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Money = happiness, yes I really mean it!

You should quit your job, my friend told me over coffee. You are working way too much, you are not even spending time with your husband and it will spoil your health.

How did you figure that out? I asked.

I know how it feels to work 80+ hr weeks. I did it for 6 months, it was horrible. [And she assumed I was miserable too, but before I could belabor that point she continued...] You don’t need to work, your husband is earning enough, why don’t you just quit and take it easy for a few years. What are you chasing? Why do you care so much about money? Money is not everything you know. Money doesn’t bring happiness. You should quit, relax a bit and enjoy life.

Ah. Money and happiness. That is one of my favorite topics :) Does money make us happy? So much has been written about how money doesn’t make us happy, so much research has been done on money and happiness and papers have been published with the same conclusion again and again – Money doesn’t buy happiness.

I am going to say money DOES make me happy. That might sound like a selfish proclamation, but hear me out.

First of all, what is happiness? Personally for me, it is not just one emotion.

  • When I take up all the expenses and pledge to care for a mentally challenged kid in a developing country, that doesn’t make me happy. It makes me sad that the kid has to go through this & it makes me grateful to be in a place where I can do something about it.  I also feel immense pride every time I see an accomplishment from the kid.
  • When I know that I can pay all the bills for a few months even if I get laid off today, that doesn’t make me happy, that makes me feel secure.
  • Yes, there are lot of frugal ways to show love, but I do love it when my husband surprises me with flowers and a fancy dinner out.
  • I would love to pay for first class plane tickets for our parents when they visit us because it is a long flight.

We cannot appreciate the beauty of a full moon if we have never experienced a new moon. Just one emotion doesn’t make my life complete. All these emotions make me feel alive, make me happy and provide me with opportunities to have a lot more than happiness.

So why do people say that money doesn’t bring happiness?

Since 1954 personal income has almost tripled but happiness has remained the same.

 

happiness vs income

(Source : New Scientist)

And people reported that everyday emotional experience did not improve beyond an income of approximately $75,000 a year[this link is a PDF].

I am going to assume that when people say money doesn’t buy happiness, they mean money literally cannot buy happiness. This conclusion is derived from all the research done by surveying people at different times and in different countries.

In my opinion, there are a few missing pieces in the research

  • Relative Income : Most of these surveys assume that the happiness quotient is related to absolute income. But in reality that is not true. We always compare ourselves with our peers – colleagues, high school friends, neighbours… Yes, we say we are not keeping up with the Joneses and that could be true up to a certain point. But how many of us want to be the poorest among our friends.
  • Adaptation : In psychology, it is called as “hedonic adaptation”. Wikipedia explains this concept as the supposed tendency of humans to quickly return to a relatively stable level of happiness despite major positive or negative events or life changes.I understand this is a proven concept, but I have difficulty in accepting the hedonic adaptation as a reason to not make more money. I understand earning more money for the sake of having more won’t increase my happiness, but what I do with the extra money can certainly bring me a lot of happiness.
  • Trading happiness for money : This is not mentioned in the research papers I’ve seen, but I see a lot of people associating more money with unhappiness. Why? Why does it have to be mutually exclusive? People aspiring for more money are seen as evil. But if I love what I do for your living and it brings in more money, why am I categorized as evil or unhappy?

If earning more isn’t making you happy you are probably not spending it right. If you have a lot of money but are unhappy, the main problem is NOT money, it means you don’t know what will make you happy and spend money on the wrong things. We blindly follow what makes “others” happy thinking that it would have the same effect on us.

What makes me happy?

A lot of people like to quote the Mexican fisherman and the American tourist story. (If you haven’t heard the story before go ahead, read it, I will wait. It is a really inspiring story). Now that you are back, what do you get from the story? Personally for me, if I enjoyed fishing and I am good at it, I will do it a little longer and donate the money I don’t need for those less fortunate than me.  If what I am doing to make money is something that I enjoy how can doing less of it make me more happy? And I might be treading a fine line here, but, in my opinion, I feel that if I have the ability to help others who deserve it, financially or otherwise, I feel it is my responsibility to do so. Yes, my happiness might not be proportionally high when my wealth & happiness are compared to that of the fisherman, but I know it makes me more content with my life when I can help others.

If Warren Buffett and the Mexican fisherman are equally happy, I would rather be Warren Buffett than be the Mexican fisherman.

 

happiness vs income 2

 

It all boils down to mindful spending. I spend money on things/stuff/experiences that help others around me, makes me feel good, content with my life, makes me healthy and secure. Nothing can force/guarantee happiness. It is what we make out of what is available to us that makes all the difference. I use my money to make my life and others’ lives better. So as long as I am not making myself and others miserable in my ambition to wealth, I will keep earning money and I will strive to earn more. If that is wrong so be it.

Money is a tool. How we use money to make us happy is in our hands. I am spending it on things that make me happy, so yes, money = happiness for me.

{ 33 comments… read them below or add one }

Freddie @ How to Save Money

Everytime I hear someone talk about money and happiness I think about this audio I heard, but cannot think of the title or the auther to save my life. It is about a guy that use to work on wall street, making an absurd amount of money, but walked away from it. He started giving speeches on money and donated everything he earned above $500/mo which he needed to live. (Damn, I will find the name of this.)

He discovered that after a certain amount of money, the level of happiness tends to drop. There is a point when more money equals more happiness, but you reach a peak in the curb. He calls this peak ENOUGH!

Hopefully, you find ENOUGH and spend our days loving and enjoying life with friends and family!

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Suba

Freddie, you and I have the same example but come to different conclusion I guess :) From your WS guy example, I take it as giving away the money gave him the happiness. I doubt he would have the same happiness if he is struggling to make just $500 without anything to give away.

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Brock Coley

You may be talking about John Bogle of Vanguard. The book is Enough.

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Miss T @ Prairie Eco-Thrifter

Money is a tool. How we use money to make us happy is in our hands. I am spending it on things that make me happy, so yes, money = happiness for me.

I completely agree with this statement. Money is a tool you can use to take opportunities and enjoy life. You don’t need to be ultra rich but you do need enough money to fulfill your dreams. My goal is to do just that- reach my dreams debt free.

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Suba

Good luck with your goals Miss T. Hopefully we can do the same too.

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Ashley @ Money Talks

I want a slice of happiness pie. :) I don’t think money and happiness are related very much at all, after a certain point. Like you said, if you love what you do then you will be happier. If that job happens to bring in a lot of money then that’s awesome. You can be happy with money and you can be happy without money.

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Suba

Ashley you can have it :) But I do think for me personally they are very much related. I know for sure I won’t be happy if I don’t have much money.

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Shannyn @FrugalBeautiful.com

Money makes me happy too! I though, had to learn the balance between money is happiness through having security, and money being happiness through the pursuit of comforts, luxuries and experiences.

Money brings me security which brings me happiness, but obsessing over the protection of it causes me stress…spending it too freely also causes stress. There is balance when you find what you want your money to be used for (like you described) and having your priorities that will justify either the keeping of it, the working for it, or the usage of it. Too much in any direction causes burnout and isn’t sustainable, but do I think it’s worth working hard to have money if it’s used to bring happiness, whatever that happiness is for you personally? You betcha!

I’m also glad you incorporate charity into the equation, great job! That’s important to me as well and it seems to maximize the happiness quota for my dollar. ;)

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Suba

Charity is an integral part of our budget Shannyn. My husband brought that in and it stayed.

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Evan

A favorite topic of mine…Money absolutely buys happiness! In my limited experience with the topic, it seems that anyone that says otherwise almost seems like they are trying to justify that they aren’t that shallow.

http://www.myjourneytomillions.com/articles/does-money-buy-happiness-evans-theory/

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Suba

Right on Evan :) Money buys me happiness!

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krantcents

The people who say money cannot buy happiness usually have enough money. The truth is lack of enough money will make you very unhappy. What is enough? It used to be $40K, I think inflation has increased it.

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Suba

KC, according to the research I linked, it is now $75000!

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Jen @ Master the Art of Saving

I think I’ll always be happy no matter how much money I have. Personally, I think it’s more about the people and what they do with their money than the money itself. Great post, Suba. :-)

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Suba

I don’t think I will be very happy if I don’t have much money. Happiness is a blessing too I guess :)

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20's Finances

I like your argument. Very convincing. Money isn’t the issue. It’s being able to do what you will make you happy. Well put.

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Suba

Thanks Corey!

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Little House

I like the term ‘mindful spending.’ And I do think that the luxuries of money spent on things you like to do can make you happy. Now of course you can’t physically buy happiness. If a depressed person earns more money each year, the chances of them becoming happy because of money are slim to none. But if you’re already happy, then money can bring happiness.

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Suba

I don’t think ANYTHING can physically buy happiness. I don’t even know what “happiness” is :) For me it is being content, secure, loving, being in a rock solid marriage… all of these mean so much so I am assuming that is happiness…

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Hunter @ Financially Consumed

I think our relative wealth can sometimes be associated with happiness. You touched on this when you said that you didn’t want to be the lowest earner / least wealthy among your friends. Is that person in your peer group happy? This is diverging, but I think that this is why we gravitate towards people in a similar soceieconomic band. I respect people that are good at what they do. I also admire the competitive instincts in us to strive for more responsibility, promotion, better business systems, and more money. But I don’t think you can argue that person A with X money is always happier than person B with X-1.

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Suba

I am not arguing that it is necessary to earn more than someone to be happy. I am simply saying knowing/unknowingly we tend to measure our emotions based on others. You, me, everyone… So those surveys don’t mean much. Because it is not measuring absolute income vs happiness. I don’t even know if there is a good way to do that.

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Well Heeled Blog

Money definitely can bring happiness, if only because it’s pretty hard to be happy when you don’t have financial security and can’t have your needs and at least SOME of your wants fulfilled.

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rob

Great post, not sure if money does bring you happiness, but lack of it in today world defiantly is a massive factor in making so many people unhappy.

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Bret @ Hope to Prosper

This is a great post Suba. I have seen this subject covered many times, but never this well. I especially enjoyed the Happiness in Life chart. I have always suspected happiness and income level didn’t correlate.

I consider myself very happy and optimistic. I was that way when I was struggling financially and it continues as I have become more successful. To me, it’s more of a lifestyle choice than a milestone. The money part of the equation simply opens up the freedom and opportunities. I never depend on external things for happiness and no one that I know who is truly happy does either.

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Matt

The way I see it is, that building a house isn’t all about hammers but it sure is a hell of a lot easier when you have a few lying around.

The same is true about money. Happiness isn’t all about having a lot of money but it is a lot easier to be happy if you have a pile of it.

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Donna Freedman

If I were your husband, here’s what would make me UNhappy: Someone else’s assumption that he should foot all the bills while you took it easy and enjoyed life.
Or is this a cultural thing? Is it considered okay for you to kick back and let DH cover all the bills?

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Suba

Donna, Yes and No. It might be a cultural thing. Because this friend of mine, she stays at home. But she is not having it easier. She cooks every single meal. I mean she cooks fresh breakfast/lunch and dinner. So her husband loves having her home. Because I cook once a week and freeze, she thinks I am depriving my husband. That part is most certainly a cultural thing. With that said, our situation is different. I don’t cook for my husband every single day but he wouldn’t mind footing the bill. For my husband it doesn’t really matter who works outside home, as long as we are happy.

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Bret @ Hope to Prosper

This comment sounds pretty judgemental Donna.

It’s a couple’s prvate choice who stays home and who works. Anyone outside of the family has no business criticizing their decision. Suba’s husband is probably very happy with their arrangement or he would ask her to get a job.

My wife stays home and she doesn’t cook everyday. She’s not the greatest housekeeper and she gets to kick back way more than me. But, I don’t consider her a mooch. As my Dad would say, “We’re raising a family, not running a boarding house.” When I was young, most families had stay-at-home Moms and it was great for us kids.

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Donna Freedman

Suba *does* work outside the home. She loves her job and is good at it.
I wasn’t saying that Suba should quit or not quit, merely pointing out that someone “outside the family” (i.e., her friend) was assuming that her husband would be happy to go down to one income. She was the one judging (“You work too hard and your husband should support you”), not me.
Myself, I think people should do what works for their individual situations.

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Untemplater

Having more money than I did 5-10 years ago does make me feel more secure but my expenses have also gone up. So, I still keep a budget and monitor my spending. I am happy that I have savings and money to travel. It makes me feel free. Seeing the world means so much more to me than buying new clothes or new gadgets. I like to put my money towards experiences and not toward material things.

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Maggie

Wouldn’t you feel better actually cutting your hours at work and volunteering somewhere? Maybe traveling the world to help others? Just handing over money doesn’t do much and if you really felt bad you would actually do something about it.

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Maggie

Did you ever think maybe cutting your hours and actually volunteering somewhere? Doing something productive instead of sitting on the couch thinking you’re doing the world a favor? I don’t think you make any sense with any of your “reasons” why money brings happiness. You just seem like a materialistic person who can’t make the best out of nothing.

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Suba

Maggie, believe it or not, I have registered with 3 volunteering organizations near by (and even said I am available during the weekends) but they always have enough people to volunteer and just ask for money. You are entitled to you opinion. But I prefer to do what I like, help everyone and feel secure, yes that makes me happy.

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