Money vs Happiness in 2023 (6 tips to try)

Can money buy happiness? It’s a complex equation involving resources, mental well-being, and personal fulfillment. While money can purchase comforts and provide opportunities, it doesn’t guarantee emotional well-being or personal satisfaction.

Spoiler alert unlike what you might expect. It is not the amount of money that you make that can make you happier. But your relationship with money will influence your mental happiness.

Introduction

If you are anything like me, you probably have wondered how your life would be after winning the lottery. The idea of being richer would indeed make us less unhappy was my inspiration for this article.

The relationship between money and happiness is more intricate than we think. Let’s delve into this interesting conundrum.

Money Can Buy Happiness … To An Extent

Surely, we can’t deny the significant role of money in fulfilling our basic needs and wants. According to a study by Matthew Killingsworth, a happiness researcher at the University of California, there is a positive relationship between income and emotional well-being.

But the question remains whether the power of money to “buy” happiness is absolute or has its limitations. Once our basic needs are satisfied, the ability of money to increase happiness seems to wane.

This suggests that while money can contribute to happiness by fulfilling fundamental needs, it doesn’t necessarily guarantee an everlasting state of happiness. Below I have tried to visualize this in a graph.

Tip 1

Consider doing a self-reflection exercise to evaluate how your income affects your happiness and satisfaction levels. Is your pursuit of money in line with your pursuit of happiness?

Winning The Lottery – A Short-Lived Euphoria?

Lottery winners often provide the perfect case study to scrutinize the relationship between sudden wealth and happiness. Noted psychologists, Kahneman and Gilovich, reveal that the happiness experienced by lottery winners tends to be short-lived.

This puts a question mark on whether money, especially sudden wealth, can really provide long-term contentment.

Despite initial euphoria, the happiness of lottery winners tends to normalize over time. This highlights the fact that while an increase in money may cause a temporary surge in happiness, it is unlikely to impact our long-term sense of contentment.

Tip 2

Aim to cultivate financial habits that provide sustainable happiness rather than daydreaming about a big lottery win. Where could you invest your time and money for long-term benefits?

How We Spend Money Matters

How we spend our money can significantly impact our happiness. A study from Princeton University in 2021 suggests that spending money on experiences rather than material goods leads to greater happiness. It appears that memories and experiences tend to make us happier over the long run than tangible possessions.

Memories from experiences, such as vacations, hobbies, or time spent with loved ones, often provide a more lasting sense of happiness than the fleeting joy of a new purchase.

I can personally totally relate to this. The happiness I got from my new Macbook was way shorter than the feeling I still have when I look at pictures from our family trip to Italy last year. Like this one, when we passed a magical field of sunflowers at sunset.

Tip 3

Before making a significant purchase, consider if your money could be better spent on creating memorable experiences. Is there an experience you’ve been longing for that could provide lasting happiness?

Peace of Mind versus Keeping Up with the Joneses

Money can undoubtedly contribute to peace of the mental state, especially when it caters to our basic needs and shields us against unexpected financial stress. But what happens when the quest for more starts impacting our happiness?

The constant comparison with others, a phenomenon known as “Keeping up with the Joneses,” can become a source of stress and unhappiness. If we continually measure our worth by others’ apparent wealth, we are likely to undermine our own happiness, regardless of how much money we have.

Tip 4

Practice gratitude for what you already have and strive to find happiness in your own achievements rather than comparing yourself with others. Could you turn your focus towards appreciating your current possessions and accomplishments?

The Happiness Ceiling is at $75k

The relationship between money and happiness isn’t limitless.

According to a study by Kahneman and Deaton, happiness levels rise with income up to about $75,000 per year, but beyond that, more money does not equate to more happiness (source: Kahneman & Deaton, 2010).

This suggests that for most people, once they reach a certain level of financial security, earning more money may not lead to an increase in happiness.

Tip 5

Evaluate your financial goals. If you’ve already reached a comfortable level, maybe it’s time to focus on non-monetary goals to boost your happiness.

The Dark Side of Wealth

Contrary to what one might think, an increase in wealth can sometimes lead to diminished well-being. Some studies have shown that individuals in high-paying jobs often report higher levels of stress and lower job satisfaction. A great book on this topic would be The Millionaire next door, by the authors Stanley and Danko.

The stress of maintaining a high income can sometimes outweigh the benefits of the wealth itself. Thus, it’s clear that when wealth comes at the cost of peace of mind, money can’t truly buy happiness.

Tip 6

Evaluate your work-life balance and the stress levels associated with your job. If the pursuit of a high income is impacting your mental well-being, consider whether a reassessment of your career path may be beneficial.

Summary

  • Money can contribute to happiness, but unlike what people tend to think. its effect diminishes once basic needs are met.
  • The euphoria of winning the lottery is often short-lived, and long-term happiness is usually independent of such windfalls.
  • While money can provide peace of mind, constantly comparing oneself with others can lead to lower mental well-being.

The relationship between money and happiness is complex, and a balance must be struck. Remember, financial wealth is just one aspect of overall well-being. If there is one thing the pandemic has thought us, money means nothing if your health and general quality of life are not at the right level. 

The purpose of this blog is to provide you with insights and idea’s that could give you more mental space and time in order for you to create more happy moments in your life, regardless of the money you possess. This link will bring you to an overview of insights.

Take care of your mental well-being.

Remko

Owner and creator of this space. My mission: Provide you with insights and tools you need to create more happy moments in your life and in that of your loved ones. By using Mental Minimalism for more clarity.

Recent Posts