Fifteen years ago, I discovered minimalism. A lifestyle of intentionally owning fewer possessions has changed my life in many ways. But as one might guess, a shift in how I view spending money was among the top changes that took place.
Letting go of unnecessary possessions frees us to pursue happiness in places where it can actually be found. When it comes to our personal spending habits, even for someone who doesn’t embrace a minimalist lifestyle, there is still important research that can guide our decisions into smart spending.
Science shows that after our basic financial needs are met, there are specific ways we can spend money that will lead to greater happiness and well-being.
Here are three ways:
1. Spend on Experiences, Not Things
One of the most well-supported findings in happiness research is that money spent on experiences brings more lasting joy than spending on things. This is something that many believe to be true, but now we have research to support the assumption.
A study from The University of Texas highlights this reality with a short summary sentence: “The basic finding from a lot of experiments is that people derive more happiness from their experiences than from their possessions.” That was from the lead author Amit Kumar, assistant professor of marketing.
People who spend money on experiences—such as a family outing, a vacation, or even a cooking class—tend to feel happier before, during, and after the experience. Experiences bring joy not only in the moment but also through memories we revisit long afterward. Physical items, by contrast, lose their shine as time goes on, rarely delivering the same emotional return.
When we invest in experiences with others, we receive a double benefit of investing in relationships too. The shared moments, stories, and memories we create with others are powerful drivers of both well-being and happiness. Robert Waldinger, director of a 75-year-old Harvard study on adult development, explains that here.
For me, this choice has been one of the most rewarding changes in my own life. I no longer seek out the newest gadgets or fashions; instead, I look for ways to connect with people and make memories. As my children have now become young adults and are leaving home, I am grateful even more for our shared experiences.
2. Give to Others
Research also consistently shows that spending on others, whether through charity, gifts, or acts of kindness, can bring more happiness than spending on ourselves.
A study published in The Journal of Personality and Social Psychology backs up this idea, finding that “spending money on others promotes happiness.” This is just one of countless studies on the topic and the results appear universal, holding true across cultures, ages, and income levels.
Giving aligns with our innate need for purpose and connection. When we use our money to make a positive difference—whether through a donation, a thoughtful gift, or a meal shared with friends—we strengthen our sense of purpose and community. We also enjoy the benefit of alignment—aligning the spending of our dollars with our deepest heart desires.
The joy of giving is something I’ve experienced in my own life. And I have found that prosocial spending ignites happiness in whatever measure it is practiced—from launching a nonprofit to buying pizza for a friend.
3. Buy Time to Reduce Stress
Another effective way to spend money for greater happiness is to “buy time.”
This concept goes beyond spending on positive experiences to include removing stressors and creating more space in life. Research published in The National Library of Medicine Journal found that people who prioritize time over money generally report higher life satisfaction and that “using money to buy time can protect people from the detrimental effects of time pressure on life satisfaction.”
“Buying time” can look like hiring someone to handle tasks we’d rather avoid, choosing a home closer to work to cut down on commuting, or even simplifying household responsibilities.
This approach isn’t about avoiding work or responsibility—it’s about freeing up time and energy for the things we value most. Even small decisions, like paying for grocery delivery or outsourcing household chores (cleaning the house, raking leaves, shoveling), can free us up for family, hobbies, and relaxation.
Spending intentionally is a choice we all have. We would all be wise to remember more often that research tells us that after our needs are met, happiness isn’t found in acquiring more possessions. Instead, it’s about how we use our resources to enhance our lives and relationships. By investing in experiences, giving generously to others, and creating space through time-saving decisions, we find more and longer-lasting happiness than foolishly spending our limited dollars on something we don’t need.