Money Minded

Can Money Buy Happiness?

conclusion about money and happiness
Written by Richard Thwaite

Can money buy you happiness?

“money can surely buy happiness, give me some and watch me smile : )”

Whenever the topic of money is brought up invariably at some point the question will be asked can money buy happiness? The answer largely depends on your money mindset.

For many years, we have pondered the effects of monetary circumstances on happiness. Current research shows that people with a higher income are generally happier than those who struggle financially. This observation may hold some truth but it is not a simple equation.

As with all statistics, there are always subtleties and the fine details bear greater scrutiny. In this post we look at both sides of the financial-happiness coin hoping to offer some insights into the matter.

Does Money Make You Happy?

Does money make you happy? Yes, but not in the ways people often imagine. It all comes down to how you manage your finances.

1. Personal Experiences.

People are much happier when they use their money to create memorable experiences such as experiences and vacations, rather than buying material things. Rich experiences support basic human psychological needs. These include interaction, memories, fantasies, experimentation and exploration. When you have the money to invest in such necessities, a significant increase in happiness occurs.

Additionally, personal experiences provide better value for our money in long term perspectives. If you buy material goods you will definitely take them for granted at some point. Their contribution to your happiness ends there, however with experiences, you create memories and develop a more enlightened outlook that can positively impact other aspects of your life.

2. Time

Money, when properly used, can buy you time the single most valuable commodity in the universe. Almost all of us spend more than half of our lives working. This means that we generally spend more time away from our loved ones.

Having more money gives you more time to focus on your relationships, the major source of happiness. It has been known that people who cultivate meaningful interactions with others are much happier than those who don’t. This observation doesn’t include the stress-related issues of work.

3. Philanthropism

Philanthropism is the practice of being affectionate to fellow mankind through the dedication of time or wealth to socially beneficial activities. Money can indeed make you happier by giving it away to a worthy cause or organisation rather than splurging on yourself.

Moreover, this effect is witnessed even when you are relatively poor. This can be attributed to the gratification of having impacted someone else’s life. You are more likely to be happy when people around you are also happy.

Money Does Not Always Make You Happy

For some people, having money does not make them happier.

1. The Happiness Money Can Bring Is Limited

As mentioned earlier, people with higher incomes are somewhat happier than their lower income counterparts but this trend is relative and occurs only up to a certain point. While money does make you happy by bringing a sense of satisfaction in life, it usually does not affect other emotions that cause happiness. These emotions include peace of mind, love or joy.

Poorer people may be less satisfied with their lives and still exhibit such emotions. In essence, having more money will not buy you more happiness than the next person. As a matter of fact, for some people having too much money causes them much more unhappiness.

2. Higher Likely Hood Of Getting Into Debt

Having more money can increase your chances of getting into debt for a number of reasons. For starters, you are more likely to spend more than you can afford because your needs are being met without struggle. When you only have to worry about your wants, you may end up making unsound financial decisions. In the long run, if left unchecked such behaviour can lead to insurmountable debts.

Secondly, too much money gives people some sense of financial security and invulnerability. Have you ever wondered why some people who win millions in lotteries end up poor in an unreasonably short time? This false sense of financial security prevents some people from properly investing their money. As a result such great losses can cause more unhappiness than that experienced by poor individuals

3. Having Too Much Money

For some very wealthy people, conventional work is no longer an option. Such situations have adverse effects on the human psyche. Working provides significant psychological and emotional flow and balance to our lives. This is due to the activity, behavioural structure, sense of security, self- esteem, sense of contribution and social interaction regular jobs offer. Continual lack of this kind of engagement causes depression which greatly impacts our happiness.

4. Regular Developments And Achievements

Having money makes you unhappy if your sense of continual progressive achievement is eroded. The trend where happiness increases with income up to a point where it levels out or decreases, gives insight into this fact. It is pretty obvious that the emotional high of money does not last.

Margaret Lee Runbeck once said that happiness is not a station you arrive at, but a manner of traveling. She was right; studies have shown that people are largely much happier when they regularly achieve certain milestones.

Having excess money means you are always better poised to effortlessly achieve things poorer people only dream of. This robs you of the joys of witnessing gradual developments in your life through struggle and hard work. A spike in happiness occurs when a difficult milestone is achieved. Humans need to constantly experience such triggers of happiness at intervals throughout our lives. This ensures the emotional highs of happiness outnumber the negative ones.

Conclusion

The answer to the question about whether money can buy happiness lies in finding a reasonable balance between satisfying your wants and needs. Both have to be met with equal measure to truly get the most out of financial capacity. More money will not buy happiness if you do not know how to use it for meeting your true wants and needs. Moreover, there is a limit to how happy we can get and it is called being human.

Does money make you happy? Yes, but not in the ways people often imagine.

Leave a Comment

4 Comments

  • Hi Richard,

    Good article.

    I’m not sure that conventional work is required for all personality types. I agree, that for some, it is very important, but for others, it isn’t. Ermine wrote a good article about this recently.

    http://simple-living-in-suffolk.co.uk/2016/03/freedom-to-not-freedom-from-is-what-retirement-is-about/

    For myself and the good lady, money has taken away many of the things that could have made us unhappy in the past, rather than make us happy. We are no longer so wrapped up in the silliness at work, as we feel comfortable about walking away if things get out of hand. We don’t stress about unexpected bills, repairs etc. We are able to help family and friends out as and when required as we did with my brother recently. This reduces their stress and stops us worrying about them. This is the for us the major benefit of being more financially stable.

    Regards,

    TBM

    • Hello TBM

      Money means different things to different people. I believe you summed it up perfectly when you said “money has taken away many of the things that could have made us unhappy in the past, rather than make us happy”. Love it.

      Cheers

      Richard

  • Hi Richard,

    It’s certainly an interesting question to ponder – can money buy happiness? I think you’ve done a great job in looking at the ways money may bring happiness, and indeed the ways it can cause misery and unhappiness.

    I guess my thoughts on the matter are that having too much money can bring unhappiness and stress through fear of losing it all, whereas with little or no money this fear factor simply doesn’t exist. Having said that, I think having a nice stash of money offers a tremendous deal of peace of mind if invested correctly – as it can allow people to walk away from stressful jobs/work situations if necessary. For me, by far the biggest advantage and “happiness making” factor with money is that it can buy TIME. I would like to have a lot of money, so that it’s there behind me to support me – but I don’t believe that having the money in itself would make me happy. It’s what I then would get to do with my time that would make me very happy. But indirectly I guess that means the money would be making me happy!

    Thought provoking article.

    OR

    • Hello OR

      This question always seems to raise its head when the topic of conversation is around saving/investing.

      It is the doors that money unlocks that is the key to future happiness. Those doors can mean different things to different people. Maybe it is being able to stick with a job knowing you don’t have too or being able to pack it all in and potter round the garden or take off around the world in a motorhome. The choice is yours.

      Richard