Can money buy you happiness?

The Beatles think “Money Can’t buy Me Love” but can it buy you happiness?

I’ve spent a lot of time reading different studies about money and happiness and my conclusion is there is no consensus.  Some studies will tell you that money will make you happy while other studies suggest it won’t.

Does money spoil our ability to be happy?

According to a study from the University of British Columbia, the answer is no.  The researchers argue that because wealth allows people to experience the best that life has to offer, it ultimately undermines their ability to savor life’s little pleasures. Once we’ve had the opportunity to drink the finest French wines, fly in a private jet, eat foie gras with edible gold leaf, and watch the Super Bowl from a box seat, coffee at Starbucks with a friend, a sunny day after a week of rain, or an unexpected Reese’s peanut butter cup on our desks just doesn’t provide the same jolt of happiness it used to. Indeed, a landmark study of lottery winners showed just that: People who had won between $50,000 and $1,000,000 (in 1970s dollars) were less impressed by life’s simple pleasures than people who experienced no such windfall.

Money has made it more difficult to be satisfied by life’s little pleasures.

More money can complicate our lives

Another study by RBC says that money does not make you happier because with wealth comes more complications, complexity and management.

Although having more money can create more stress, I’d rather have that stress than the stress of not having enough money to pay basic bills.  Or the stress of living beyond your means.

Another study from Princeton suggests the lower a person’s annual income falls below $75,000 per year, the unhappier he or she feels. But no matter how much more than $75,000 people make, they don’t report any greater degree of happiness.

There seems to be a correlation between money and happiness up to a certain threshold and although this study says it’s $75,000 per year of income, it’s probably different for everyone.

My two cents

I believe a lack of money creates stress.  I also believe that constantly living beyond your means creates stress.  If you only make $35,000 per year but are comfortable and content living at that level of income, then who’s to question your happiness.

Living beyond your means is a problem and can happen at any income level.  While it may be more prevalent at lower level, I have seen people who make really great incomes spend it all and more with terrible net worth statements.

If you think about it, stress and happiness are at opposite ends of the spectrum.  It’s the stress created by money or a lack of it that really prevents happiness.  The bottom line is its about living within your means and if your income does not support your means, then you may not be happy until you can figure out a way to increase your income.

I love this quote from David Chilton’s new book, The Wealthy Barber Returns, “When we desire things we can’t afford, that’s when we grow poorer regardless of income.  When we are satisfied with what we have, that’s when we truly become wealthy.”

Happiness is personal just like your values and thoughts around money are also personal.  That’s also why financial planning is personal too.  There is no cookie cutter approach to finding happiness.  Therefore, there is also no perfect correlation between money and happiness.  That correlation is personal.

For me, I’m not ashamed to say that there are a lot of things that make me happy and having money is one of them.  I love money and I love what money can do for me and my family.  Not everyone feels the same way.  How do you feel?  What do you think?

Written by Jim Yih

Jim Yih is a Fee Only Advisor, Best Selling Author, and Financial Speaker on wealth, retirement and personal finance. Currently, Jim specializes in putting Financial Education programs into the workplace. For more information you can follow him on Twitter @JimYih or visit his other websites Group Benefits Online and Advisor Think Box.

16 Responses to Can money buy you happiness?

  1. We all have different aspiration upon which our mode swing depends, satisfaction is measured by more or less of how much we can satisfy them and be happy or sad. Money sadly can go a long way to making us somewhat happy not fully happy for that we need God.

    • Thanks Stan, Agreed that money alone cannot create happiness. Many people look to faith, spirituality and Religion for more happiness.
      Jim

  2. When I was in my late 30’s, I had a real brush with death that focused my life on gratitude, simple pleasures, the appreciation of the joys of living, and the miracle that is my body that needs exercise and good nutrition. Those mind sets and practices help. On the other hand so does a good job, a defined benefit pension, and income to afford me options of travel and a good standard of living. I volunteered a food bank for over 3 years and saw the too little side and it is not pleasant.
    I have also seen well off people miserable with consumerism that does not make them happy. Strike your own balance and attitude counts!

    • Thanks for sharing Donna. Balance is a word that seems to always come up when we talk about happiness. You have an incredible story and many readers can be inspired by it!
      Jim

  3. Happiness is an intangible like love, health, security, peace of mind, confidence, success, trust, …

    Our definitions vary and our requirements change. In the summer, our squirrels won’t eat apple slices. Today at -28C, they are less fussy and easier to please.

    In the past, we could easily be happy without Internet access on our smartphones. That’s because we had neither.

    PS Someone said that money can’t buy happiness but does make the search more comfortable 🙂

    • Context is a great perspective Promod. We might appreciate money a lot more is we see how families in India or Africa live without it. I like the quote There’s been times in my life where I have had money and times where I have not had money. I much prefer having money.
      Thanks for stopping by!
      Jim

  4. Is that $75k before or after tax. 😀
    Having enough money to pay bills and a little left over to spend is happiness. I wouldn’t be happy if I can’t pay the bills.
    I agree with the research. Once you go over a certain threshold, extra money doesn’t bring much extra happiness. We have to find our own path – family, travel, exercise, etc…

    • There was no reference to gross or net but I suspect they worked on gross figures because that’s how most studies work.

      As you alluded to, the number doesn’t really matter because it’s different for everyone. The lesson is for people to understand their lifestyle cost whether it’s $75,000, $50,000 or $200,000 and find a way to prevent struggle. In tact, that might be the way to retire by fourty ;).

      Thanks for stopping by!
      Jim

  5. I do not believe that money can buy happiness but I do feel that is can prevent, to some extent, sadness. Of course there is always going to be unforeseeable issues that take place in ones life, but in some of those situations money can help. I don’t think anyone should rely on money for happiness since it does come from many other places, but one should have a enough understanding about how money can be beneficial during a time of a financial burden.

    • Here’s one thought … when you have enough money to help others and give it away, that might be one example where money can create happiness. It’s when you move from a life of accumulation to a life of contribution where you can appreciate a different relationship between money and happiness.
      Jim

    • Thanks Cliff! If you could not live on $32K, I would suspect that making more money would relieve some stress and possibly make you happier. Congrats on your successes and thanks for commenting!
      Jim

  6. I appreciate the comment but the one thing to keep in mind is that your life and how you live it costs a certain amount of money. You must make enough money to cover this price tag or you may be unhappy.
    Thanks for the comment and your continued support!
    Jim

  7. I agree money can’t always buy happiness but I can certainly guarantee you its almost impossible to be happy without money. One of my favorite saying as it goes ” I have never been in a situation where having money made it worse”, have you ?? lol

  8. Well I have been extremely happy when I had no money (between 18 and 26), and I have been depressed plenty of times now I am in my 30s when I am comfortably well off.

    Money counts for nothing if you haven’t got your health, and also if you haven’t got a good group of friends and family around you. If you have got all this, then you can consider yourself very lucky.

  9. Having no debt buys you freedom. Therein lies happiness. How much money that costs is up to each person.

    Personally, I live in a little cottage that is paid off. I could get a bigger house with a mortgage, but I know from experience that I would feel vulnerable and shackled as long as I had house payments.

    Hence I think money spent to buy freedom can definitely make a person happy, whether it be freedom of time, freedom from debt, freedom from unwanted responsibility. Janis Joplin sang, “Freedom’s just another word for nothing left to lose, and nothing ain’t worth nothing but it’s free.” Actually, freedom costs quite a bit, but in my book, that’s money well spent.

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