Is there a way to spend your tax return wisely and take a much-needed summer vacation?
If you’re among the 75 percent of taxpayers who got a refund from the IRS this year, you might be pleasantly surprised to learn that putting some of that cash toward a life experience that’s personally rewarding and memorable (as opposed to buying material goods) can be a smart investment.
Research shows that the dividends are your happiness, and your health.
Those are all excellent choices, yet setting aside a portion of your windfall for something that makes you feel good — a pleasurable, relaxing getaway; a fun social activity with family and friends; or donating to a charitable cause — can have both short- and long-term health benefits.
With refunds averaging around $2,689 this year, consider allocating some of that for something that increases your life satisfaction.
Here are four smart ways to invest in your well-being and how money can buy you happiness:
1. Spend on experiences rather than things
You might think a luxury car or the newest immerse-your-senses, curved screen LED TV will make you happy.
After all, these are purchases you’ll be able to enjoy for years, whereas a vacation always feels like it’s over too soon.
Studies, however, show that the opposite is true.
While accumulating stuff won’t make you unhappy, when it comes to long-term well-being, spending money on an experience that creates lasting, joyful memories is the better investment.
When one group of consumers was asked to think back on recent purchases, 57 percent reported that they felt happier after putting money toward an experience, versus 34 percent who were happier with material items.
Research shows that often we become accustomed to things that we purchase fairly quickly, so the new kitchen floor or smartphone soon becomes familiar and may not seem that special anymore.
Experiences, however, live on in our minds, so the happiness derived from a getaway is far from fleeting. (Unless something hilarious or exceptional happens at the hardware store, it’s unlikely you’ll revisit the experience of buying kitchen tiles the way you’ll fondly recall telling fireside ghost stories on the family camping trip.)
Need another reason to contribute to your getaway fund?
Consider your health.
Several studies show that people who take regular vacations have longer life spans. As scientists study the links between health and happiness, they’ve discovered that positive emotions can lower the risk of everything from the common cold to chronic diseases, like diabetes and heart problems.
If your refund check was modest this year, don’t let that spoil things.
Researchers say treating yourself to small, frequent indulgences might bring even more happiness than a big splurge. So go ahead and book a weekend getaway, a massage, or a meal at a pricey restaurant you’ve been dying to try.
2. Give money to a good cause
Spending on others, not just on yourself, also boosts happiness — whether you’re buying a gift for a friend or donating to a worthy cause.
Studies have also shown that giving to charity activates the brain’s rewards center. And here’s a surprise: Giving as little as $1 can make you feel wealthier!
According to behavioral scientists Michael Norton and Elizabeth Dunn, authors of Happy Money: The Science of Smarter Spending, parting with even small sums increases your feeling of “subjective wealth,” meaning you feel as though you have enough money to give away.
3. Invest in strengthening social ties
Anything that enriches our connections to others makes us happy. This also plays into why experiences are joyful — they’re often shared, and we can reminisce with family or friends about a beautiful beach sunset, a wild white-water rafting trip, or an unforgettable night out.
Obviously, time spent with loved ones makes us feel good, and when researchers looked at the numbers, they calculated that people are happiest and less stressed and anxious over the weekend, on days they spend six to eight hours or more socializing with others.
Those with strong social ties have also been shown to live longer.
Being socially active can actually be as beneficial for you as not smoking! Tweet this
So think about spending on activities where you’ll get out there and mingle with old friends — or make new ones.
Sign up for a cooking or painting class or join a group where you’ll meet others with shared interests, like wine tasting or hiking.
Making a regular gym or fitness class date offers the bonus of the physical and mental benefits of exercise. (Plus, you might be able to offset the cost of a gym membership with a discount or reimbursement through your health insurance company.)
4. Buy yourself more time
The reason we aren’t seeking out more memorable experiences or hanging out with friends? We feel like we don’t have the time. But one of the most worthwhile ways to invest your hard-earned dollars is on services or in ways that add more leisure hours to your day.
According to Happy Money, it’s not only possible to buy time, it’s one of the main ways to spend money wisely.
Too often the reverse is true: We’re willing to sacrifice time to save money — choosing a four-hour airport layover, for example, instead of spending the extra hundred bucks to fly direct — but, say Norton and Dunn, we should actually be spending money on ways that provide us more time to do the things we enjoy.
It’s an important point, especially in our time-starved culture.
Treating yourself to a cleaning service or having groceries delivered — or shelling out for a direct flight — can free up time to be with loved ones and for life-enhancing experiences.
Research bears this out: To increase health and happiness, time — like money — has to be spent wisely, doing activities that you enjoy, with people who make you feel good.
After all, your well-being is worth it.