Money & Happiness
What is your earliest memory of being happy?
Do you remember that feeling, being a kid on a warm summer night, the grass under your bare feet, and the freeing feeling of not having to go to school the next day?
For me, being happy is being free, like on those summer nights.
We all want to be happy. It’s a full feeling. A feeling that connects us with others and deep into ourselves. Physiologically it’s pretty easy to understand – a chemical reaction happens in our brain, serotonin is released, and boom we feel great. Emotionally and spiritually, it’s more complex.
But how does money impact your happiness?
Studies show that the correlation between your salary’s impact on your happiness up to $75,000, and then it peaks at $125,000. Meaning that people are increasingly happy until they make $125,000, and then they plateau. This may be true for the participants in that study, but it’s not true for me, and I am sure it’s not true for a lot of people.
So Can Money Buy Happiness?
Definitely. Money can make you happier when you look at the simple fact that when we make money, it makes us happy, and when we have experiences and purchase things, using money – it can make us happy.
But it’s not that simple, as you can see below. There is an infinite number of stories of people who have made a ton of money but are miserable. The same goes for people who have very little, but still find joy in their lives. You don’t need money to be happy, but it can make you happier.
Earning more, saving more, and investing more will help you lead a richer life. And a richer life will make you happier. Happiness is personal.
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If you aren’t already happy, then money can only provide a temporary escape from your inner well-being.
For a different perspective, we recently recorded a Millennial Money podcast episode on the topic of money and happiness.
The more money I’ve made in my life, honestly, the happier I’ve gotten – but the money is only one factor – the means. The reason I am happier is because I have more control over my time. This means I can spend more time doing things I love, spending time with people that I love, and well, doing things that make me happy. You can actually use the money to maximize your happiness when you know how to use it.
Why Money Can Make You Happy
Here are the biggest ways making more money can make you happier:
- Less worry and stress
- More control over your time
- More extraordinary experiences
- The opportunity to give back
To understand how money can make you happier at a deeper level, I think we should look at two different types of happiness – short term and long term.
Short-term happiness comes from finding your flow state.
You know that feeling when you’re sitting on the beach with a cold beer and feel one with the world? What about the feeling you get after seeing your favorite DJ or band and walking out into the crisp air after the show? What about the feeling you get when you’re in such a good conversation time disappears? Or maybe it’s how you feel when you buy that new handbag or a new truck?
That’s your flow state; when you are happy. Finding your flow state will make you happy, but it’s still fleeting. One way to maximize your happiness is to find your flow state every day, or as often as you can. It’s about doing the things you love. This is the most beneficial form of short term happiness.
Unfortunately, so much of American culture has linked happiness with consumption – this is why we feel happy, albeit temporarily when we buy stuff. But that happiness rarely lasts. It’s surface level.
Making more money can open up more time and the freedom to experience your flow state. Money is freedom; as long as you have control over how you use it.
Long-term happiness comes from finding purpose and exploring your passions.
It’s pretty easy to go out and buy short-term happiness, but long-term happiness needs to be cultivated.
As humans, we all essentially seek and require the same things to live a happy life – community, loyalty, love, excitement, curiosity, passion, and peace. To explore more on how to live a fulfilled life, check out Maslow’s hierarchy of needs.
At its core, living a happy life means having more fun, rich, and meaningful experiences. It also means living a life full of meaning, passion, and purpose.
The more money I have made, the more time it’s freed up for me to follow my true passions – like Millennial Money, where I share my passion for helping others with their personal finances. I also get to spend more time traveling the world with my wife, more time with friends, and more time exploring other projects that fulfill me. This makes me happy.
I know that my long term happiness has less to do with making money and more to do with exploring the freedom and connections it provides. I’ve made a lot of money mistakes, and it took me a while to learn this. Money can only make you happy if you also work on other areas of your life.
I feel very blessed and lucky.
I know that my success is not directly a result of hard work – it is more a result of building good habits, maximizing my value, and of course, the luck of an insane bull market over the past 7 years. I truly believe that most people can escape living paycheck to paycheck and use money to live richer and happier lives.