Money and Happiness

Many people believe that having more money leads to greater happiness, while others argue that money cannot buy happiness. While there is definitely a relationship between money and happiness, it is hard to say if more money does, in fact, lead to a greater level of happiness. 

First, let's define what we mean by happiness. Happiness can be described as a positive emotional state characterized by joy, contentment, and satisfaction. It is a subjective experience influenced by various factors, including genetics, personality, life circumstances, and environmental factors.

Now, let's turn our attention to money. Money is a medium of exchange used to purchase goods and services. It is often seen as a symbol of wealth and success and measures one's financial status. People often believe that having more money will lead to a better quality of life, and therefore, greater happiness.

So, does money actually buy happiness? In an article published by PennToday, research suggests that there is a relationship between money and happiness, but it is more complex than many people believe. Let's explore some of the ways in which money and happiness are related.

Basic Needs and Financial Security

One way in which money can contribute to happiness is by providing for our basic needs and financial security. Having enough money to meet our basic needs, such as food, shelter, and healthcare, is essential for our well-being. We cannot live a healthy and fulfilling life without these basic necessities. Financial security is also important for our mental health and well-being. Knowing that we have enough money to cover our expenses and plan for the future can reduce stress and anxiety.

According to the National Institute of Health, research has shown that people who live in poverty or struggle financially are more likely to experience negative emotions such as stress, anxiety, and depression. Therefore, having enough money to cover our basic needs and achieve financial security can contribute to our overall happiness.

Material Possessions and Status

Another way in which money can contribute to happiness is through material possessions and status. Material possessions such as a house, car, or vacation can bring pleasure and enjoyment into our lives. Additionally, having a higher income can provide a sense of status and social recognition, which can boost our self-esteem and confidence.

However, the relationship between material possessions and happiness is not straightforward. Further research discussed in The Atlantic has mentioned that the initial pleasure and excitement that comes with acquiring a new possession tends to wear off over time, and we quickly adapt to our new level of wealth. This phenomenon is known as the "hedonic adaptation" or "hedonic treadmill." Essentially, our desire for more material possessions and status increases as we become accustomed to our current level of wealth. This means that the satisfaction we get from material possessions tends to be short-lived, and we are constantly striving for more.

Furthermore, the pursuit of material possessions and status can lead to a "keeping up with the Joneses" mentality, where we compare ourselves to others and strive to have more than those around us. This constant comparison and competition can lead to feelings of envy, jealousy, and dissatisfaction. Therefore, while material possessions and status can contribute to our happiness to some extent, they are not the key to long-term happiness.

Time and Experiences

A third way in which money can contribute to happiness is through the time and experiences that it allows us to have. Having more money can provide us with more opportunities to pursue our passions and hobbies, spend time with loved ones, and explore new places and experiences. Another article published by Forbes discussed research conducted by San Francisco State University "found that people who spent money on experiences rather than material items were happier and felt the money was better spent." This would include spending money on experiences, such as travel, concerts, or dining out, which ends to bring more lasting happiness than spending money on material possessions.

Furthermore, having more money can allow us to have more free time, which can contribute to our happiness. Time is a valuable resource. Money may not buy happiness, but sometimes, it can help alleviate the financial troubles we are faced with in times of need and desperation.  

Here to Help, 

Your Financially Fit Team