The age-old adage would have us believe that money can’t buy happiness. But many people believe that they’re one major achievement or purchase away from true contentment—a bigger house, a faster car, a better-paying job…
The truth is there’s no perfect answer.
Research has shown that money generally increases happiness… up to a certain point. And that point is approximately $75,000 per household (according to highly cited data). However, any income beyond that hasn’t been shown to further improve one’s overall level of joy or satisfaction.
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There’s an obvious role that money plays in life’s necessities and comforts. Those with higher incomes are able to afford higher-end basic expenses (nicer homes in safer neighborhoods, access to better healthcare and education)… luxuries (vacations and entertainment)… and perhaps most importantly, they have better financial security.
Data shows that the pursuit of material items won’t improve one’s happiness. However, there are ways to spend money that have been scientifically shown to improve your happiness…
If “time is money,” then money may very well equal happiness—in a way. Several studies—many of them led by Harvard business professor Ashley Whillans—have shown that people who spend money on “buying time” (i.e., paying for time-saving services like chores and errands) are generally more satisfied than people who don’t. The reason? They’re less stressed over time constraints.
This trend is so powerful that it transcends income levels.
Saving—rather than spending—could improve your happiness, particularly if you have limited savings. A sense of security is obviously a key corollary to overall happiness—and there’s no question that finances play a part in obtaining that security. Knowing that you have enough in the bank to cover an emergency could go a long way in increasing your overall level of contentment.
People often think that material objects are better purchases than are experiences. After all, experiences are fleeting. Things are (theoretically) forever.
But research has shown that’s not the case—and in fact, the opposite is true. When we purchase an item, it may give us some joy for a period… but we eventually become accustomed to it. Once it’s no longer new, our happiness wanes.
But experiences create memories that continue to provide joy long after the money has been spent.
Money can also help create ongoing experiences, as well as opportunities for improvement (gym memberships, art or music lessons, etc.).
Being able to create an impact in areas that are important to you can improve your overall satisfaction. There are a variety of ways to do this—from donating to charities… to investing in companies with a mission you support… to simply spending money on a loved one.
Whether money can buy happiness depends on your definition of the word. But if you’re going based on science, then the key lies not in the amount of money you have… but rather how you choose to spend it.