There is a famous saying that money does not buy happiness. I have heard it dozens of times. But is it true?
The Fallacy
Money doesn’t buy happiness is something poor people say to get over the fact that they are not wealthy. I am not implying that just being rich is enough to suffice for your being happy, but it certainly does not hurt.
Let’s look at some examples:
If you can’t afford to feed your family, you will be unhappy.
If you can’t afford to buy your children presents during the holidays, you will be unhappy. (Not buying presents when you can afford it just makes you cheap.)
If you have a car and can drive places on your own schedule, you will be happier than if you have to take public transportation. (In most cities in the United States – there are exceptions)
If you really want a shiny new laptop and you can’t afford it, you will be unhappy. If you buy it, you will be happy.
The Counter
There are certain things money can’t buy. It can’t buy health. It can’t buy you love. It can’t buy you a wonderful family. It can’t buy you a feeling of satisfaction with your life.
However, it doesn’t hurt.
Does More Money Mean More Happiness?
A study from Princeton says that money can buy you happiness, but only up to $75,000 per year. Up to that amount, earning more money every year has a measurable impact on life satisfaction. Beyond that, people do not become incrementally happier earning more.
The psychology behind the study is interesting. Low income levels correlate to higher stress and lower happiness overall. Higher incomes have less stress in their personal lives and report feeling more positive overall.
Beyond $75,000, the study authors found that people have enough disposable income to pay for what they want in life. That is where the wealth effect ends and interpersonal relationships and other parts of your life drive incremental happiness.
What Do You Think?
I think making more money makes me happier. I can do what I want, buy what I want, and experience what I want if I have more money. Of course, money is not everything, but it doesn’t hurt.
What do you think? Can money make you happy? Can you buy happiness? Please share your thoughts in the comments.
Image by stevendepolo.
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I’m with the Princeton study. Up to a certain point, money helps you fulfill basic needs and wants, and extra does help you to secure a better standard of living. Over a certain amount, though, and your fulfillment is not much greater. You have enough, and although there are still advantages to having more, it’s not necessarily going to improve your standard of living by enough to significantly increase your happiness.
The difference between straddling the poverty level and struggling to get by and having enough to not have to worry about comfortably affording your life is quite a jump, and that can definitely increase happiness. But the difference between a family that has a warm home, enough to eat, safe transportation, occasional travel, etc. and one that has a little bigger house, fancier meals, newer cars, isn’t quite as big.
That is a logical idea. I sometimes wonder about how much more money could make me happier. A big part of me thinks that if I had $4,000,000 show up giving me unlimited opportunity for travel and financial freedom, it would make me happier than $75,000.
I am not too worried about the bigger house or fancy cars, but being location independent sounds pretty amazing to me.
I think if you are really stressed out with your job and making $250,000 a year you won’t be happy. I thin work life balance is really important, but not so much work that youre stressed and not so little paying work that your’e stressed.
It’s a fine balance 🙂
Everything in life needs balance. Diet, finances, work, etc. Thanks for commenting!
Money will not make you happy, but lack of it will make you very unhappy. The happiest moments in life have nothing to do with money. Lack of money can affect everything and make you very unhappy. Perhaps even desperate.
If you didn’t have the money, would those moments have been possible?
“You say that money isn’t everything
well, I’d like to see you live without it!”
– Apologies to Silverchair!
Money’s just a tool – it’s great to have, sure, but what you do with it is what makes you happy. If I own a hammer… great, it’s a hammer. If I build a house? Now I’m happy.
Certainly everyone would be a little happier if they found $100 tomorrow.
You make a good point. Cash will not make many people happy on its own. However, one time I rolled around in a pile of dollar bills and it made me really happy. Then I had to turn it into the bank and I was less happy.
Money can’t buy you happiness directly because happiness is not sold in any market. However, money can buy you goods and services that can bring you happiness. Thus using the transitive property, money can indirectly buy you happiness.
Now how can we apply the distributive and associative properties to our conundrum? And if money equals the root of all evil, does money squared equal evil?
At the expense of sounding shallow and materialistic, having the “extra” money I do from blogging, an annual bonus or whatever, is nice. I like it and I would miss it if it went away. I like having an emergency fund, nice family vacations and a swimming pool. I like the prospect of actually being able to save the $100K per kid it’s going to cost to put 3 kids through college. If I made less, we’d make it work. But I think we’d be missing something.
I don’t think you sound shallow. I once had an econ teacher tell me that you sell your soul for an econ degree. I picked finance, but I think the same rule applies. I am not one to judge. Nothing wrong with wanting to enjoy the finer things in life.