Does having more money make you happier?
I bet I’m not alone when I’ve asked this question.
I’m not sure if you’ve ever heard about the Princeton study that sought to find out if money makes people happier. This study gets quoted a lot because people like to point out that it says that money does make you more happy but only until your income reaches $75,000 a year. After that, the effect money has on happiness diminishes.
So in other words, having a greater income doesn’t make you a happier person if you’re making over a certain amount. You may look at that and feel guilty for trying to earn more.
You feel worse because, shouldn’t you just be happy with what you have? It may make you feel guilty for not appreciating what you do have more. It may make you feel better knowing that, having a greater income wouldn’t make you any happier anyway.
Now of course, this raises a couple of questions for me, like does this mean $75,000 for the household or for each individual if you’re married?
There I am, trying to justify any personal feelings I have about how money works. You may have done the same thing.
Ramit Sethi, author of I Will Teach You To Be Rich, was the first person I saw to point out that the study doesn’t really say what people have been saying it says.
Guys—PLEASE STOP QUOTING THIS STUDY WITHOUT READING IT!
In reality, the 2010 study by Deaton and Kahneman found that ‘emotional well-being’ peaks at $75,000. But if you take another measure, ‘life satisfaction,’ you find no plateau — not at $75,000, or $500,000, or even $1 million.“
So is that true?
Can money actually buy happiness?
Defining What You Mean By Happiness
I think when we’re talking about happiness, we’re talking about two things, I call them:
Happiness and fulfillment.
You feel happy when you’re doing something you really enjoy. Maybe that’s going on a trip or going out for drinks with friends.
I think our things can even make us feel happy. I really enjoy my Macbook. It’s true, I’m complete Mac snob. I just got a new one a couple of years ago, and I can tell you that I truly enjoy using it still, two years after getting it.
My old MacBook was getting really old, and it was reaching the point where it was super frustrating to use.
Some people really enjoy buying nice clothes, it literally makes them feel happier to go on a shopping trip. And this is both men and women by the way.
All of these things can bring happiness. I know that a purchase can bring a temporary dopamine high, but there’s enjoyment to be had long after that’s faded.
However, there’s also fulfillment. Remember Maslow’s Hierarchy of Needs from high school? As we move past the needs for food, water, shelter, safety, and even belonging and love, you move into the need for accomplishment, things that give you a greater sense of self esteem. Highest on the hierarchy is self-actualization or the need to fully live into your purpose.
As you go higher on the hierarchy, fulfillment becomes what gives you that deep happiness.
Without fulfillment in your life, you can never be what we normally call happy. But if you are living your life according to a deeper purpose, it’s possible that the way we spend our money can bring a great deal of enjoyment.
How Does Money Buy Happiness?
My first suggestion when considering how money can buy happiness is to achieve financial security.
You want to give yourself the gift of peace when it comes to your money.
You want to have cash in the bank, you want to hold as little debt as possible, and you want to have a plan for a bright future.
The number one cause for divorce in the US is money problems. It’s stressful on any marriage. If you’re in a young marriage that’s just getting off the ground, money worry makes it super tough. You want to give each other the gift of not having to worry about money.
After that, money should be enjoyed.
Some people reach a point where they can’t even relax enough to spend their money for their own enjoyment.
You should absolutely use your money to enjoy things that are important to you.
Some of Katie and my favorite memories involve trying something new. We really enjoy discovering a new restaurant with great food and an awesome atmosphere. There’s something about getting to go to a new place and try new things. We don’t get to go as often as we’d like, but there’s no doubt that going someplace new makes us very happy.
For some people, spending the extra money on a MacBook is the most ridiculous thing you could do. Why would you spend more money on a computer that “underperforms” other pc devices? Well, the answer is that I love my MacBook and I will tell you that each time I use it, it is a joy for me to use. I absolutely think that they potential extra money that I spent so that I could have this device was worth it.
I don’t know what that thing for you might be. We’re all different. Which is why it’s so important that when budgeting, you’re budgeting for your priorities.
Finding Fulfillment
Then, there’s fulfillment, which I believe money, directly at least, has nothing to do with.
If you aren’t living a life that fulfills you, money isn’t going to be able to help you out.
And that’s really the reason people say that money can’t buy happiness. I get it. I get what they’re saying, but what they really mean is that money is not going to make you feel good about yourself as a person or the life you’re living.
If you’re interested in learning more about the things that make up true fulfillment in our lives, then I recommend that you read High Performance Habits by Brendon Burchard. In it, he defines 6 “habits” that people who are high performers exemplify. Of course, this is also the stuff that makes for a more fulfilled life.
For example, this isn’t my job. I’m a junior high band director, but I found myself being much more fulfilled when I started this blog. That’s because it was something that I had always really wanted to do, even when I didn’t realize it at the time.
And at the moment, I’m feeling very stressed about navigating schools reopening in the fall. This provides an outlet for me to work on a project that I’m deeply passionate about outside of work.
And I love it. Learning how to build a website, set up email automations, and forcing myself to sit down and write every week so that I can improve on this craft isn’t for everyone. Yet for me, it’s contributed to my feeling that I’m more myself than I’ve ever been.
You’ll have to focus on yourself in similar ways to find true fulfillment.
I can’t find that for you. But I can tell you, that is the stuff that makes for a truly fulfilled life.
Money Does Buy Happiness, You Just Have to Make Sure You’re Chasing the Right Kind
So money can buy happiness, but be careful. You won’t find your fulfillment with things. You won’t find fulfillment scrolling and comparing.
You’ll find your fulfillment with the people you surround yourself with.
You’ll find fulfillment in the work that you do.
You’ll find your fulfillment in the projects that you work on in your spare time.
You’ll find your fulfillment in your faith and the purpose you feel for your life.
But after that, money is meant to be enjoyed.
First, make sure that you’ve built up your security. Money can’t bring enjoyment when it’s being spent on a credit card that brings stress.
Second, create a budget that allows you to spend guilt free on things you enjoy. And I think, there is a bit of happiness to be gained from that.
Jared
If you want to check out that original study, you can find that here.
You can also read a Time article that had covered it.
Ramit Sethi is a personal finance author who’s made a big impact on me. You can find his website here.
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