All of our parents or guardians have told us that money does not buy happiness. Instead, they attributed it to other things, like helping others and being a good person. But is that really the case?
One study, in particular, performed by three gentlemen in 20101, found an intriguing link, not between the amount of money and happiness, but between the level of income and happiness.
According to them, happiness has almost nothing to do with the amount of money you make, and almost everything to do with the rank of your income.
So, simply put, making more money might not make you happier, but if your income boosts your social currency, your level of happiness will increase as well.
Imagine that you make below $50,000 per annum, which the United States considers low-income, and then you receive a raise that puts you in the $60,000 range. According to this study, your happiness level would go up, too.
Your perception of your wealth influences your happiness more than your actual wealth2.
Perceiving that you have “enough” money or “more than enough” makes you much happier than knowing you earn $61,358 per year.
The word “enough” is crucial to the equation; is $61,358 enough to cover all your expenses? Do you have extra money left over?
Despite the research cited above, and the advice of our parents, life satisfaction, as psychologists call happiness, depends primarily on how you spend your money.
Another body of research suggests that spending it on others (friends, family, even strangers) could be extremely beneficial to your overall happiness3.
If you have ever helped a friend or done what is known as a “good deed”, then you understand why.
Using your money to help others makes you feel good. It gives you a warm, fuzzy feeling inside, though whether or not the feeling is from pride in yourself or genuine goodness is up for debate.
With that being said, here are 5 ways to use your money to increase your happiness over the long-run:
#1. Splurge on Health and Wellness
Good health means intrinsic happiness. It’s crucial that you invest in whatever contributes to robust health and well-being.
Research has proven that eating healthy foods is much more beneficial to your health and happiness than money alone. Eating a good portion of fruits and nuts every day can improve your happiness4.
The research has a solid premise. Foods such as carrots, spinach, kale, apricots, etc. have a high presence of carotenoids which are linked to higher levels of optimism. So, treat yourself to a delicious salad with your favorite veggies.
Not just fruits and vegetables, ladies (and gentlemen, too, if you’re into this kind of thing), you should also splurge on wellness stuff. Buy yourself a facial mask. Buy that bubble bath or bath bomb once in while. It will give you a lingering sense of confidence and happiness.
#2. Budget all the way until you become a moneybags
This may seem contradictory to the first statement, but budgeting is actually a form of self-care.
Known colloquially as “Getting your s*** together”, living on a balanced budget ensures that you don’t spend more money than you have. For most of us, bills are a major cause of life dissatisfaction.
Create a budget (it helps to write it down or create one on an app) and stick to it. You can write down your expenses if you’d like, or you can use apps like Mint, Walnut, and numerous others to track your spending and make a budget based on your needs.
#3. Help Others get what they want
Dr Viktor Frankl, the author of ‘Man’s Search for Meaning‘, said, “The meaning of your life is to help others find the meaning of theirs.”
If you could deploy your money and resources to uplift the less-privileged, your happiness would double up on its own.
Donate to a cause you are passionate about. Whether it is human trafficking victims, autistic children, the elderly, disabled veterans, or animal welfare, donate a portion of your money to one of these causes.
You will feel good because you helped (and no amount is too small), and others will see a brighter future.
Money begets money. Sounds a little capitalistic, but the statement is worth its weight in gold.
Watching your money (investments) grow can bring a lot of intrinsic happiness. It could also provide you with a financial cushion in hard times. Yes, all investment come with an element of risk, but then, “no risk, no payoff”.
If you don’t have a side hustle or a family property or some kind of backup trust, and your day job is your sole revenue stream, then you must invest.
What you should invest in falls beyond the purview of this post, but if you are young – in your 30s or early 40s – and investing for a long horizon, then equities are the best.
Your carefully made investments won’t let you down. Knowing that you have a pile of money somewhere to fall back on, will always keep your chin up.
#5. Pursue goals
Do you have any big things you’d like to do with your money?
According to Ken Sheldon, Professor at the University of Missouri, goals which contribute to autonomy and goals that result in lasting relationships with others, often lead to greater happiness.
It could be starting up your own venture, saving for a month-long overseas vacation with your family, investing in a professional course you’ve been longing to take – the pursuit of such goals can inject happiness into you.
A sense of achievement in life shares a strong correlation to life satisfaction.
Having these long-term goals will motivate you to invest that extra money (point no. 4), which in turn will boost your happiness and ultimately, satisfaction.
In conclusion, forget what your parents told you. Money does buy happiness…IF you use it the right way.
Don’t overspend, don’t get into debt if you can help it, and most importantly, take care of yourself and your family. These are, in my view, important keys to happiness.
What are your thoughts on this? Do you know of a better way which links money or wealth to intrinsic happiness?
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- Boyce, C., Brown, G., & Moore, S. (2010). Money and Happiness. Psychological Science, 21(4), 471-475. doi: 10.1177/0956797610362671
- Dunn, E. W., Aknin, L. B., & Norton, M. I. (2008, March 21). Spending Money on Others Promotes Happiness. Retrieved from http://science.sciencemag.org/content/319/5870/1687
- Diener, E. (2009). Culture and subjective well-being. Dordrecht: Springer