Last Updated on April 9, 2026 by Hemant Beniwal
“The purpose of money is to facilitate life experiences, not to accumulate as a scorecard.” – Morgan Housel
A retired VP called me three years after he left his job. He had done everything right – Rs 3.2 crore corpus, no debts, health insurance in place. But he sounded flat.
“I keep thinking I should not spend it,” he told me. “What if something happens later?”
He had not taken a single vacation in three years. Had not visited his daughter in Bangalore more than once. Had not renovated the house he had been talking about for fifteen years.
His fear of running out had become a new kind of poverty – one with a full bank account and an empty life.
⚡ Quick Answer
Money can buy happiness – but only when spent in the right way. Research consistently shows that spending on experiences, giving to others, buying time, and making small frequent pleasures creates far more lasting happiness than accumulating things. For retirees especially, the question is not just “will the money last?” but “am I using it to actually live?”
What the Research Actually Says
In 2013, behavioural economists Elizabeth Dunn and Michael Norton published “Happy Money: The Science of Smarter Spending” – a synthesis of decades of research on money and happiness. Their core finding: it is not how much you earn that determines your happiness. It is what you do with it.
The research points to five consistent principles. Spending on experiences rather than things. Giving to others. Buying time (outsourcing tasks you dislike). Making treats occasional rather than routine. And paying in advance so the spending feels free at the time of consumption.
A 2010 study by Kahneman and Deaton, often cited as the “happiness income” research, found that day-to-day emotional wellbeing plateaus beyond approximately $75,000/year income (roughly Rs 60-70 lakh at purchasing power parity). Beyond that threshold, more money adds little to daily emotional experience – though it continues to add to overall life satisfaction. For the senior executives reading this, earning Rs 30-60 lakh annually: you are likely past the emotional wellbeing plateau. More income alone will not make you noticeably happier. What you do with the money will.
5 Ways to Spend Money That Actually Create Happiness
1. Spend on Experiences, Not Things
When Evan Spiegel, founder of Snapchat, turned down a $3 billion acquisition offer from Facebook in 2013, the conventional reaction was disbelief. He was already wealthy. Why not take the money?
Because for him, the experience of building the company was more valuable than the additional money. That is a perfect illustration of the research: at a certain income level, experiences outweigh accumulation.
The family vacation to Ladakh. The trip to see the cricket World Cup live. Attending your child’s convocation in another city. These create memories that compound. The third laptop or the larger television does not.
2. Give to Others
Research across 136 countries shows that spending money on others creates more happiness than spending on yourself – regardless of income level. Indians instinctively understand this. We spend generously at weddings, during festivals, on religious occasions. The challenge is to bring that same generosity to everyday life – without waiting for a special occasion.
3. Buy Time
If you earn Rs 5,000/hour at your professional rate and spend 2 hours every Saturday on a task you hate – driving a long errand, doing accounts, cleaning – you are effectively “spending” Rs 10,000 on frustration. Hiring help for Rs 2,000 to do that task frees you to spend those 2 hours doing something meaningful. That is a Rs 8,000 happiness gain.
Research by Ashley Whillans (Harvard) shows that people who prioritize time over money consistently report higher life satisfaction – regardless of income level.
4. Make Treats Occasional, Not Routine
The first cup of freshly ground filter coffee every morning is special. The fourteenth is not. This is hedonic adaptation at work. Scarcity preserves pleasure. The key to lasting happiness from spending is to resist the impulse to upgrade every pleasure into a daily routine.
5. Pay in Advance
When you book and pay for a vacation three months in advance, you enjoy the anticipation for three months. You enjoy the vacation itself. And you do not feel the pain of the bill when you return. Compare that to buying something on impulse and paying later – you enjoy briefly and feel the pain monthly.
The Retirement Spending Window Most People Waste
Retirement spending follows a curve – and the best years for experience spending are earlier than most people realise.
Research by David Blanchett at Morningstar shows that retirement spending follows what he calls a “smile curve.” It is high in early retirement (travel, experiences, family visits), declines through mid-retirement as activity levels reduce, and rises again in late retirement – driven by healthcare costs. The curve is not flat.
For an Indian executive retiring at 60, this means the prime experience-spending window is roughly age 60-72. After 72, health and mobility genuinely begin to limit the experiences you can pursue. A Himalayan trek at 63 is possible. At 73, it may not be. A Europe trip at 65 is comfortable. At 78, it is an ordeal.
The planning implication: budget generously for the first decade of retirement – the Rs 3-5L/year “experience allocation” that most retirement plans never include. Under-spending in your 60s is not prudence. It is waste.
A good retirement plan tells you how much you can spend on living. Not just how much you can save.
At RetireWise, we build withdrawal strategies that include an experience budget alongside the survival budget. SEBI Registered. Fee-only.
Why the New Car Stops Making You Happy
Philip Brickman and Donald Campbell documented Hedonic Adaptation in 1971 – the finding that humans return to a relatively stable level of happiness regardless of positive or negative events. Lottery winners reported similar happiness levels to non-winners within 18 months. The new car thrill fades in 3-6 months. The salary raise feels routine by the next appraisal cycle.
This is why the research on money and happiness consistently points away from things and toward experiences. Experiences do not adapt the same way. The memory of a beautiful trip to Rajasthan with your family 10 years ago is still vivid. The television you bought that same year – you likely cannot remember the brand.
Research updated by Matthew Killingsworth (2021) using real-time happiness tracking shows that the happiness-income relationship continues beyond the earlier plateau – but only for people who spend money in ways aligned with their values. The key variable is not how much you have. It is how consciously you use it.
“It’s not how much money you earn that matters, but how you spend it. And the time to spend it on living is while you are healthy enough to enjoy it.”
– Hemant Beniwal, CFP, CTEP | Founder, RetireWise
Read next: How to Save for Retirement in India – The Complete Guide
Does your retirement plan include what you will actually do with the money?
RetireWise builds complete retirement blueprints for senior executives – including a life plan, not just a financial plan. SEBI Registered. Fee-only.
The VP called me again last month. He had just returned from a 3-week road trip with his wife through Rajasthan. He sounded completely different – alive, full of stories. “Why did I wait three years?” he asked. I did not have a good answer. But I made sure his next financial review included a proper travel budget for the next five years. Money that is saved for a life never lived is not really wealth. It is just a number.
Build the corpus. Then actually use it to live.
💬 Your Turn
What is one experience you keep deferring because it feels like “unnecessary spending”? Is it actually unnecessary – or is protecting the corpus from living the real mistake?
Hi Hemant,
I completely agree with you. Here I would like to talk about my personal experiences. When I purchased a house and a car, I was very happy but that happiness was there for only a short amount of time. But when I went to many pilgrimage places in India with my Father since last 2 years, I felt like I am the most happiest person in the world. Those memories will stay with me forever. In this fast paced life we will have some hectic life style but spending money on traveling with our near and dear ones does make a huge difference.
The article is quite apt and true. I’ve received biggest happiness when I’ve donated money to small charities or funding school education for a poor child in my native. That’s how I derived permanent pleasure. These things remain with you for a longer time so giving is certainly the best way to derive happiness. I recently bought a big car, the happiness was very short lived and I’m also going through lot of guilt whether in a country like India – which is too crowded, big car is necessary? So I do car pooling whenever it’s possible:)
You have put forward a very important aspect in an extremely lucid way. Nice article.
Good!!!
Interesting article.
As The financial scenario in India ( Middle class) is getting bitter, One should start rethink controlling about the expenses, (this only could be done by oneself)and start for alternative income generation too.
interesting and true .
thanks hemanth
Good one Hemantji
very true but lots of people don’t understand the right way to spending the money and also the time
your article is eye opening for them
Very interesting and relevant topic. One should understand before spending money on various purposes.
Hi Hemant
To remain happy one must have good health and to remain healthy one has to spend a lot of money these days.I know many wealthy people who lead a long and happy life only because they are able to get the best possible medical treatment in time.
One can also get happiness by spending money on a hobby. Gardening is my hobby and I love to collect new plants even if it means spending a lot of money.
Hi Hemant, Another master piece! It is how you spend what you’ve earned, gives you joy and satisfaction. The true happiness comes from sharing with others (needy people). However, one should know the difference between wants and needs.
Hello Hemant,
Really Nice article.
Keep posting. I have read your both the books. Really nice one.
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