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The relationship of money and happiness has been discussed for so long. One author and psychologist reveals that how one spends his money can make a difference in the scale of happiness.

Though money cannot buy happiness, most agree that it can relieve one from stress especially if it means capability to pay the bills. In a report by Stuff, psychologist Nigel Latta said that people who spend their money on other people are likely to be happier than those who lavish it to themselves only.

Latta said that things-based happiness does not work. He gave an example of someone buying a new coffee table or a new watch. It may give the buyer a giddy feeling at first but after a while, it becomes just a coffee table and just a watch.

The author of "The Politically Incorrect Guide to Teenagers" said that what may work is spending money on experiences which does not cost a lot of money. He notes that children do not usually remember things in their childhood, but it's the experience that lingers on.

In an experiment, the team gave people $20 to spend. One group were instructed to spend the money on themselves, while others were to spend it on other people. After spending the money, they were asked to rate how happy they were with the experience.

The group who spend the money on others scored nine out of ten on the happiness scale. Those who spend it on themselves scored only 6.75.

In a study conducted last year by researchers from Cambridge University, the result showed that people who spent more money on purchases have higher level of happiness. However, those purchases need to be aligned with their personality traits. Those with agreeable personality tend to spend more on charities and pets. The more they spend on those things, the higher their level of happiness.