The Science of Spending

The Science of Spending


What if there was a way to increase your happiness and satisfaction without much work, energy, or effort? Would you want to find out more? Science supports that it is, indeed, possible to achieve more happiness by taking an objective look at how you’re spending your money. In this piece, we share insights from the emerging field of positive psychology that suggest ways we can increase our happiness by simply changing how we view and how we spend our money.

We’re all familiar with the old saying “money can’t buy happiness” – we’ve written about this saying in a previous post. As it turns out, scientists have been studying the question of whether money can buy happiness for decades. The evidence they’ve found suggests that money can indeed buy happiness, but only up to a certain point. They believe that the relationship between the possession of wealth and happiness is positive, but modest. In their studies, scientists have found that often times, money allows people to live longer and healthier lives because it buffers them against worry and harm, increases leisure time, and allows them to control the nature of their daily activities—all of which, science says, are sources of happiness.

However, if money does indeed increase happiness, why doesn’t a whole lot more money equal a whole lot more happiness?3 The answer to this question may be found in an emerging field of psychology popularly known as positive psychology, or as some people call it, the science of happiness. Positive psychology is the scientific study of the strengths enabling individuals and communities to thrive and flourish. The field is founded on the belief that people want to lead meaningful and fulfilling lives, to cultivate what is best within themselves, and to enhance their experiences of love, work, and play.2

An important term in the field of positive psychology is PERMA. PERMA is an acronym for the belief that for human beings to flourish, they must:

  • Experience Positive Emotions
  • Be Engaged in Life
  • Cultivate Relationships
  • Have a Sense of Meaning and Purpose, and
  • Experience Feelings of Accomplishment5

The following sections will share additional insights on each of these areas.

P: Experience Positive Emotions

The first part of the PERMA framework is to increase the feeling of positive emotions. What constitutes a positive emotion is different for each of us, but some universal activities that elicit positive emotions are spending time with loved ones, spending time outdoors, attending sporting events, listening to music, dining out, travel, or experiencing new and novel things. We also feel positive emotion when we engage in healthy risk-taking activities or purchase new clothing, jewelry, or other material items.

E: Be Engaged in Life

The second element of the PERMA framework suggests that individuals can change their spending patterns to increase their happiness by seeking ways to be more engaged. Activities that increase engagement include spending money on hobbies such as reading, playing music, doing art, gardening, exercising, hiking, or practicing mindfulness. Other ways individuals can induce a sense of engagement is by seeking experiences which positive psychology calls entering a state of flow. Flow is defined as a mental state of operation in which a person performing an activity is fully immersed in a feeling of energized focus, full involvement, and enjoyment in the process of the activity. In essence, flow is characterized by complete absorption in what one does and a resulting loss in one’s sense of space and time. Scientists have determined that people who experience more flow in their lives, tend to be happier.4

R: Cultivate Relationships

The third word of the PERMA acronym focuses on an individual’s desire to cultivate relationships, sometimes in a way that involves spending money. This may include making gifts for others, planning travel together with friends or family, visiting loved ones, spending money to connect with one’s significant other, participating in community activities, or seeking new relationships around shared hobbies. Another way to cultivate relationships may be to outsource household tasks or chores that take time away from connecting with others or from pursuing activities we genuinely enjoy.

M: Have a Sense of Meaning and Purpose

The fourth way individuals can increase their happiness is by spending money on experiences that enhance a sense of meaning. Having a sense of purpose and meaning to why each of us is on this earth is essential to living a life of fulfillment. These fulfilling activities could include volunteering, becoming involved in a charity, participating on a board, developing and sustaining meaningful work, cultivating a sense of wonder, deepening spiritual practice, or seeking new opportunities to engage in self-growth.

A: Experience Feelings of Accomplishment

The PERMA framework is rounded out by the fifth element which is to seek ways to increase a sense of accomplishment. We can improve our sense of accomplishment by setting goals and taking actionable steps to achieve those goals. Other ways to build a sense of accomplishment might be to embark on educational endeavors that challenge us mentally or to set personal benchmarks requiring self-discipline and self-regulation.

Keeping these elements of the science of happiness in mind, financial planners have the opportunity to help Clients engage in personal spending habits that align with the PERMA framework. The framework offers a “Spending Inventory” that helps Clients and Planners work together to classify a Client’s spending habits as they relate to each of the PERMA categories. Once these habits are identified, both parties can brainstorm new ways to alter spending patterns to bring more of the elements of PERMA into one’s life in pursuit of increasing happiness and well-being.

Next time you are in a reflective mood, we encourage you to take a few minutes to think about how you’re spending your money and ask yourself;

  • Are the things you’re spending your money on bringing more elements of the PERMA framework into your life?
  • Are there ways you could change your spending habits to increase your happiness and life satisfaction?

We invite you to explore your spending questions and habits so we may think together about ways you may be able to use your money to enhance your well-being and to improve the happiness of those you share your life with.


  1. Authentic Happiness. (n.d.). Retrieved January 17, 2018, from
  2. Asebedo, S. D., & Seay, M. C. (2015). From Functioning to Flourishing: Applying Positive Psychology to Financial Planning. From Functioning to Flourishing: Applying Positive Psychology to Financial Planning, 51-58. Retrieved from
  3. Dunn, E. W., Gilbert, D. T., & Wilson, T. D. (2011). If money doesnt make you happy, then you probably arent spending it right. Journal of Consumer Psychology, 21(2), 115-125. doi:10.1016/j.jcps.2011.02.002
  4. Finding Flow. Reviews the book ‘Finding Flow,’ by Mihaly Csikszentmihalyi. Retrieved January 17, 2018 from
  5. Positive Psychology Center. (n.d.). Retrieved January 17, 2018, from