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?