can you spend your way to happiness?

You can be poor and happy, and you can be rich and unhappy. But the norm is more likely poor and unhappy or rich and happy. But it doesn't have to be that way.

According to Elizabeth Dunn and Michael Norton, money can definitely make you more satisfied with life; you just need to know how to spend it more effectively.

In their book Happy Money, the authors offer several key principles for happy spending. It's an easy read and not too preachy.

What's more, unlike many "yes, you too can be happy" books, Dunn, an associate professor of psychology at the UBC, and Norton, who teaches marketing at the Harvard Business School, back up their views with both their own research and third-party studies from around the world.

Here are a few of their suggestions:

Buy experiences, not things. A new Porsche may make you happy for a while, but the glow soon fades. ls. Spend your money on experiences instead. They're more likely to be shared with others whereas material things very often are enjoyed alone.

Make those things unusual. Whatever good things in life come our way, we tend to get used to them. Even the most enjoyable experiences eventually become boring. So try to make something as simple as your morning coffee a bit of a treat rather than a daily routine.

Buy some time. Time should be used for distinct activities that produce lasting effects on happiness. You won’t enjoy playing with your kids if you're worried about the money you're leaving on the table by not being at the office.

Pay now, consume later. Where possible, Dunn and Norton suggest exchanging "buy now, pay later" for something closer to "pay now, consume later". Not only are you less likely to get into debt this way, the pleasure of anticipation provides another source of happiness.

Invest in others. Although it seems counterintuitive, the single best thing you can do with your money is to spend it on someone other than yourself.

When the authors gave study participants $20 to keep or give away, the ones who gave it away felt much happier, a response that was fairly constant around the world and among different ages.

If you don't have time to read the book, here's a TED talk that hits the highlights.

By Gordon Powers, MSN Money

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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...