We came across a wonderful little Ted Talk recently taking about how money can make you happy – provided you spend it right. The key is not what you buy with that money – it is who you buy something for.

The talk was given by Michael Norton, from Harvard University. He describes various pieces of research that show that people are happier spending money on someone else compared to spending the same money on themselves.

The simplest example was a Uni experiment that Norton and colleagues ran. They gave students an envelope with some money and one of two simple instructions: to either spend the money on themselves or spend it on someone else. Later, they checked in with each participant. Having ascertained that they did what they were told (spending the money, either on themselves or on someone else), they then measured each person’s happiness. You can predict the result: people who spent the money on someone else were happier.

Interestingly, it did not matter how much money there was (the trial ran from $5 to $20). The key was who the money was spent on. Spend it on yourself and you are a bit happier. Spend it on someone else and you are a lot happier.

The findings were not limited to sudden amounts of money thrust on Uni students, either. All around the world, people who give money to charity report being happier than people who do not. Of course, this does not necessarily mean that giving money makes you happier; it might be that happier people are just more inclined to donate money. In which case donating would not make people happy so much as being happy would make people donate.

But then we remembered some other research that shows that, when it comes to happiness, you can ‘fake it until you make it.’ This research is sometimes known as the ‘pencil experiment,’ and it involves people holding a pencil sideways between their teeth (go on – try it. No one is looking!) When we do this, our mouth makes the same shape as a smile. And research has shown that asking people to hold this pose does in fact lead them to feel more happy. Acting as if you are happy actually triggers some happy feelings.

If holding your mouth as if you are smiling makes you happy, who’s to say that spending money as if you are happy will not have the same impact? So, in these stressed-out times, maybe the way we manage money can be a neat little way to feel just a little bit better. Spending at least a little on someone else and see how you feel.