While it’s true that money can’t buy happiness, there is no question that it can have a profound impact on your mood and your overall quality of life.

If you’re making one of these three common mistakes, you could be secretly sabotaging your mood. 

1. You’re Spending It All On You

Money, for the most part, can’t buy you happiness. In fact, several psychological studies conducted on lottery winners found that their temporary spike in happiness levels is short-lived, and that some even experienced profound misery in the years following their win.

However, Harvard Business professor Michael Norton argues that money can bring you increased happiness – as long as you don’t spend it on yourself. In his fascinating TED talk, Norton talks about experiments that he conducted around the world to determine whether or not money could, in fact, buy happiness.

Norton and his team approached random individuals, asked them how happy they were, and then handed them an envelope with a random sum between $5 to $20 inside. Half of the participants received instructions to spend the cash on themselves (buy a treat, pay bills, etc.), and the other half to spend it on others.

From privileged college campuses in Canada to the poorest city neighbourhoods in Uganda, one central theme emerged from their experiments: those who spent money on others reported increased happiness, while those who spent it on themselves experienced no additional joy.

Chuck Feeney, a famous Irish-American billionaire who has joined Bill Gates and Warren Buffett in their giving pledge, sums it up quite nicely:

“I cannot think of a more personally rewarding and appropriate use of wealth than to give while one is living - to personally devote oneself to meaningful efforts to improve the human condition.”

“Using your money to promote underindulgence requires a shift in behavior, for sure”, explains Norton. “But another scientifically validated means of increasing the happiness you get from your money is even more radical: not using it on yourself at all.”

What does that mean for your wallet? Next time you’re wondering what to do with that crumpled $10 bill, consider buying some groceries for a shelter, or paying for the coffee of the person in line behind you – you might just be able to ‘buy some happiness’, after all.

2. You’re Chasing Temporary Bliss

Have you ever felt a rush at the checkout when buying the ‘perfect’ new pair of jeans, or a brand new smartphone? How long did it last? Chances are it was a short-lived feeling, and wore off by the time you arrived at home, purchases in hand.

What about the last vacation you took with your family? Chances are – even years later – you still feel the warm glow of happy memories of shared meals, new adventures and laughs over missed off-ramps and detours.

As author Lauren Vanderkamp explains, “travel is almost always worth the splurge. You’ll anticipate the experience beforehand, live through the adventure, and then savor the memory afterwards. So even if travel is expensive, you get a triple happiness whammy for every dollar spent.”

When we spend our money on stuff, it has little lasting effect on our happiness and quality of life. But what money can buy, is the happiness that comes from enjoyable experiences and pleasant memories. Studies show that spending money to throw a family reunion BBQ will make you happier than a gleaming new iPhone ever could.  

3. You’re in Debt Denial

No surprise here. Debt kills your mood faster than almost anything. In fact, credit card debt is scientifically linked to anxiety and depression.

Like Francine Bostick knows all too well, skyrocketing consumer debt can have serious health consequences. After accumulating more than $120,000 in debt over 13 credit cards, Bostick’s blood pressure was so high that she was at severe risk for a life-threatening stroke. Fortunately, she paid attention to the wake up call that her body was giving her, and took the necessary steps to pay down her debt.

As Gail Vaz Oxlade teaches young women on her show, Princess, ignoring your debt and letting it pile up can have disastrous consequences for your emotional wellbeing. “I make Princesses face up to how their behaviour is working against them” she explains. “I insist that we move from delusional to rational. And the ones that do reap the additional benefit of developing a sense of peace.”

Choosing Happiness

If your finances have ever kept you up at night, or if you’ve ever felt overwhelming regret after splurging on an indulgence, maybe it’s time to take another look at how your money is affecting your emotions.

From the billionaire who gave it all away, to the retiree who reclaimed her health by paying down her debt, it is clear that money has a powerful effect on our emotional well-being. It is up to us to ‘choose happiness’ by building healthy financial habits, and using our money as a springboard to our dreams.

Your turn - Can money make you happy? Share your thoughts below!