Money doesn’t buy happiness: we spend it on the wrong things

We spend a measly 31p in every pound that passes through our fingers on things that actually make us happy.

By far the majority of the cash we spend goes on the boring things in life instead. Older people, meanwhile, seem to have found a far better balance in life.

See also: Why do young people think money is the key to happiness?

See also: Do we need to be stressed into saving for the future?

Age Partnership divided spending into the boring bare necessities - like bills, debt repayment, living costs and the rent or mortgage - and things that actively improve our lives - like saving and investing for the future, giving money to charity, and buying things that make us happy.

Depressingly, we spend so much on making ends meet that we have very little left over to invest in our happiness.

Happiness hotspots

Some groups of people do better than others. Overall, the group allocating the biggest proportion of their spend to happiness is women aged 55-60 in Manchester. Manchester residents did particularly well in the study, partly because living costs are marginally lower than elsewhere - overall they spend 34p in every pound on the nicer things in life. They were followed by Birmingham, Glasgow, Leeds, Liverpool, and Sheffield - which all spend 32p in every pound on things that make them happy.

At the other end of the spectrum, men aged 36-45 from Brighton seem to have the most miserable balance - in Brighton, only 25p in every pound goes on generating happiness. The 36-45 age group, meanwhile, spend the most on making ends meet - with 74p in every pound spent on the boring necessities.

Older people are happier

Those aged 36-45 had the worst balance overall, spending an average of 26% in every pound on things that make them happy. This is unsurprising given that they are likely to have larger mortgages, debts, and families running up expenses - leaving them every little to save for the future or spend on having fun.

Older people tend to have a better balance. Those aged 55-60 have the best balance - spending 44p of every pound on the things that make them happy in life. They are followed by those aged 61-70 (39p) and 71-80 (33p).

You could argue that this is no surprise, given that these age groups are more likely to have paid off significant debts, including the mortgage. However, you also have to bear in mind that once you get past retirement age, many people in these age groups are living off a fixed income, and putting aside very little for the future. Of the cash they have left over, they choose to keep their bills and debt payments down, in favour of spending on the nicer things in life.

Check how much could you retire on?

Given that older people have spent a lifetime learning about the kinds of spending that make them happy - and they've opted to cut their bills and enjoy themselves a bit more - maybe it's something younger people can learn from too.

A spokesman for Age Partnership, who commissioned the poll, said: "Different life stages bring a different set of financial challenges to navigate but it's really a question of balance and priorities."

"Money can buy you happiness but it can also make you feel miserable if it's solely going towards 'existing' as opposed to 'living'. The volume of money is irrelevant to happiness – as you earn more, you will naturally spend more. So ultimately it's about getting to that point where what you do with your money is providing you with satisfaction. Whether that be saving it, donating to charity or booking that dream holiday."

But what do you think? Does your spending make you happy? Let us know in the comments.

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