I've just finished reading Happy Money, by Elizabeth Dunn and Michael Norton. It's a really great read, full of hard experimental evidence about how the choices we make about using our money affect our happiness. In particular, there's a lot of discussion of the trade-off between time and money, and when it's a good one to make. The authors identify three specific areas of life where there's persuasive evidence that changing our use of time - and, if necessary, spending some money to do so - can be particularly rewarding.
Firstly, commuting. The evidence suggests that having a daily commute of one hour each way has a similar average effect on happiness as being unemployed! Of course, this varies from person to person, and for some of us a long commute might even be enjoyable. Overall, though, it's suggested that most of us would benefit from commuting less - either by spending more on housing closer to our job, or by accepting a lower standard of housing closer to our job, or by accepting a lower-paid job closer to home.
Further, the evidence on housing is that, although people *report* greater happiness from having a better home, in actual fact it makes us no happier overall. Experiments have found that owning makes us no happier than renting, and that larger houses make us no happier than small houses. So the smaller house closer to work option could make a tremendous difference to the quality of life of many people.
Secondly, watching television. On average, a Briton watches TV for two months of every year, but the evidence is that we actually get less enjoyment from watching TV than from more active leisure pursuits. So spending money on great and impressive TVs and surround sound systems, which then bring with them an implicit commitment to sit in front of them, is - for most people - using money to buy unhappiness.
Finally, socialising. The evidence shows that people experience more positive feelings and happiness when they're spending time with family and friends that they get from any other use of their time. So, if you've family and friends who aren't just around the corner, using time and money to see them could be a great choice.
A highly recommended read for anyone who's interested in the hard evidence on making smart financial choices. Check it out.