How money can buy happiness

Money doesn't buy happiness.

It's one of the often repeated phrases in personal finance (second only to “spend less than you earn!”).

Money can't buy happiness but there is something it can buy - time. According to a new paper, time has the ability to make us more content in life and there's a way you can turn money into more time.

There are studies that show you aren't happier when you make more money after a certain point. A Gallup survey of 450,000 Americans in 2008 and 2009 showed that “day to day contentment” rises with higher incomes but plateaus at $75,000. Make more money and it has no impact on your day to day contentment (but your overall life assessment happiness does improve).

As it turns out, there's a new study and there is a way you can buy day to day contentment.

Buying time promotes happiness” is the title of a paper authored by Ashley V. Whillans (Harvard Business), Elizabeth W. Dunn (University of British Columbia), Paul Smeets (Maastricht University), Rene Bekkers (Vrije Universiteit Ambsterdam), and Michael I. Norton (Harvard).

Despite rising incomes, people around the world are feeling increasingly pressed for time, undermining well-being.

We show that the time famine of modern life can be reduced by using money to buy time.

Surveys of large, diverse samples from four countries reveal that spending money on time-saving services is linked to greater life satisfaction.

To establish causality, we show that working adults report greater happiness after spending money on a time-saving purchase than on a material purchase.

This research reveals a previously unexamined route from wealth to well-being: spending money to buy free time.

The math is simple.

We know that money doesn't buy happiness but money buys time. So to buy happiness with money, you just have to spend it on time.

How might we do this?

Good Time vs. Bad Time

We all have 24 hours in the day but not every hour is created equally.

The hours you spend commuting to rush hour traffic to work isn't as good as the time you spend lying in your bed sleeping. You can improve your commute by listening to music and podcasts, turning bad useless transportation time into marginally entertaining or educational transportation time. It's not as good as sleeping, or hanging out with friends and family, but it's better than driving in rush hour traffic in silence.

If you were to plot the hours in your day on a “good time vs. bad time” scoring chart – it might look like this:

Score your entire day (do the week if you're ambitious)

The numbers aren't super important as long as they're relatively accurate. I put chores as 25 but maybe you like chores, so it's a 40. Maybe you're a weirdo and prefer chores over sleep – flip the numbers.

The goal is to identify how you spend your time, give them relative scores, and then find ways to turn low value time into higher value time.

How to Buy Happiness (Time)

The goal is to increase the total happiness in your day, which can be achieved by:

  • Removing bad time (by improving it or removing it)
  • Improving good time (by making it better)

For removing bad time, it often comes down to buying something or hiring someone to replace a job you once did manually.

The best example of this is a cleaning service. There isn't a single person in the world that has hired a cleaning service and then said it was a bad decision. Everyone has loved it because it takes bad time (scrubbing toilets, mopping, etc.) and completely frees it up. If you have the means, hire a cleaning service and turn those hours into something better.

If you hate sweeping, buy a Roomba. The little robot will sweep for you.

For improving good time, you want to think of ways to improve the quality of life. Sleeping should be 100 for everyone. You spend so many hours sleeping that if you aren't scoring your sleep as a 100, you should take steps to fix it. Perhaps that's a better mattress, better sheets, better pillow — whatever.

If you spend 7 hours in bed a night, that's 2555 hours a year. If you keep the mattress five years (arguably low), that's 12,775 hours. How much are you willing to pay per hour for a score of 100?

We all have just 24 hours a day. Score your time, improve it piece by piece, and increase your day to day contentment. 🙂

What will be your first move to buying happiness?

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About Jim Wang

Jim Wang is a thirty-something father of four who is a frequent contributor to Forbes and Vanguard's Blog. He has also been fortunate to have appeared in the New York Times, Baltimore Sun, Entrepreneur, and Marketplace Money.

Jim has a B.S. in Computer Science and Economics from Carnegie Mellon University, an M.S. in Information Technology - Software Engineering from Carnegie Mellon University, as well as a Masters in Business Administration from Johns Hopkins University. His approach to personal finance is that of an engineer, breaking down complex subjects into bite-sized easily understood concepts that you can use in your daily life.

One of his favorite tools (here's my treasure chest of tools,, everything I use) is Personal Capital, which enables him to manage his finances in just 15-minutes each month. They also offer financial planning, such as a Retirement Planning Tool that can tell you if you're on track to retire when you want. It's free.

He is also diversifying his investment portfolio by adding a little bit of real estate. But not rental homes, because he doesn't want a second job, it's diversified small investments in a few commercial properties and farms in Illinois, Louisiana, and California through AcreTrader.

Recently, he's invested in a few pieces of art on Masterworks too.

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  1. Ms. Frugal Asian Finance says

    I totally agree with you that money can buy happiness in many cases (i.e. ice-cream, delicious food, trips to the beach & Europe). I used to not do anything on my train ride to work because I got nauseated reading books.

    But now I either listen to podcasts or keep up with brief blog posts. It’s really improved the value I attach to those train rides. Sometimes I even look forward to my commute to and from work every day because I know I’ll be able to do something I enjoy.

    P.S. The Excel table is a great idea! It’s always refreshing to quantify something that’s not easy to measure (i.e. happiness).

  2. Penny says

    I think you must really like your job to give it a 75 and your entertainment score only 5 points higher at an 80 and with sleep topping out at 100, where do things like sex fit in, lol? is that over an 80 but not as high as sleeping? I see “commute” for an hour but there is no time for obvious grooming activities (or ladies this is a chore usually of an hour in the a.m. and sometimes nearly as long if going out in the p.m. and it rarely leaves enough sleep time for anyone once you are done with all the things you need to do and things you want to do, and I can’t even imagine these numbers for people with kids! Would diapers, baths & day care count as 10’s or is that enjoyable for folks?

    • Jim Wang says

      I threw up that spreadsheet and those numbers in about five minutes to give people an idea of what I was talking about. My day to day (and I suspect yours too) isn’t as rigid as “Sleep from 10PM to 7AM” and a commute from 7-8AM and 5-6PM… so that’s how you should view the table. Rather than analyze the specifics of the table, which would be for me anyway, create your own and see how you can improve it. It’s not about how people score but about your score and how you can improve it.

  3. Lazy Man and Money says

    I love the idea of scoring your hours (at least for a little while).

    I see sleep as Pass/Fail rather than a score. It’s not like at 3-4AM, I’m thinking, “This hour is fantastic!” I wouldn’t say that my perfect day is sleeping 24 hours. I guess your “pass” can be 100, as the spreadsheet police aren’t going to come after you.

    I think if I tried this, I’d find that I enjoy my time more at things that cost money, but then feel bad at spending all that money. For example, I could get high scores if I went out to dinner every night that month, but I don’t think it would help with my long-term happiness as my bank account got smaller and my waist got larger.

  4. Paul Andrews says

    I find this logic also applies to the blogosphere, i.e., Do I want to spend the $$$ to automate something, or just spend the time doing it myself? Well, after manually doing Pinterest for 6 months and wanting to shoot myself in the face, I decided it was worth it to use a scheduling service. Great write up, Jim. Keep ’em coming!

  5. sagar nandwani says

    Happiness is not a destination but an ongoing process. There is no ‘reaching for it’. You experience it in the same way you experience the full kaleidoscope of emotions. Anger. Pain. Love. Sadness. Despair

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