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The Secret to Happiness Isn't Income or a Lot of Stuff


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Gilligan's Island
CBS/Getty ImagesAre Thurston Howell III and his wife Lovey really the types you should imitate?
Would you like to be happy?

Of course -- but how? How much income do you need to feel financially secure enough to feel happy? How should you spend the money you make to "buy happiness" -- if that's even possible?

In 2012, a website opened up with a mission to quantify happiness and utilize vetted academic data from positive psychology to help lead people to a happy place. Its name: Happify.com. And as luck would have it, Happify.com has just released a short, colorful report on some of its findings.

Recognize When Enough's Enough

Citing data from a 2010 Princeton University study, Happify notes that an annual income of $75,000 is the sweet spot for personal happiness. After that, "salaries above $75,000 have no impact on our day-to-day feelings of happiness."

That seems to defy logic. (If enough is enough, then shouldn't more than enough be better?) But research appears to confirm that after you reach a point of comfortable well-off-ness -- $75,000 being a good benchmark, 50 percent above the median annual household income in America -- you hit a point of diminishing returns. In terms of absolute wealth, once you can comfortably cover life's necessities -- and then some -- a little more cash doesn't matter.

It's a different story for those who are focused on relative wealth and status (how much you have vs. your neighbor). In that case, there's always going to be someone you know or read about who's earning more.

The research's conclusion: Catching up to Thurston Howell III is an impossible task, and you're more likely to be happy if you don't even try, and just content yourself with being significantly above average for income.

Wake Up From the American Dream

Another finding cited by Happify challenges the idea that the American dream of homeownership is one key to happiness. According to Happify (and others), "homeowners are ... no happier than renters. Owners often experience more burden than joy from their homes." Among other findings, the requirements of home upkeep -- repairing broken appliances, mowing the lawn and so on -- result in homeowners having less time to spend on leisure activities than do renters.

Think a nicer car will make you a happier camper? Think again. Paying $60,000-plus for a new "super luxury" automobile may elicit envy from your friends, but as far as happiness goes, chances are you can be just as happy with an average car costing half as much.

Happify cites a University of Michigan study that reports drivers of economy cars get no more of a "hedonic experience" while driving their cars than luxury vehicle owners experience.

Or as Happify puts it, there's "no relationship between the Blue Book value of a car and the amount of enjoyment the owners got from driving it that day."

On the other hand, Happify cites research that shows that for Americans over the age of 50, spending money on car payments and leisure activities made them happier than spending on their homes or on television. The theory is that spending is more gratifying when it goes toward things that make you feel more connected to others (and, in the case of a car, can physically transport you to others). Research found that spending on those two things increases optimism and reduces loneliness and depression.

Spend the Rest of the Money the Right Way

So what if you've followed Happify's advice so far -- making more than $75,000, downsized to an apartment and traded in the Lexus for a cheap jalopy? What should you do with the "extra" money, if it's really not doing much to make you happier?

Happify cites research showing that when spending on yourself, you'll get more bang for your buck by spending on "experiences" (think a vacation, a trip to the theater or a five-course dinner) rather than "stuff." Research shows that while "shop therapy" can give a consumer's happiness an initial boost, "the initial joy of acquiring a new object ... fades over time as people become accustomed to seeing it every day."

Experiences, in contrast, form memories that can be tucked away and mentally pulled out for reflection -- feeling almost new again -- an infinite number of times over the course of a person's lifetime.

An even better idea may be to give away the money you don't need. It needn't be a lot. Research shows that donating just $5 to charity can make you happier than buying a $5 cup of coffee at Starbucks (SBUX). Spending money on yourself (and on a cup of coffee that, after all, will be gone in 10 minutes) doesn't hold a candle to the "experience" of knowing you helped out someone in need. The latter can generate warm feelings -- happiness -- for a lifetime.

Motley Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Starbucks.​


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