Money and happiness, these are two things it’s probably safe to say everyone wants. And, it might even be safe to say everyone wants more and more of them both. But, how strongly do money and happiness relate?
You’ve probably heard the old question “can money buy happiness?” But have you ever really thought about it? Psychologists have, and there’s a bunch of research to show for their curiosity. Ready to find out if money does really buy happiness? Read on for your answer to the age-old question and for tips on how you can have both money and happiness at once.
Can Money Buy Happiness?
The answer to whether money can buy happiness can vary from person to person, and even researchers are split on the answer.
Yes, It Can
One study, held by the University of Michigan, might get you on board the money buys happiness train. This study compared happiness levels and satisfaction with life between rich and poor countries and between rich and poor people in the same country. Results showed that those that fell in the category of being rich, were happier and had an overall greater satisfaction with life.
But, Not That Much
While those results might lead you to believe money can buy happiness, and lots of it, another study might sway your opinion. In a large study, surveying over 1,000 Americans, researchers from Princeton University found that money does bring happiness, but only to a certain degree. This study showed that people find a greater sense of well-being with an increased source of income, but that there’s a limit.
The research found that the happiness that comes with more money plateaus at around $75,000. After that amount, participants didn’t show a further increase in happiness with an increase in income.
It All Depends
When it comes down to it, the reason you can’t really say if money buys happiness or not is because happiness means different things for everyone.
Psychologists even take it as far as saying that money has a small impact on happiness because life circumstances, like income levels, only impact 10% of total happiness. The rest breaks down into 50% baseline happiness and 40% intentional activities. While a baseline happiness is just how people are, intentional activities are the things people do to feel happiness.
So, while income might only account for a part of 10% of happiness, it definitely plays a role in the intentional activities that account for 40% of happiness. So, it really might not be about having a lot of money, but what you do with your money that really counts.
Money Can Make Life Easier
From study to study, the answer to this age-old question of money buying happiness remains controversial, and the question remains largely unanswered. While we can’t say money fully does or doesn’t buy happiness, it’s pretty understandable that money can bring comfort, and make life a lot easier. Regardless of whether you think money buys happiness or not, there’s a way to balance between the two. Read on for how you can find the perfect balance of money and happiness.
Finding the Perfect Balance
Okay, so there’s no definitive science-backed answer to whether money can buy happiness, so instead of stressing over not having enough money to be happy, you should focus on finding the perfect balance.
There’s a lot more that goes into the relationship between money and happiness than just making more money and being happier. Before we can dive into the best tips for achieving money and happiness at the same time, it’s important to cover the other components of money and happiness.
Spreading the Wealth
Some studies say money can buy happiness, some say it can’t, and then there are studies that show that money can buy happiness if it’s spread around. A study conducted by researchers from the University of British Columbia and Harvard Business School found that the amount of money spent on gifts or donated to charity was positively correlated with happiness.
So, while you’re in the midst of trying to find money and happiness, don’t forget that sharing is caring, and it can make you happier too.
Quality over Quantity
Often, people want expensive things because they think expensive material items will bring with them happiness. But, a study by researchers from the Stanford Graduate School of Business and California Institute of Technology, tested out whether the price of the things people buy and how they impact happiness.
The researchers measured brain activity in participants while they drank the same wine. What they found was that regions of the brain associated with pleasure became more active when participants were told the wine they were drinking was expensive versus when they were told it was inexpensive.
Okay, so now that you have a better idea of all the variables that can go into the relationship between money and happiness, you can see that the importance, in large part, is about how you spend your money, not how much of it you spend. So, if you’re trying to find a balance between money and happiness, remember to focus on how happy something makes you feel or how much you enjoy it separate from focusing on its price tag. This will probably save you money while making you happier.
Tips for Achieving Money and Happiness at the Same Time
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Pay Ahead of Time
Part of how money and happiness are related is that more money means more things to spend on. But, at the same time having to pay for things can often get in the way of enjoying an experience. Luckily, you can save money and feel happier by paying ahead of time.
If you’ve got big travel plans, book everything in advance; it’ll save you money and when your trip comes around, you won’t have to worry about paying for anything. You can do the same thing with pre-ordering books and albums or pre-paying for massages, spa days, and pretty much any other activity you want to do.
The way this works is that if we pay for something ahead of time, by the time the activity or item gets to us, we’ve almost forgotten about paying for it. This, plus the fact that booking things ahead of time can save you money, leads you to more happiness.
Focus on Enough, Not More
We covered how that one study done by Princeton University showed that more money brings happiness but only until about $75,000. Well, today society seems to stress more on more on a six-figure income, and then to grow that income in order to be successful and happy. But, that’s not necessarily the reality.
Instead of bringing your quality of life down by constantly stressing over getting a six-figure income, focus on having enough income to provide for all your creature comforts and some added pleasures, too. After you have enough for all you need, more money doesn’t always mean more happiness.
When you focus on your career more than your salary, you’ll find that advancing will come with time.
People usually want more money so they can have more things, but having more things doesn’t equal more happiness. What you spend your money on could have a way bigger impact on happiness than how much money you have to spend.
A study by the University of San Francisco shows that spending money on experiences has a more positive correlation with happiness than spending money on material items. Sometimes, people just buy things for the false hope of happiness. So, while a second car or more furniture might not actually make you happy, spending your time and money on experiences can.
Instead of putting your hard earned money towards things and then stressing over making more money, spend your money on travel, great meals, or spa days. In the long run, spending money on experiences will probably save you money. Experiences are value-based items that don’t depreciate, while material possessions get replaced and thrown out often.
Use Credit Cards
Using credit cards over debit cards may seem like a bad idea. After all, debt does not lead to more money and happiness. But, if credit cards are used correctly, they can get you more money and happiness.
The right way to use a credit card is on purchases you have the money to pay for. Don’t go splurging on things you can’t afford just because you have a credit card. But, instead, use a credit card to pay for items you will buy, anyway.
When you make your necessary purchases with a credit card instead of a debit card, you give yourself the opportunity to gain rewards that lead to free things and even free money. Plus, with credit cards, you have added theft and fraud security.
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Everyone wants more money and to be happier, but maybe the only way to find money and happiness is to realize that it’s all about having enough, not more. Next time you’re stressing over money or basing your happiness off of it, remember to live richly and spend your money the way it matters.
With the tips and science-backed knowledge in this post, you’re already well on your way to understanding and reaching the balance of money and happiness.