Money can’t buy happiness.
This is a saying that society throws around a fair bit and an issue that divides people. Some people believe that factors much larger than money impact our emotional well-being. But others recognise the significance of money to living a fulfilling life. So what’s the truth? Can money really buy happiness? Well, it’s a little more complicated than that.
Money does appear to impact happiness, but more money doesn’t necessarily make you happier.
A recent study of 1.7 million individuals from 164 countries examined whether there was a sweet spot of income satiation. In other words, the study sought to discover whether or not there’s a point at which income no longer increases happiness.
The study found that for optimal emotional well-being, individual annual income sits at around USD $60,000 to $75,000 (approximately AUD $84,000 to $105,000). Earning any amount above this figure did not appear to have a direct impact on day-to-day happiness. However, in terms of overall life evaluation, which takes into account other factors like long-term goals and peer comparisons, the study found that a higher figure (USD $95,000; AUD $132,000) correlated with happiness. Nevertheless, it is also important to remember that this figure may vary depending on country of residence or life circumstances.
The researchers also observed that in some cases, emotional well-being declines past the $95,000 mark, perhaps in part because of unrealistic social comparisons or unfulfilling superficial desires. This doesn’t necessarily mean that getting a new job with a huge pay increase or winning the lottery won’t result in feeling positive emotions, though. It simply indicates that a person who earns $200,000 a year isn’t likely to be much happier overall than someone who makes $95,000.
Many people believe that the association between money and happiness is largely due to the ability to obtain materialistic possessions, but that might not be the case after all. People who are more materialistic tend to report lower levels of life satisfaction than those who aren’t. This may be in part due to people spending excessive amounts of money on materialistic goods as a coping mechanism for managing anxiety or insecurity.
It may also be a strategy to avoid the responsibility of self-awareness.
Many materialists also reported having fewer close relationships and rated themselves less favourably, which may be because they rely on material goods instead of social connection to fulfil emotional needs. However this isn’t to say that spending money can’t result in happiness.
Spending money can make you substantially happier if you know how to spend it the right way.
Spending money on experiences (as opposed to possessions) can increase happiness. We also tend to feel happier when we think about life experiences as opposed to material items. We rate them as contributing more to our happiness and consider them to be a better use of money than material things.
Experiences satisfy our need for relatedness. This in turn leads to greater happiness, particularly when we share these experiences with others. Also, life experiences don’t promote the same types of social comparisons material items do. This may be because we value them for more intrinsic reasons rather than extrinsic ones.
So can money buy happiness?
Yes, it can, but only to a certain extent and if we spend it in the right ways. While income somewhat influences happiness, that sentiment only applies up until a certain point. This is not to say that if your income isn’t high, you won’t ever be happy, though. Rather, earning more money doesn’t necessarily mean that you’ll be happier. And of course, we’re happiest when we spend our money on experiences or on others rather than on materialistic possessions. This also isn’t to imply that you shouldn’t spend your money on material goods. Just remember that connecting with others will bring you more fulfillment than the amount in your bank account ever will.
Featured Photo via Wolf of Wall Street