Can money buy happiness?
Many great minds throughout history have tried to answer this age-old question. And I bet you’ve pondered it a time or two…
Over the years, there haven’t been any great anwers eithe, leaving many of us still wondering if money can truly buy happiness, and others assuming that it does.
As a result, millions of people have bought into the idea that they need to spend their lives chasing wealth as the way to happiness and wellbeing.
Which totally works out for capitalism, right? Make people feel like they need more shit to be happy. Keep the world turning round.
Enter Daniel Kahneman, a 2002 Nobel prize winner, whose research has added some interesting perspectives on the role of money in increasing a person’s sense of well-being.
In a nutshell, his study determined that having enough financial resources to afford life’s basic needs is crucial to avoiding significant degrees of emotional distress.
He found that in the United States, the income that seems to hit the bullseye on the money-happiness relationship is about $75,000 per year. At these levels, higher income may increase life satisfaction, which refers to how people think about their lives. But well-being or how life feels on a daily basis, stays the same.
More recently, a 2018 study from Purdue University used much wider data from the Gallup World Poll and found that the ideal income point for people is $95,000 for life satisfaction and $60,000 – $75,000 for emotional well-being.
So taken together, these studies found that people’s emotional well-being, or how they felt on a daily basis, didn’t improve as they made more than $75,000, but their life satisfaction, or how happy they were with their life overall, did…up to about $95,000.
Interestingly, above $105,000 it started to go down!
Dr Sonja Lyubomirsky, a leader in the field of positive psychology, summarizes the idea like this:
You need money to meet basic needs, such as access to healthcare and a safe place to live. If you grow up without resources like food, clothing or shelter, then having more money really makes a huge difference in your life and overall well-being.
But once you hit that middle class level, there really is no correlation above that. When you have a bunch of money, at the end of the day you still ask yourself, “Am I living a meaningful life?”
“What is my purpose?”
You still have to answer those questions.
And here’s the other thing: being rich is relative.
We have an evolutionary tendency to compare ourselves to other people.
When we feel like we can’t maintain the same standard of living as our peers, it makes us unhappy.
How you rate yourself in terms of your subjective well-being, like whether you feel like you’re happy or satisfied or not, is very dependent on how you see other people doing around you and what they have.
But here’s something I want you to remember: despite the role that money does play, purpose is more important than money to be happy.
Research consistently shows that if you want to be happier in your job, you shouldn’t chase a high salary. It doesn’t mean you should turn down a good salary, but don’t let that be the driving force.
From a happiness standpoint, it’s more important that your job provides a sense of meaning or purpose.
A place for you to have your strengths shine.
And the ability to have those basic needs met.
Not only does having meaning make you happier, but studies have shown that you tend to be more productive, too.
When you’re engaged in an activity that you find challenging and satisfying, you experience that flow state – what I like to call your “Peak Experience”.
Truth is, how you spend your money is really critical to your happiness as well.
In today’s episode, I share some pro tips on what this could look like and offer suggestions for a few places you can start right now.
We are in a time when our habits around money and shopping are changing.
Simply understanding what will make you happy is essential.
Being aware of our money beliefs and being open to challenging them and shifting them, is more important than ever.
The work needs to start on the inside – with your thoughts, your goals, your values, your living with meaning and purpose.
Finding balance between finances and other life-domains is a key aspect to achieving happiness.
I invite you to dig in with me. And I challenge you to ask yourself:
:: What level of financial freedom do you want to see in your life?
Like you’ve heard me say before: Money in this society is power. And we need more people with that power who want to use it for good.
Money is not evil in and of itself. It’s how you earn it and how you spend it. So earn it with integrity. Spend it with love.
In This Episode You’ll Learn:
- Why how you spend your money is critical to your happiness – and why spending it on experiences, rather than material things, might be a good place to start;)
- Various studies that have examined the plateau point for money’s impact on people’s happiness
- Why dream-based budgeting can make all the difference – stop wondering what you need, and be honest about what you actually need vs want
- About the psychological phenomenon called “hedonic adaptation” – and why it explains that simply getting more money doesn’t make us happier
- How to understand the difference between pleasure and happiness – because although money can buy pleasure, it doesn’t necessarily mean it can buy happiness
- Why imagining your dream income is the first step to making it happen
Resources:
// Want to dive in deeper? Check out Freedom School, the coaching experience where you learn to master your mind and emotions in all domains of life – relationships, career, money, health, and more. www.JoinFreedomSchool.com We have an entire month on Money Mindset and it is FUN!
// Check out this article I wrote on “How Much is Enough?”
// If you’re new here, grab the starter kit I created at RebelBuddhist.com. It has all you need to start creating a life of more freedom, adventure, and purpose. You’ll get access to the private Facebook group where you can ask me questions! Once you join, there’s also a weekly FB live called Wake the F*ck Up Wednesday, where you can ask questions that come up as you do this work – in all parts of your life.