Ask anyone, “Can money buy happiness?” and they’re likely to give you a different answer.
A recent study revisited this famous question, and the answer may surprise you. Here’s a look at the technical answer and wealth and well-being considerations.
What Science Is Saying
In 2010, researchers conducted a study to determine if more money did, indeed, equate to a greater level of happiness.
The findings suggested that lower earners were more likely to experience the emotional impact of factors such as health concerns, failing relationships, and loneliness. It determined that those earning $75,000+ per year would be able to reasonably address financial misfortunes (like an unexpected medical bill, car repair, divorce, increased rent, etc.). This was determined to be the plateau level, meaning anyone who earned a paycheck higher than $75,000 did not experience an increased level of happiness.1
In 2021, a new research paper challenged this conclusion. It expanded both the study pool and data points monitored, concluding that a person’s day-to-day happiness and well-being rises linearly alongside income level.2
The conclusion? Yes, money can buy happiness — but with a few important caveats to keep in mind.
What Money Can’t Buy
Money can help you achieve a base level of happiness by addressing your fundamental priorities — shelter, food, healthcare, socialization, education, etc. But keep in mind that regardless of wealth, there are some things that money cannot change.
Money can’t buy you healthy relationships with family, friends, and loved ones. But as humans, we often need a sense of community in order to be happy.
In addition, your sense of purpose doesn’t have to tie to your wealth or financial success. You can follow your own moral compass and core tenants, no matter your net worth. Perhaps you find satisfaction in helping others, volunteering your time and efforts to local charities, or spending time with loved ones — whatever it may be, feeling purposeful and intentional with your actions doesn’t require a cent.
Money Is the Tool, Not the Goal
Once you’ve set savings and investing goals for yourself, it is important to think about the “why” behind them. Is it to save for retirement? Purchase a second home? Help a child through college? Or maybe, it is to sleep better at night knowing you’re prepared to handle anything that may come your way.
Although money is the tool you’re using to achieve your goals, it’s crucial to remember that money isn’t the goal itself. Money doesn’t give you purpose, passion, or drive — goals do. Goals help put meaning behind your wealth and give you a reason to feel fulfilled and accomplished. Without goals, you’d never have a sense of how much is enough to be satisfied.
When Does Money Become a Problem?
Perhaps when you hear the phrase, “Money can’t buy happiness,” you picture the tragic stories of Jay Gatsby, Marilyn Monroe, or the countless millionaires and billionaires who’ve splashed across headlines during nasty divorces or estate battles.
So, when does money no longer serve in your pursuit of happiness?
Typically, money becomes more of a burden and less of a blessing when people lose track of their goals, their purpose, and their plan.
Like eating decadent meals every day, eventually, you’d become bored of the “thrill” and face the consequences of a slimmer wallet and wider waistline. Being intentional with how you use your wealth helps ensure that you meet your goals, feel continually satisfied, and stay focused on the future.
Aligning Your Wealth With Your Well-Being
Wealth is a powerful tool that can help you build a solid foundation of independence, stability, and fulfillment. But the key to harnessing this power is to develop and execute a strategy that aligns with your unique goals and vision for the future.
If you’d like to learn more about what working with an experienced and passionate financial partner looks like, feel free to schedule a call with our team. We’d be more than happy to discuss your unique financial standings and develop a customized plan together.