How money makes you happy

May 17, 2023 | Insights

There is nothing wrong with wealth as long as your relationship with money makes you happy because you spend to benefit others.
I was intrigued by recent research into the connection between money and happiness. Philosophers, psychologists and financial advisers have been exploring whether money buys happiness for millennia, so let me ask you which statement describes you:

  • I earn more than $75,000/£60,000, and I am happy
  • I earn more than $75,000/£60,000, and I am unhappy
  • I earn less than $75,000/£60,000, and I am happy
  • I earn less than $75,000/£60,000, and I am unhappy

In 2010, Daniel Kahneman and Angus Deaton found from research that happiness rose with income up to $75,000 pa, then levelled off. Arguably, an income of this size at the time covered core expenditure and some discretionary spending resulting in happiness, so any additional revenue would not increase happiness.

However, research by Matthew Killingsworth carried out ten years later found an unlimited correlation between income and happiness. In other words, happiness increases with income.

Less is more?

Not that it started here. Diogenes of Sinope, a philosopher active in the third century BCE and founder of the Cynics movement, taught and practised the very opposite, that “less is more”. The Cynics sought happiness by relinquishing everything, including money.

However, research into the money and happiness connection in 2018 found that happiness is maintained by repeatedly gifting money to others. In addition, the researcher, Olaya Moldes, noted that giving seems to be a unique happiness-inducing event.

Moldes and others had earlier found that spending money on an experience makes us happier than on a material object. Her research published in the British Journal of Social Psychology a few days ago starts with this premise. However, Moldes also found that happiness also comes from spending money to further your intrinsic goals. In other words, spending money on something personally important to you, instead of spending money because others expect you to, leads to greater fulfilment and happiness.

You might have experienced this already. Have you contributed to a global appeal after a natural catastrophe? How did you feel? Remoteness and obligation, possibly. How does this compare to when something or someone attracts your attention and inspires you to give? You feel connected and good about it.

The virtuous circle

These two recent pieces of research confirm my view that if your goal is to make life better for others, and you spend money on achieving that goal, your money will bring you happiness. I call this the virtuous circle of wealth, impact and spirituality.

There is nothing wrong with wealth. However, your relationship with money is crucial in ensuring your money brings you happiness, not just by the amount you earn but also by how you spend your money.

Photo attribution

Photo: the author

Audio link

https://audio.com/jeremy_deedes/happy-money/

Other references:

Kahneman, Daniel, and Angus Deaton. “High Income Improves Evaluation of Life but Not Emotional Well-Being.” Proceedings of the National Academy of Sciences, vol. 107, no. 38, 7 Sept. 2010, pp. 16489–16493, www.pnas.org/doi/10.1073/pnas.1011492107, https://doi.org/10.1073/pnas.1011492107.

Killingsworth, Matthew A. “Experienced Well-Being Rises with Income, Even above $75,000 per Year.” Proceedings of the National Academy of Sciences, vol. 118, no. 4, 26 Jan. 2021, www.pnas.org/content/118/4/e2016976118, https://doi.org/10.1073/pnas.2016976118.

O’Brien, Ed, and Samantha Kassirer. “People Are Slow to Adapt to the Warm Glow of Giving.” Psychological Science, vol. 30, no. 2, 27 Dec. 2018, pp. 193–204, https://doi.org/10.1177/0956797618814145. Accessed 12 Sept. 2019.

Moldes, Olaya. “Beyond Experiential Spending: Consumers Report Higher Well‐Being from Purchases That Satisfy Intrinsic Goals.” British Journal of Social Psychology, vol. 62, no. 2, 13 Nov. 2022, https://doi.org/10.1111/bjso.12602. Accessed 12 Dec. 2022.

Related posts:

The perils of financial immaturity

https://wordsnotdeeds.co.uk/financial-immaturity/

Financial immaturity makes money your master, not your servant, making it hard to use for the benefit of others or your spiritual growth.

Will money make a difference to your values?

https://wordsnotdeeds.co.uk/values-3/

On the cusp of a financial crisis, reflect on your core values and decide if you will take the path of service to others or yourself.

How to use your gifts to help others

https://wordsnotdeeds.co.uk/gift/

The gifts you have to offer are an excellent place to start when deciding how to lead a life of meaning and purpose by making a difference to others.

How to find meaning by sharing

https://wordsnotdeeds.co.uk/how-to-find-meaning-by-sharing/

When you have achieved something, share your experiences for greater meaning and to feel part of something greater than just you. 

What do you think?

Your views are important, and your fellow readers would love to hear your opinion,
so share your thoughts in the comments box below, and thank you for your time and generosity.

What do you think?

Your views are important, and your fellow readers would love to hear your opinion, so share your thoughts in the comments box below, and thank you for your time and generosity.

0 Comments

Leave your comment here