It is something of a cliché to say that money can’t buy you happiness, and research seems to suggest it may not actually be true.

A regularly quoted, though somewhat outdated US study from 2010 found that day-to-day emotional wellbeing appeared to stop increasing once annual income reached around $75,000.

However, a second study from 2021 contradicted the earlier one, finding that there was a clear correlation between higher income and reported happiness.

The latest research on the topic from 2023 reconciled the two seemingly contradictory papers and found that more money appears to be associated with greater happiness for most people, but there may be a point at which more money stops helping people who are already unhappy.

So, as with most things, the answer is nuanced. Having money isn’t the solution to all problems, but what you do with your wealth can significantly improve your security, life experiences, and peace of mind.

Read on to find out how to spend your money to get the most from your wealth.

Spending money on experiences can lead to more happiness than possessions

A report in Scientific American found that experiences often provide more satisfaction than material purchases. This is largely because experiences can build social connections and create lasting memories that can be enjoyed beyond the experience itself.

This might include:

  • Holidays
  • Meals with friends
  • Concerts
  • Hobbies
  • Learning new things
  • Family occasions

For instance, spending money on a holiday can provide happiness beforehand through anticipation, during the activity through participation, and then afterwards through the memories and stories it creates.

Of course, spending on possessions can also be valuable, particularly if they improve your quality of life, such as buying a:

  • Good-quality mattress or bed
  • More comfortable home
  • Reliable car

However, once the basics are taken care of, the study suggests that experiences outweigh things.

So, when deciding how to use the portion of your wealth or earnings earmarked for discretionary spending, you might want to consider what experiences you could explore and the intangible and long-lasting value they could have.

Money can buy back your time

As well as buying possessions and experiences, money can also buy back your time.

Indeed, research reported by CNBC found that people who use money to save time on things like housekeeping, delivery services, and taxis tend to be happier than those who don’t.

To save time, you could use your money to:

  • Pay someone to do jobs that take up a lot of time, such as cleaning or DIY
  • Reduce your commute
  • Move closer to your friends or family
  • Pay for services that give you more free time, such as accounting or financial planning

Spending on things such as these can open up time and space for you to enjoy things that matter more to you.

Don’t underestimate the happiness of financial freedom

We recently wrote a three-part series on financial freedom: what it means, how to reach it, and the risks to be aware of along the way.

At its core, financial freedom is about feeling secure and having the independence to live life on your own terms. You don’t need unlimited wealth to achieve this. For everyone, there is an amount of money that would be enough to ensure long-term stability and fund all of their long-term goals.

Of course, this amount is individual to you, and knowing roughly what it is can give you a target to aim for and an important sense of security once you reach it.

Once you know you have enough to support your lifestyle and meet your future needs, you will have more freedom to make decisions based on what you want from life. You may still enjoy your career and choose to work, but knowing you could afford to change direction, reduce your hours, take a break, or deal with an unexpected expense can provide significant psychological security.

In this sense, financial freedom is about having choices, and knowing that you have those choices can be one of the most valuable things your wealth can provide.

We can use cashflow modelling to help you understand how much you need to achieve your version of financial freedom. This could also give you the confidence to spend more of your wealth today, knowing that doing so is unlikely to compromise your long-term security.

How to know when to spend your money and what to spend it on

Once you’re confident that your long-term financial needs are covered, the important thing is to make sure your spending reflects what matters most to you and the life you want to lead.

So, before making a significant purchase, it can be useful to ask yourself a few questions:

  • Will this improve my everyday life? Some purchases can have a lasting impact on your quality of life, particularly if they make everyday activities easier, more comfortable or enjoyable.
  • Will this give me more time or freedom? Spending money to reduce the amount of time you spend on tasks you don’t enjoy, or to give yourself more opportunities to do the things you value, could provide greater satisfaction than simply accumulating more possessions.
  • Will I still value it in a year’s time? It’s easy to get caught up in the excitement of a new purchase. Thinking about whether you’ll continue to value it in the future can help you distinguish between spending that genuinely improves your life and spending that provides only temporary satisfaction.
  • Does this spending support the life I’m trying to build? Your spending should reflect your life goals and fit into your wider financial plan.

Get in touch

We can work with you to create a financial plan that reflects your resources and the life you want to lead, giving you the confidence to spend on the things you may not need, but that make life better.

If you would like to talk to us about this further, reply to this email or call us on 0117 959 6499.

Risk warnings

This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

This article does not constitute tax, legal or financial advice and should not be relied upon as such. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. For guidance, seek professional advice.

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Approved by Best Practice IFA Group 03/09/2026