There are a lot of things that are nice about money. Money can put food on the table, pay for transportation, and even fund a vacation once in a while. But money can’t buy you happiness. At least not in the way we normally think about it.
Here’s what the research says about the connection between money and happiness. People who are poor tend to be less happy than people who are middle-class. I think this is because being poor is stressful. It’s difficult to not know where your next meal will come from, or be one car problem or medical problem away from a financial disaster.
As your income level rises, however, the connection between more money and more happiness decreases. In the United States, once you get above about $70,000 per year, there is actually very little correlation between income and happiness. I think this is where we get in trouble. We generally think that more money = more happiness. This is true up to a certain point, but after that point we get diminishing returns.
Why doesn’t more money always buy more happiness?
- We adapt to our standard of living. As human beings, we tend to adapt to our particular standard of living. When our income changes, we might experience a small bump in happiness, but it’s short-lived. Very soon, we adapt to our new standard of living, and our happiness returns to its previous level. This happens even when people experience very large income changes (e.g., lottery winners).
- More money increases our stress. Having more money brings along with it a set of new problems. If you have more stuff, you probably will worry more about losing your stuff, or having it stolen. Having more money and stuff means that you have to spend more time and energy maintaining what you have. Other people might be more likely to ask you for money or expect you to support them. Your life becomes more complex, which can increase your stress level.
- More money takes your focus away from more meaningful pursuits. Research shows a small correlation between income and happiness (at least once you rise above the poverty level). What kinds of things make a bigger contribution to our level of happiness? Factors such as having satisfying relationships, having a strong marriage and family, having a strong spiritual connection, feeling challenged and engaged at work, and having adequate time for play and leisure all play a big role in our happiness. The tough thing about making more money is that it usually means we have to spend larger amounts of time and energy at our job. This might take away time and energy from other things like spending time with our family, friends, hobbies, and spiritual life, and this redirection can make us less happy in the long run.
Discussion: What do you think about the connection between money and happiness? If money is your primary goal, you might be spending a lot of time and energy on something that won’t actually bring you the happiness you want.
Photo Credit: Steve Cutts (www.stevecutts.com)