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Can Money Buy Happiness
You know the phrase: Can money buy happiness? Or money can’t buy happiness. It turns out that’s not entirely true. Money can buy a certain level of life satisfaction, depending on how much wealth you have and how you spend it.
Research shows that emotional well-being increases along with income up to a certain level. A 2010 study looked at surveys of 450,000 Americans and found that higher-income participants reported higher emotional well-being up to an annual income of $75,000. After that, it drops off.
Happiness is far beyond just simply having money; it is also important to meet your basic needs, enjoy life experiences, and have social connections to have satisfaction and happiness in life.
Basic Human Needs
Lindsay Bryan-Podvin, LMSW, financial therapist and author of “The Financial Anxiety Solution,” says an annual income of $75,000 may not be the threshold for everyone. Meeting basic needs such as food, housing, and health care is a top priority. The level of satisfaction that comes from income depends on factors such as the cost of living in your area and your fundamental personal interests.
“The data is pretty clear that our mental health is better when we can support ourselves financially,” Bryan-Podvin says. “It’s stressful to be on top of things all the time.”
According to the CDC, adults living below the poverty line were three to four times more likely to have depression than adults living at or above the poverty line.
Being able to meet basic needs without working multiple jobs also means you’re more likely to have time for your family & friends, which is very important for happiness.
A Harvard study that began in 1938 and followed hundreds of men for nearly 80 years collected data on physical and mental well-being. The researchers found that close relationships, more than money or fame, make people happy throughout their lives.
Experience vs. materials
Once you have basic needs met, it may depend on what you spend money on, Bryan-Podvin says.
There’s a standard theory that spending money on experiences makes you happier than material objects. Some studies back this up.
In a 2014 review found that experiences make people happier because they improve social relationships, are a more significant part of one’s identity, and are less likely to be compared to other people’s experiences.
A 2014 survey of more than 2,000 Millennials found that 78% prefer to spend money on events and experiences compared to a material object. It’s not just Millennials. The same survey found that consumer spending on experiences and events has increased 70% since 1987.
However, for some people, it may be the purchase of a material object that brings the most happiness. “Research has shown that if we have a powerful affinity for something, we get a lot of pleasure from buying that thing,” says Bryan-Podvin, who gives the example of someone who is passionate about cars.
When money doesn’t buy you happiness
One reason more money doesn’t always mean more happiness is the tendency toward what Bryan-Podvin calls “lifestyle creep.” That is, when you make more money, your spending often goes up.
For example, you may end up spending money on things like a country club membership or dinners at more expensive restaurants. In this case, you may not feel like you don’t have enough money, even though you earn a very good salary.
Happiness also depends on how much you really need to work to earn that money. “You may be pulling in $300,000, which sounds great in theory, but if you’re working 80 hours a week and not enjoying the money you’re making, what’s the point?” says Bryan-Podvin.
It seems that money does buy happiness.
A study disproves the theory that above a certain income level, dollars don’t improve your well-being; By Justin Fox – Bloomberg
That money can’t buy happiness is an age-old proposition. Since the advent of modern polling, scientists have tried to test it – with varying results.
One problem is that happiness can have different aspects. In a widely cited 2010 article, psychologist Daniel Kahneman and economist Angus Deaton (both winners of the Nobel Prize in Economics) examined Gallup polls.
They found that Americans’ assessment of life satisfaction rose in lockstep with income, their emotional well-being plateauing after a household income of about $75,000 a year, about $90,000 in today’s dollars.
Emotional well-being was measured by asking about the feelings experienced the previous day and classifying responses according to whether they showed a positive or blue effect (worry and sadness) and stress.
Around the time Kahneman and Deaton were doing this research, Harvard psychology student and a former software product manager Matthew Killingsworth was developing a measurement tool, an iPhone app called Track Your Happiness, that pings users at random intervals and asks about the activities and feelings they frequently use a sliding scale for responses.
An early finding, published in 2010, was that wandering thoughts bring unhappiness.
Killingsworth, now a senior fellow at the Wharton School of the University of Pennsylvania, has since used his app to measure the relationship between happiness and income.
The conclusion, just published in the Proceedings of the National Academy of Sciences, is that while the link is more robust for life satisfaction than for experienced well-being, it doesn’t disappear for the latter after $75,000 or $90,000. Money always buys happiness, even for the wealthy.
Killingsworth based his app on 1,725,994 testimonials from 33,391 employed adults in the United States.
The median household income in the U.S. in 2019 was $68,703. Among participants in Killingsworth’s survey, it was $85,000.
It may not work for other countries.
Economist Richard Easterlin found in 1974 that higher per capita national income did not produce higher reported happiness, a conclusion that has been debated ever since.
Money and Happiness
If you want to know how to manage money, you have to be happier; you need to understand what makes you happy in the first place. And that’s where the latest happiness research comes in.
Our Friends & Family Are Powerful Factors and a secret to happiness?
Countless studies suggest that having friends is very important. For example, large-scale surveys conducted by the University of Chicago’s National Opinion Research Center (NORC) found that people with five or more close friends were 50% more likely to describe themselves as “very happy” than those with smaller social circles.
Compared to the happiness-enhancing powers of human connection, the power of money looks weak indeed. So have a party, make regular lunch dates – whatever it takes to invest in your friendships.
Friendships are even more critical to your happiness is your relationship with your aptly named “life partner.” People in happy, stable, committed relationships tend to be much happier than those who are not.
Among those surveyed by NORC from the 1970s through the 1990s, about 40% of married couples reported being “very happy.” Among the unmarried, only about a quarter was so exuberant. But there are good reasons to choose wisely.
Divorce brings misery to all involved, although those who endure a terrible marriage are the unhappiest of all.
While a healthy marriage is a clear bringer of happiness, the children who tend to follow are more of a mixed blessing. Studies on children and happiness have revealed little more than a jumble of conflicting data.
“If you look up moment-to-moment how people feel about taking care of kids, they’re actually not very happy,” notes Cornell University psychologist Tom Gilovich. “But if you ask them, they say that having kids is one of the most enjoyable things they do with their lives.”
Doing things can give us more pleasure than having things.
Our preoccupation with things obscures an important truth: The things that do not last create the most lasting happiness. That’s what Gilovich and Leaf Van Boven of the University of Colorado found when they asked students to compare the pleasure they got from recent things they bought with the experiences (night out, vacation) they spent money on.
One critical reason may be that experiences tend to flourish when you remember them, not diminish. “In your memory, you are free to embellish and elaborate,” Gilovich says. Your trip to Mexico may have been an endless parade of problems punctuated by a few exquisite moments.
But when you look back, your brain can work out the grumpy cab drivers and remember only the glorious sunsets. So the next time you think organizing a vacation is more trouble than it’s worth – or a cost you’d instead not shoulder – consider the delayed impact.
Of course, much of what you spend money on can also be considered as just a thing, an experience, or a bit of both.
A frictional book that sits unread on a bookshelf is considered a thing; a book that you dive into with gusto and enjoy every action is an experience. Gilovich says that people define what is and is not an experience.
A researcher also suspected that; the happiest people are those who are best at getting experiences out of anything they spend money on, whether it’s dance lessons or hiking boots.
Engaging in something hard makes you happy. We’re addicted to challenges, and we’re often much happier working toward a goal than we are when we’ve achieved it.
Challenges also help you achieve what psychologist Mihaly Csikszentmihalyi calls a state of “flow”: complete absorption in something that pushes you to the limits of your mental or physical abilities. Buy the $1,000 golf clubs. Pay for the $50-per-hour music lessons.
Flow takes work
After all, you have must have learned to play scales on a guitar before you can lose yourself in a Van Halen-like solo – but the satisfaction you get in the end is more significant than what you can get from more passive activities.
Whenever people are asked what makes them happy from moment to moment, television ranks high. But people who watch a lot of TVs are less happy than those who don’t.
Settling down on the couch with the remote will help you recharge. However, to be truly happy, you need more in your life than passive pleasures.
You need to find activities that help you get into a state of flow. You can find flow at work if you have a job that interests and challenges you and gives you enough control over your daily tasks.
A study by two University of British Columbia researchers suggests that workers would gladly give up a raise of up to 20% if it meant a more varied job.
Most researchers thought you had a happiness set point that you largely stuck to for life not long ago. One famous newspaper said that “trying to be happier” can be “as futile as trying to be taller.” The author of those words has since recanted, and experts increasingly view happiness as a talent, not an innate trait.
Exceptionally happy people seem to have a set of skills – ones you can learn, too.
Sonja Lyubomirsky, a psychology professor at the University of California at Riverside, has found that happy people don’t waste time dwelling on unpleasant things.
They tend to interpret ambiguous events positively. And perhaps most telling, they are not bothered by the successes of others. Lyubomirsky says that when she asked less fortunate people to whom they compared themselves, “they went on and on.” She adds, “The happy people didn’t know what we were talking about.” They dare not compare, short-circuiting insidious social comparisons.
This is not the only way to spend less money and appreciate what you have more of. Try counting your blessings.
Literally, in a series of research and studies carried out by, psychologists Robert Emmons of the University of California, Davis, and Michael McCullough of the University of Miami found that those who did exercises to cultivate feelings of gratitude, such as keeping weekly journals, felt happier and healthier.
More energetic and optimistic than those who didn’t. And if you can’t change your mindset, you can at least learn to resist.
The act of shopping unleashes the primal urge of hunter-gatherers. When you’re in that hot state, you’re usually extremely poor at judging what you think of a product when you cool down later.
Give yourself a break before you give in to your lust. Over the next month, try your best to keep track of how often you say to yourself, I wish I had a camera! If you rarely desire a camera during your life, forget about it and continue happily.
The amount of money a person needs before they can be happy varies. Happiness can depend on how much money is needed to meet your own basic needs and what you personally enjoy.
For one individual, that might be season tickets to the Yankees. It might be just a massage once a month or a new pair of running shoes for someone else.
Finally, money can increase the potential for life satisfaction depending on how you spend it. Spending money on experiences or things that align with your values will increase your happiness, Bryan-Podvin says.