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How To Spend Money to Buy Happiness

2022-07-29 · Long video (solo, talking head or whiteboard) · Ali, Ali Abdaal (channel) · recording, 12:15 · watch on YouTube

Topic: Money and investing (also: Health, sleep and habits) · mode: List of tips or lessons · tags: Evidence-based framing, Sponsor segment present, His medical past

In a Journal Club episode on the paper "If money doesn't make you happy, you're probably not spending it right", Ali goes through nine principles for buying happiness: experiences over things, spending on others, on health, many small pleasures, delaying consumption, buying back time, removing salient negatives, things that enable activities, and charity.

What is said

The parts of the video and what is said in each (★ — how much it matters to the video).

00:00:00 — The paper "If money doesn't make you happy, you're probably not spending it right" and nine principles

  • ★★ In a Journal Club episode on the research paper "If money doesn't make you happy, you're probably not spending it right", Ali goes over nine principles for getting more happiness out of the money you spend. — 00:00:00
  • ★★★ Ali's first principle for buying happiness: spend money on experiences rather than on things. — 00:00:00

00:00:19 — Spend money on experiences rather than on things: adaptation, anticipation, comparison, sharing

  • ★★ Ali explains hedonic adaptation: we get used to things as we have more of them, so a fancy car soon gives far less happiness, while we adapt much less to experiences. — 00:00:29
  • ★ As an example of anticipating purchases, Ali recalls really looking forward to buying PlayStation games, an anticipation of things he has lost over time. — 00:00:58
  • ★★ Ali says we rarely fall into the comparison trap with experiences, while with things it is easy to say a Tesla Model 3 is not as good as a Tesla Model S. — 00:00:58
  • ★★ Experiences are usually shared, and Ali calls it a profound finding of research that we are social creatures: involving other people tends to increase our own happiness. — 00:01:27
  • ★★ In a study by Harvard Business School professor Michael Norton, students given money to spend became significantly happier only through what the researchers called pro-social spending. — 00:01:27

00:01:43 — Spend money on friends: Michael Norton's pro-social spending study

  • ★★★ Ali's second principle: to increase your own happiness with money, buy a gift, a coffee, a dinner or a holiday for someone else rather than for yourself. (hedged) — 00:01:56

00:02:21 — Spend money on health: the personal trainer

  • ★★ Ali's third principle: we should spend more money on health, especially while young but at any age. — 00:02:26
  • ★★ A couple of years earlier Ali paid for a personal trainer for the first time; after years of going to the gym on and off, only with the trainer did he start to see results. — 00:02:26

00:02:55 — Mental health and therapy, with the BetterHelp sponsor read

  • ★ Ali says he has had no major mental health crises, but has found speaking to a therapist helpful with YouTuber-related burnout and some relationship issues. — 00:02:55 · Mental health
  • ★★ Ali agrees with Alain de Botton of The School of Life that therapy should be treated like going to the gym or getting a personal trainer: it helps mental health even without a mental illness. — 00:03:53 · Mental health

00:04:22 — Many small pleasures rather than a few big ones: the can of Coke, shorter holidays

  • ★★★ Ali's fourth principle: buy many small pleasures instead of a few big ones, to counter hedonic adaptation. — 00:04:22
  • ★ Ali illustrates diminishing marginal utility with a can of Coke: the first sip is the strongest, and every later sip gives less. — 00:04:22
  • ★★ Ali says many studies suggest that shorter, more frequent holidays probably bring more happiness than one big blowout holiday a year. (hedged) — 00:04:52
  • ★★★ Ali's fifth principle: delay consumption wherever possible; he calls credit cards generally super bad because they encourage going into debt for instant gratification. — 00:04:52

00:05:20 — Delay consumption: credit cards, the snack study, prepaid meals, anticipation

  • ★★ Ali cites a study from the paper: people choosing a snack to eat right now are far more likely to pick an unhealthy one than people choosing now for later. — 00:05:38
  • ★★ Ali pays in advance for a meal delivery service's meals for the following week, so he makes healthier choices for his future self than when ordering a takeaway while hungry. — 00:05:38
  • ★★ Ali calls anticipation completely free happiness: studies cited in the paper show that anticipating a holiday is sometimes better for our happiness than the holiday itself. — 00:06:24
  • ★★★ Ali's sixth principle is to spend money to buy back your time, since autonomy over how we spend our time makes us happier, as self-determination theory holds. — 00:06:53 · money buys back time
  • ★★ Ali says freeing up his own time is one of the main reasons he built his YouTube channel, a business and streams of passive income. — 00:06:53 · passive income

00:06:56 — Spend money to buy back your time: autonomy, leaving medicine, the ideal hourly rate

  • ★★★ About three years into his YouTube channel Ali was able to quit his job as a doctor; he now has far more control over his time and feels much happier than when he worked full-time. — 00:07:22
  • ★★★ Without quitting your job, Ali says, you can work out your ideal hourly rate and choose not to do anything worth less than that hourly amount. — 00:07:52 · money buys back time
  • ★ Ali's example: if you value your time at $15 an hour, skip an hour's trip to the post office to return a $5 Amazon item and take the hit. (hypothetical) — 00:07:52 · Amazon
  • ★★ Ali calls time by far the most valuable thing we have, and where possible he spends money to save time. — 00:08:21
  • ★★★ Ali's seventh principle, from other studies he has seen: removing major negatives from your life does more for happiness than adding extra positives. — 00:08:21

00:08:30 — Spend money to remove salient negatives: the cleaner

  • ★★ Ali dislikes cleaning the bathroom, so a cleaner comes to his flat every two or three weeks and cleans the whole house, saving him an hour or two of cleaning. — 00:08:50
  • ★★★ If you have to do something you really dislike and can outsource it, especially for less than your personal hourly rate, Ali calls outsourcing it a complete no-brainer. — 00:09:19
  • ★ Many of Ali's friends who now have children say getting a cleaner has been a game changer, as they can spend more time with their children. — 00:09:19
  • ★★★ Ali's eighth principle: when spending on things rather than experiences, buy things that enable other interesting activities, such as a car seen as a way to take road trips with friends. — 00:09:48

00:09:53 — Buy things that enable interesting activities: the car, the Kindle

  • ★★ Thinking of a purchase as the item itself makes the comparison trap easy, Ali says, and studies and his own experience show that comparison is the thief of joy. — 00:10:18
  • ★★ Ali found buying a Kindle one of the biggest happiness enablers of his life, because it lets him read books far more easily. — 00:10:18 · Kindle
  • ★★ Ali cites studies showing that people and households who give more money to charity tend to be happier overall. — 00:11:05
  • ★★★ Ali's ninth principle cites the paper Giving Without Sacrifice: for most people, donating 10% of annual income to charity does not reduce their happiness and might increase it. — 00:11:05

00:11:07 — Spend money on charity: Giving Without Sacrifice and the Giving What We Can pledge

  • ★★★ Ali took the Giving What We Can pledge in 2019, to donate 10% of his annual income to effective charities every year; podcast guests, friends and family of his have taken it too. — 00:11:34
  • ★★ Anecdotally, Ali finds that giving money to charity improves his own happiness. — 00:11:34

In the description and comments

  • ★ Ali Abdaal (channel): In October 2022, asked whether Ali hires remote interns, the channel replies that the team does take interns, in person rather than remote, and has 3 in London. — creator comment · London

Threads in this video

Where the stories that moved here went next

Mentioned

Central: hedonic adaptation · If money doesn't make you happy, you're probably not spending it right · money buys back time

Also: People: Alain de Botton · Michael Norton

Projects: Journal Club

Works: Giving Without Sacrifice

Organizations: Amazon · Giving What We Can · Harvard Business School · The School of Life

Concepts: diminishing returns · Mental health · passive income · self-determination theory

Products: Kindle · Tesla Model 3

Only in the description or credits: London

Also centred on hedonic adaptation: Motivation, Stress & Time Management - Exam Revision Q&A with Cambridge students · How I Gained 1 MILLION Subscribers · Does money REALLY buy happiness?

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