There’s an old cliche that says, “Money can’t buy happiness.” But is that actually true? There’s research to suggest that, up until a certain income level, money certainly can have a positive impact on your happiness. In this article, we’re going to dive into some of the arguments on both sides of the debate.
Is it true that money can’t buy happiness?
When it comes to the question of whether money can buy happiness, there’s a lot of research out there. The frustrating but true answer is: It depends. Money is a tool. If you use it correctly, it can absolutely have an impact on your happiness.
But it doesn’t necessarily increase our happiness in the ways you might expect it to. More money isn’t going to improve your mindset, and buying more stuff won’t really bring you more joy.
But money can also buy things like time and experiences which no doubt bring us happiness. It’s also a leading cause of stress — stress that can be alleviated when we make enough to live comfortably.
Ways in which money can’t buy happiness
That old saying about money not being able to buy happiness has been around so long for a reason. Money can’t fix everything, and there are certainly ways that more money won’t lead to more happiness.
Money can’t change your mindset
Your mindset has a significant impact on your happiness, and it’s something that money can’t fix. If you’re a glass-half-empty person without a lot of money, chances are that your mindset will be similar even once you have money.
Money can’t buy relationships
Relationships are the most consistent predictor of happiness. When we have people in our lives who we love, we’re more likely to be happy. And ultimately, that’s something that money can’t buy. Sure, there might be people who want to spend time with you because you have a lot of money. But those won’t be genuine relationships, and they aren’t likely to bring lasting happiness.
Material things don’t make us happy
When we get more money, perhaps as a gift or from a raise at work, many of us immediately jump to thinking about the material possessions we can buy. But those possessions don’t do much to increase our happiness. Plenty of people have nice clothes or drive nice cars but still aren’t happy. In fact, many people use shopping as an escape when they’re unhappy, thinking it will increase their happiness. But ultimately, it doesn’t work.
Ways that money can buy happiness
You could certainly make the argument that money itself doesn’t make people happy. But there’s plenty of research that shows that when spent on the right things, money can have a dramatic impact on your happiness.
Money reduces stress, and stress reduces happiness
Studies show that money is the number one cause of stress for Americans. It’s also one of the leading causes of marital stress and divorce. So it’s no surprise that having more money — at least enough to live comfortably and get out of the paycheck to paycheck cycle — can reduce stress. And when people have less stress in their lives, they can focus on the things that make them happy.
Money buys time
One of the greatest gifts that money can buy is time. Sure, money itself may not be able to buy us happiness. But it can buy us time with the people we love.
The amount of money we make has a huge impact on our ability to spend time with loved ones. Someone who doesn’t make enough at their full-time job to pay the bills may have to get a second job, resulting in less time spent with family. But someone with plenty of money not only can afford to work just one job, but they can also take vacation time to spend even more time with loved ones.
Buying time can bring us happiness in other ways. Are there any chores that you find particularly draining? Money allows us to outsource those chores, eliminating something that once made us unhappy.
Money buys experiences
Plenty of research has shown that experiences bring us more happiness than possessions. When you have more money at your disposal, you can spend it on experiences like vacations, concerts, festivals, and more. While they may not last as long as material belongings, the memory of these events last far longer and helps to make us happier.
Money can help others
When you have more disposable income, you can share more through giving. Research suggests that when people can financially give to others, they are happier than if they had spent the money on themselves. Money allows you to donate to the causes most important to you.
How much money do you need to be happy?
In 2010, researchers at Princeton University decided to dig into the question of whether money can buy happiness. The researchers surveyed more than 450,000 people to look for a correlation between each person’s emotional wellbeing and their level of income.
The researchers found that money does increase one’s emotional wellbeing, but only up to a certain point. Up to $75,000 per year, more money leads to more happiness. The lower someone’s income below $75,000, the worse their emotional wellbeing. But making more than $75,000 per year had no additional impact on happiness.
This number actually isn’t all that surprising. Based on data from GoBankingRates, the median amount you’d need to make to live comfortably in the United States is $67,690. So someone making $75,000 per year would be able to pay all their bills, while also having some money leftover to enjoy.
The bottom line
There are plenty of good points on both sides of the argument of whether money can buy happiness. Sure, the money itself doesn’t make you happy. And buying more possessions likely won’t either.
But money is a tool. And when used properly, it can absolutely help you to reach financial goals that make you happier. For some, that happiness looks like more time with family. For others, it’s simply the stress relief that comes with knowing you don’t have to worry about being late on your bills. It’s not the money that makes you happy — it’s how you use it.
Erin Gobler is a personal finance writer and millennial money coach. She is passionate about teaching women to pay off debt and save for their financial goals without having to give up spending on the things they love.
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