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Can Money Buy Happiness?

The definition of happiness and the multiple ways people are investigating in the attempt to acquire it are always changing. However, one question seems to always come back to people’s minds. It’s time to find out, once and for all, can money buy happiness or not quite so.

The Relation Between Money And Happiness

Surely, there is a relation between money and happiness. If it weren’t true, there would be no such thing as staying late at work or struggling to save money and invest it profitably. But what kind of relationship is that and to what extent is it beneficial? We are about to find out.

If money had the biggest role in acquiring happiness, there would not be enough money in the world. Finding 20$ on your way to work can put a smile on your face and you might also take it as a good start to the day. But can money really buy you happiness? The question is too complex to be answered briefly, so we will dive deeper into this analysis.

First of all, people are different, not brand new information. Therefore it is obvious that the definition of happiness also varies and everyone perceives it differently. As a response to this question, some people may tell you that materialistic things cannot and will not be the source of your happiness. On the other hand, other people will say that such a way of thinking is only possessed by people who know they are not able to accumulate riches, and therefore, their mindset condemns them to poverty. But there has to be an overall answer to this burdensome question.

Money And What It Has To Do With Your Personality

In a study from Yale University and the University of Cambridge, the problem is discussion was analyzed and it’s all about how you spend your resources.  76,000 bank transaction records were analyzed in an attempt to examine the pattern of what people spend their money on and the predominating factor – material objects or experiences. After obtaining the results, they were rated regarding the participants’ satisfaction concerning the purchased items. The satisfaction level connected with the purchases was examined regarding the participants’ personalities.

In order to determine participants’ personalities, the study used a theory called “Big Five”. The big five theory is focused on five well-defined characteristics: openness to experience, conscientiousness, extraversion, agreeableness, and neuroticism. The researchers then analyzed if participants’ spending habits matched up with their personalities. The discoveries of the study revealed that spending money, in fact, is likely to increase the level of your happiness in case it is spent in a way that matches your own personality.  In other words, consider who you are when you make a purchase, and that could make all the difference.

So, depending on how much wealth you possess and how you spend it, money can buy you a certain degree of life satisfaction. The research shown above also states that well-being rises along with income, up to a certain point. Another study from 2010 that examined 450,000 Americans revealed that participants with higher incomes reported higher emotional well-being. However, this level of emotional well-being is increasing up to an annual income of $75,000. After that, the level drops off. Obviously, simply having money is less likely to make you happy. The factors that bring you happiness in relation to having money have been grouped into two categories that we are about to analyze.

The Ability To Meet Your Basic Needs

One of the top priorities in everyone’s day-to-day life is being able to meet basic needs like food, housing, and healthcare. Therefore, the amount of satisfaction derived from income varies depending on factors like the cost of living in your area for example, or your personal interests. Adults living below the poverty level are three times more likely to experience depression. The ability to meet your basic needs without an increased level of difficulty like working multiple jobs obviously will bring a little more peace in your life. One of the reasons is that you are more likely to have enough time for your friends and family which has been characterized as an important factor for happiness by multiple studies.

A Harvard study, which started in 1938 and tracked hundreds of men for nearly 80 years, collected data on both physical and mental well-being. The researchers found that close relationships, more than money or fame, keep people happy throughout their lives. 

In other words, it is much more pleasant to be able to meet your basic need without having to be on the grind all the time. Spending your daily life without constantly thinking of every penny you spent is, therefore, likely to free you of a certain level of stress.

Life Experiences

Focusing only on materialistic things is, of course, kind of taboo. Happiness can be acquired through money not only for the objects it can buy. Financial freedom gives you the possibility to include in your life things that have the role of feeding your soul and bringing you spiritual experiences. With a certain level of financial freedom, people have the possibility to travel to places they always dreamed of, acquire a collection of memories that will last a lifetime, and nourish their minds with the wisdom of various people and cultures.

There is a common theory that spending money on experiences will make you happier than spending money on material objects. One of the studies on this topic found that experiences make people happier because they enhance social relationships, are a bigger part of one’s identity, and are less likely to be compared to other people’s experiences. After interviewing 2,000 millennials back in 2014, it was found out that 78% of people would prefer to spend their money on experiences or various events rather than simply on objects.

Does Money Help You Fix Problems?

Doing things rather than having things has been proven to bring us more joy. The reason that money increases happiness up to a point seems to be that having a certain amount of money helps to fix certain problems in life that make people stressed out and unhappy. There is a large number of issues that can be solved in case your income permits it. A health problem or a broken car are some examples of issues that can be fixed with money. However, if there are not enough resources and you can’t afford to solve matters as such, you tend to become stressed and even unhappy.

Obviously, money is not the answer to everything and we are all aware of that. So it’s not so much about money is the ultimate source of happiness as that money can help to solve problems that would otherwise lower our happiness. If money were to be the most important factor regarding people’s happiness, then as a society, we ought to be much happier today than people were 50 or 60 years ago. But national polls from the United States show that people actually rated themselves happier in the 1940s than they do today.

The Relationship Between Money And Time

Recent studies have shown that nearly 40% of people prioritize money over time. These people tend to become less happy after a few years than the ones who are prioritizing time over money. Why is that happening? It is important not to get the wrong idea and think that you should never sacrifice your free time. People who choose time over money intend to find a balance between the two and try to keep it. Prioritizing time over money correctly means that you are not obsessed over the idea of spending all of your energy desperately trying to accumulate as many fortunes as possible. Of course, that doesn’t mean that you should turn down the next raise you’re offered. A mountain of evidence shows that, on average, wealthier people are happier. How much joy and benefits you get from money depends on how you spend, save, and think about money.

Final Thoughts

Our spending choices are connected with our unique personalities and that is why we get joy from it in different ways. The amount of money a person needs in order to be happy varies as well. Happiness may depend on how much money is required to cover your own basic needs and what brings you joy personally. Even if money has a role in increasing the potential of your life satisfaction, it all depends on the way you spend it. An income higher than the amount needed to meet your basic, day-to-day life needs, allows you to spend money on items and experiences that align with your own values.