There is no better time than the Christmas season to reflect on the long standing debate of whether money does actually buy happiness.
OPINION: In our consumerist society the basic tenet is the more we have to spend, the happier we will be.
Recent research from the University of British Columbia and Princeton University shows that while there is a link between money and happiness, it is a weak one.
However, it is possible to get more happiness for your money by making good decisions about what you do with it.
In a well known study done at Princeton University in 2010, Angus Deaton and Daniel Kahneman - a Nobel prizewinning economist - found happiness increases with income but only up to a certain point.
At an income of around $75,000 people can enjoy a comfortable life. Increases in income beyond this level make them feel more successful - but not happier.
This is reinforced by research undertaken by Elizabeth Dunn of the University of British Columbia. Her research shows that the more money people have, the less they savour the simple pleasures of daily life.
Money gets in the way of happiness by undermining our ability to savour.
In a 2004 journal article titled How Not to Buy Happiness Robert Frank says: "Considerable evidence suggests that if we use an increase in our incomes, as many of us do, to buy bigger houses and more expensive cars, we do not end up any happier than before.
But if we use an increase in our incomes to buy more of certain inconspicuous goods - such as freedom from a long commute or a stressful job - then the evidence paints a very different picture."
In a recent Harvard Business Review blog post, Dunn and Michael Norton, authors of Happy Money; The Science of Smarter Spending, argue money can bring happiness if you use it in the right way.
They tell of a series of experiments where they have found that asking people to spend money on others - from giving to charity to buying gifts for friends and family - makes them happier than spending the money on themselves.
They have found this to be true even in very poor countries such as India and Uganda, and even for gifts with as a low a value as $5.
Other tips for maximizing happiness include buying many small pleasures rather than fewer, larger ones and buying more experiences and fewer material goods.
Whereas possessions grow old and dull with time, experiences grow more positive and enjoyable as time passes. Experiences are more social as they usually involve others, so they help build friendships.
Pleasant memories can bring happiness over and over again. We might be tempted to compare possessions with those of others, but we are less likely to compare our experiences and so we don't feel as though we fall short.
According to Sonja Lyubomirsky, author of The How Of Happiness: A New Approach to Getting the Life you Want the purchases or expenses that yield the greatest emotional benefit are those involving goals that satisfy one of the three basic human needs; competence (feeling capable or expert), relatedness (belonging and feeling connected to others) and autonomy (feeling a sense of mastery and control over one's life).
The key to buying happiness is not in how financially successful we are but what we do with our money; it is not how high our income is but how we allocate it. In the words of Norton, "if you think money can't buy happiness you are not spending it right".
* Liz Koh is an Authorised Financial Adviser. The advice given here is general and does not constitute specific advice to any person. A disclosure statement can be obtained free of charge by calling 0800 273 847. For free eBooks, go to www.moneymax.co.nz and www.moneymaxcoach.com.