The phrase “Money can’t buy happiness except for morality and citizens” originated from a proverb in 1750.
It has evolved to a phrase that is often heard on Tv’s and self-help books, but how much truth is behind this saying?
You know there is some connection between money and happiness, otherwise, you won’t bother staying late at the office (or going to work at all), or struggle to save money to invest for your future.
But then why aren’t you happy with your luxury apartment and cars? It’s safe to say that the relationship between money and happiness is complicated.
It’s clear that being wealthy does not guarantee happiness; many rich people are secretly unhappy. But while money can’t buy you happiness, being poor can buy you nothing.
The best-known theory is that money buys happiness but up to a point. This theory is from Daniel Kahneman and Agnus Deaton (2010). Daniel and Deaton argued that the emotional well-being of an individual rises with income logarithmically.
What this means is that as your income increases, your wellbeing also increases but at a much slower rate. Once your income rises above $75,000 per year, your emotional well-being becomes stagnant.
This is because once our income reaches a certain point, the negative aspect of money overshadows the positives. It’s human nature: we are never satisfied. We have the mentality that the more we get, the happier we become. But when we eventually get more, we realize we are not truly happy.
The more you have, the more you want and it becomes a vicious cycle. Dan Gilbert, a psychology professor at Harvard University and author of Stumbling on Happiness, sheds more light on this. He said, “once you get basic human needs met, a lot more money doesn’t make a lot more happiness.”
You overestimate how much pleasure and happiness you get from luxury. Humans adapt to changes and situations quickly – right from the ice age, world wars, and plagues. And that’s also the reason you aren’t and can never be satisfied for long when good things come your way.
While luxury condos can make you happy in the short term, you quickly adjust to your wealth – and everything money can give you. Yes, you’ll get a thrill from buying the latest Prada shoes, but you’ll soon quickly get used to them.
In attempting to answer this seemingly confusing question, psychological insights offer useful insight into the connection between money and happiness.
Let’s take a look at some of them:
Being rich does not guarantee happiness
Money is important to happiness. I don’t think you can be happy when you lack the financial capacity to meet your basic and daily needs.
Yeah, money gives you access to good homes in a safer neighborhood, better nutrition and health care, and better schools for your kids. But at the same time, happiness is not something you buy at the convenience store down the street.
Perhaps the association between money and happiness can be strongly determined by the answer to these questions: How important is money to you? Do people value money because they know it makes them happier, or does it make them happier because they value it?
Either way, we are left with an open answer.
People find fulfillment from doing things rather than buying
Since we habituate to new things, the initial excitement from the new things that might have made us happy becomes the new normal. Eventually, it fades into the background.
“Money doesn’t make you happy because you don’t know how to spend it.”
That’s true to some extent. However, research shows that the happiness that comes from purchasing experiences lasts longer. This is because we share these experiences with people who matter to us.
You took a trip to the Maldives last summer with your best friends and you can’t stop talking about it to your co-workers.
Even in your new car, you still find yourself telling stories of the time you visited Africa and your car broke down, you had to spend the night in a shady motel.
We’re happier when we spend money on others
When researchers assess happiness, people report greater happiness when they spend money on other people or donate it to charity than when they spend money on themselves.
Despite cultural values, your environment, and what matters to you, a common thread between us all is that we instantly feel good about ourselves when we spend money on others. Like gifting your best friend the baseball bat he has always wanted, or simply donating $10 for the annual local fundraising charity event.
Spend money on things that bring intrinsic value
Things that make you happy can be said to have intrinsic value. This means that they are valuable to you, but not necessarily for others.
On the other hand, money is said to have extrinsic value, that is, it is a general standard for happiness since it has real-world value.
For example, you may find pleasure in sleeping with a dreamcatcher, but someone else might find it less appealing. We all have different things that add intrinsic value to our lives.
If eating mint ice cream brings you joy, you could use your money to buy a dream catcher and hang it somewhere near your bed. That, in turn, may increase your happiness.
What’s my take on this topic?
Happiness varies. It depends on how much money is needed to cover your basic needs and what brings you joy personally.
For one person, that might be summer tickets to Barcelona, and for someone else, it may be staying at home watching Netflix or buying a pair of running Nike shoes.
For me, happiness is an inside job. It’s how good you feel about yourself, and grateful you are about what you have today. It’s how fulfilling your relationship with the universe is. It’s how much self-fulfillment you derive from helping others. It’s how easily you deal with difficult situations.
These are the things happiness is made of. When you quit trying to get more of everything and start searching for happiness within you, then you’ll be truly happy.