Can money buy happiness? Recent research suggests that maybe it can, but only a little.
It seems that rich people report more happiness and satisfaction in life than poorer people, according to studies discussed in a recent Associated Press report. But when researchers try to pin down the strength of this mood-boosting effect, they can measure only a small increase.
British lottery winners, for example, got only slightly merrier after their windfalls. Their average elation increase measured only 1 point on a 36-point scale. Other studies found wealthy people report feeling greater happiness, but that researchers who tracked those people's feelings throughout the day found a much smaller effect.
If there's a scientist out there who wants to give me a pile of money to find out whether it makes me happier, I'll definitely volunteer. In the meantime, it might boost your mood to find out that you probably have more money than you think. Don't overlook opportunities to stretch your paycheck.
Taxes. Uncle Sam offers a million and one ways to keep more of your money by cutting your taxes. Among the largest tax breaks around are those that encourage taxpayers to save for retirement, something you should be doing anyway. You can deduct a significant sum from your tax bill by stashing money away in some retirement accounts, like a 401(k) or certain Individual Retirement Accounts.
But the goodies don't stop there. There are tax breaks for everything from medical expenses to union dues. The list includes educational costs, child care, unreimbursed work expenses, and hybrid vehicles. Familiarize yourself with the common deductions and credits, and then claim what's rightfully yours. Visit our Tax Center for help.
Employee benefits. Your employer might be a little stingy with annual raises, but the company might also be offering you a host of benefits and perks that you're not using. Chief among them, any matching contributions your company makes to your 401(k) retirement account should be snatched up faster than you can say "marketing and sales meeting." That money comes not from your paycheck, but straight from the company. Wouldn't it make you a little bit happier to see your employer funding your future days of leisure in retirement?
That may not be all. Some companies offer special savings accounts that will cut taxes on money spent for medical or child care expenses. Others offer transportation benefits, dental and vision assistance, health club dues discounts, even free coffee. Milk your employer for every last cent.
Interest. Once you've accumulated some of that hard-earned money, don't let it just sit around on the couch watching game show reruns all day. Put it to work. If you let your savings accumulate in a savings account that pays no interest, you're missing an opportunity to stretch your dollars. Put it instead in an account that earns a competitive interest rate and you're increasing your wealth without lifting a finger.
Comparison shopping. When it comes time to spend that hard-earned money, don't let go of your cash without first doing some homework. For major purchases, in particular, a little time spent comparison shopping can reap some significant savings. It's easy to check the prices of major retailers online, and websites like Froogle make comparison shopping easy.
Debt. Large debt payments can make even the wealthiest professionals feel like they're in the poorhouse if there's very little of that paycheck left after writing those checks. That's especially true if you're carrying credit card balances that grow every month. Getting rid of those regular debt payments can make your paycheck seem much larger. Visit the Credit Center for more information about the credit industry and getting out of debt.
This strategy for seeking happiness requires a little sacrifice up front. You'll have to put yourself on a debt repayment plan that will probably require some immediate sacrifice. But the result -- more money in the bank -- is almost guaranteed to make you smile.
Motley Fool GreenLight can help you discover additional ways to stretch your hard-earned dollars. If you'd like to check out the current issue, or read past issues, you can sign up for a free 30-day trial today.
Fool contributor Mary Dalrymple welcomes your feedback, along with inquiries from any wealth researchers looking for subjects.