Avoid 'The Bottom Dollar Effect' For More Satisfying Purchases

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Money might not buy happiness, but how we choose to spend it does affect our satisfaction. A recent study found that when we buy something, we're more satisfied with our purchase if we have money left over in our bank account.

For a paper published in the Journal of Consumer research, researchers carried out six experiments to gauge the link between spending and happiness. In one study, they gave participants money to buy three films they'd just watched. Some subjects had just enough to buy the films; others had a little more than enough.

When the subjects bought the second film, their satisfaction levels were more closely aligned. But when it came time to buy the third film, the difference was greater. Those whose budgets weren't exhausted reported higher levels of satisfaction:

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Basically, the closer you get to zeroing out your budget, the more your satisfaction drops.

So how can this help with your own spending? If you're saving up for something, consider saving a little more than what the product costs. This way, your account or fund isn't depleted — aim to have money left over, even if it means waiting a little longer.

Not only is this a good financial habit overall, but, according to research, it will make you happier with your purchase. For more detail, check out the rest of the paper.

The Bottom Dollar Effect: The Influence of Spending to Zero on Pain of Payment and Satisfaction [Journal of Consumer Research]


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