Can Money Make You Happy?
The short answer to this age-old question is yes — potentially. But the complete answer is a bit more complicated than a simple yes or no.
Let’s look at the numbers. GeekWire recently shared a study that tells us exactly how much people in Seattle need to live comfortably: $72,092. This includes all of your basics, like rent and groceries, as well as savings and miscellaneous spending money for concerts or movies. The study also found that the median income in Seattle falls short of that figure by about $4,000.
Luckily, there’s good news, whether you meet that figure or not.
Money and “stuff” — as Melissa Knox, an Economics lecturer at UW explained — isn’t usually the source of a person’s perceived happiness. In fact, the usual source is gaining what many people often wish they had more of: time.
“From my personal and professional perspective, money is best spent when it gives you freedom,” Knox explained. “When you ask us what we prefer to be doing, I think we’re much more likely to answer, ‘Going to the beach’ than, ‘Sitting in my new car and thinking about how happy it makes me.’”
Bloggers and researchers often express a similar view. In a conversation thread on the Q&A site Quora, psychologists, researchers, and even some TED talk speakers have been discussing the answer to whether money can help you find happiness or not since 2012. A common theme is that experiences and other people — not materials — make you feel great, and making “smart financial decisions” by learning how you should spend your money is essential.
Part of knowing where you should be spending your hard-earned money is investing some of that precious time you have for budgeting. Although stress from a lack of funds can impact a person’s ability or desire to create a budget, Knox emphasized the importance of making one before opening up your wallet no matter how much you have to organize.
“Happiness is not created just by spending money, but by spending money on things that you value,” Knox said. “Budgeting is a way, from an economist’s perspective, of writing down what you really value.”
Of course, money is less likely to impact your mood positively unless you’ve got the essentials taken care of, like rent, groceries, utilities, and so on. Without those, you open the door for stressors to set in if something goes awry, and when you’re not ready for rent, eviction will most certainly not make you a happier person.
Basic needs aren’t the only priority before looking into how your cash can make you merry: money in a savings account is an important factor, too.
Knox explained that while a savings account might not necessarily boost your mood, having any sort of fallback fund will certainly help prevent your attitude from taking a tumble.
“There’s lots of research out there that shows that experiencing an emergency without savings or insurance to help you deal with it leads to people choosing coping strategies that, in the end, make them worse off,” she explained. “This might be going into debt, selling productive assets, or underinvesting in their own or their children’s educations.”
Fortunately, most folks who work at UW qualify for retirement and savings plans, or can access professional financial advice through CareLink. There’s even an entire webpage devoted to explaining how your retirement plan works, and another on how you can start saving money.
So what does this all really mean? It means that yes, money can help make you happy, but you have to put in some amount of effort for that satisfaction to match your unique set of values and priorities. It’s definitely easier said than done, but isn’t it worth it?
Share any of your own saving or spending advice in the comments below, and remember that no matter how much you make, at the end of the day money just another tool.
3 Thoughts on “Can Money Make You Happy?”
On April 27, 2016 at 11:44 AM, jay said:
Wait, so is that $72k just for one person??? I make about $30k and so does my boyfriend. We’re not doing too badly. We have savings and we eat well and go on trips. (Not big trips, but around here you don’t have to go far to have a great time.) If we made that much I think we could do what we really want and start shopping for a house. If we made that much EACH… that would be incredible, lol. Comfortable and then some, for sure.
On April 29, 2016 at 3:35 PM, Jeanie Lindsay said:
According to the study Geekwire refers to, yes, they mean it for just one person! They used something called the 50-30-20 budget rule to find that figure, but I agree, that would definitely be a very “comfortable” living.
On April 28, 2016 at 12:46 PM, Layth Matthews said:
This is a wonderful article and not least because it seems to point out some empirical standing for the experience based conjecture in my book: “The Four Noble Truths of Wealth: a Buddhist view of economic life”
Just as Milton Friedman said, ‘Inflation is always and everywhere a monetary phenomenon” we could say wealthiness or happiness is always and everywhere a matter of perception.
A med student once asked me what is the secret of financial success? Everyone surreptitiously leaned in around the table to hear my reply, and I finally said, “the secret of financial success is to make friends with yourself, because that way you won’t squander your money seeking happiness externally so much, and you will make more level headed financial decisions.” Then one of the listeners said, “So the secret is that there is no secret!” and everyone laughed. But there definitely is a secret. And the secret is that making friends with oneself is a profound and challenging journey to make.
And another interesting “secret” is that materialism (over-fixation on external solutions) is actually the greatest obstacles to not only happiness, but also to material success! E.g. At the personal level – overspending, at the corporate level – focusing on products vs. solutions, or at the policy level – focusing on GDP benefits from trade liberalization without addressing localized fallout. OK, Maybe that last one is a stretch. 🙂
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