Last Updated on April 22, 2023
We’ve all heard the phrase “money can’t buy happiness.” However, we all spend money, and for the most part, it is a finite resource. How many times have you willingly given up your leisure time in order to make more money? You’re not the only one who feels this way. However, new research reveals that putting money ahead of time may actually make us unhappy.
However, there have been numerous studies on the subject, and various aspects such as cultural values, where you live, what matters to you, and how you spend your money all play a role. Some even claim that the amount of money matters, and that accumulating a specific level of riches does not guarantee happiness.
Continue reading to learn more about the study on the link between money and happiness.
What’s the connection between money and happiness?
Money does have an impact on how people evaluate their lives when they think about it, according to a study conducted by psychologist Daniel Kahneman and economist Angus Deaton in 2010. People with more money feel better about their lives.
However, as expected, emotional well-being increased with income, but only up to a $75,000 yearly wage ($90,000 in today’s money). People were also unsatisfied with increasing earnings. While “poor income is connected with both low life evaluation and low emotional well-being,” the key study concluded that “rich income buys life satisfaction but not happiness.”
However, a study conducted by Matthew Killingsworth in 2021 found that, while both life satisfaction and experienced well-being improved with wealth, well-being continued to rise as rapidly beyond $80,000 as it did without it. “Higher earnings may still have the potential to improve people’s day-to-day well-being, rather than having already reached a limit for many people in wealthy countries,” the researchers concluded.
He developed a program called ‘Track Your Happiness,’ which is an app that looks into what makes life worthwhile. The idea is that you tell the app how you’re feeling at different times during the month, contributing to Killingsworth’s experiment while also assisting the user in determining what elements are linked to higher happiness.
As you can clearly see from research, times have changed since 2010. We are now living in a world where a person’s criteria for happiness grows with their income.
While you can’t buy happiness in a store, you can use the money to add intrinsic value to your life when you spend it in particular ways, such as purchasing items that make you happy. Things that make you happy are believed to be intrinsically valuable. This means they’re important to you, but they’re not necessarily a conventional measure of happiness for others. Extrinsic value is the opposite of intrinsic value. This implies that people realize money’s real-world value and will take it (in general).
For example, you may enjoy travelling and would enjoy spending your money on it, while someone else may find it less appealing and would prefer to spend their money on getting the latest iPhone and MacBook. In any case, money is being used to buy happiness indirectly. So the more money a person makes, the more things they can buy or do for themselves that would bring them happiness.
Read: The Science of Happiness: How to Cultivate Joy and Improve Your Health
Ways to Spend Money to Increase Happiness
Spend on experiences, not things
According to the findings of a study on the subject, people who spend money on experiences like travels, concerts, or special meals rather than tangible objects like gadgets or clothes are happier.
Nonetheless, it’s easy to get seduced into purchasing material goods, partially because they’re so easy to compare, which is why they’re frequently unsatisfactory. For example, someone could be perfectly content with their iPhone 7 until they go out with their friends one day and notice that everyone else has an iPhone 11 or newer. The difference between an iPhone 7 and iPhone 11 is very clear when both phones are compared. The once content iPhone 7 user now finds themselves unsatisfied and want a newer version of the iPhone.
Here’s where the money-happiness correlation comes in.
If the person has the money to upgrade to a newer version, they are happy and content… at least until newer versions of the phone are released. In contrast, if they do not have the money, they are stuck in their satisfaction and begin to feel unhappy
Experiences, on the other hand, are more difficult to compare. For someone who would rather attend a concert than travel abroad, they would derive more happiness and satisfaction from attending a $50 concert than they would from going on a $1000 dollar trip to France.
Spend money on others
Perform the following experiment on yourself: Today, take a bit of spare change and use it to help someone else. You may send a little present to a friend, assist a stranger at the supermarket who is short on funds, or donate to a cause that is important to you.
Although it may be tempting to spend extra money on yourself, a decade of research suggests that spending it on others is more likely to make you happy. Even those who are suffering to satisfy their own basic requirements might feel the “warm glow” that comes from helping others.
However, this does not always imply that giving makes everyone happy. It’s more important to consider how and why you offer. It’s critical that you feel free to donate — that it’s something you want to do rather than something you’re compelled to do. Look for giving opportunities that will allow you to see how your generosity is helping a person or cause that you care about. You can also start small. Paying someone’s bus fare, buying a snack for a homeless person, or even giving a bit of cash can improve your attitude, according to research.
Bottomline
Ultimately, depending on how you spend your money, you can boost your potential for life fulfilment. You will be happier if you spend money on experiences or goods that match your values. The amount of money required to be content varies. Happiness may be determined by how much money is required to meet your basic necessities and what personally provides you delight.
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