Many people discuss and debate whether money can improve happiness. While we like to think that it doesn’t, science shows otherwise.
This article can catch you up on research to answer your questions regarding money and happiness. Money can pay for luxuries and help reduce or avoid daily stressors. It can also help you stay calm when unexpected situations arise that impact your finances.
The benefits of having more money impact those who earn a low income just as much as those who make more. It can make everyone happier, although the reasons vary based on the person.
What the Experts Say About the Relationship Between Money and Happiness
A 2018 study showed that happiness increased the more money someone made, but only up to $75,000. After that number, the study showed that it no longer affected mental well-being.
This research used self-reported data from an app to determine happiness levels. The participants had to remember and report how happy they were during a specific timeframe. It resulted in answers affected by memory errors, biases, and integrating various memories.
More recent research shows no cap on how much money increases your happiness. The newer study involved repeating the previous idea with new methods. Their techniques removed the things that could have affected the answer in the original research.
Using an app again, participants had to answer a question about how they felt each day. They also had to respond about how satisfied they felt overall. The results indicated a mostly linear increase in well-being and life satisfaction.
Experts found that the biggest happiness increase occurred when someone earned a moderate income below $80,000. This increase could be higher because it involves leaving the low-income group and experiencing fewer financial issues.
However, all income brackets experience more happiness as they earn more money. Experts couldn’t find a cutoff point, so the linear increase continues for higher income brackets. It involves joy and contentment at the moment and experiencing overall life satisfaction.
Why People Earning More Money Are Happier
Money can make people happier for many reasons. The reasons often depend on previous life experience and current stress or desires.
More disposable income
When you have disposable income, you can spend it on things that bring you joy and make you feel good. Spending money on experiences brings more happiness than buying materialistic items. Additionally, spending money on other people can also encourage more joy.
You can also pay others to do jobs quicker or easier than you could when you have disposable income. It saves you time, allowing you to do something else during the time you would have spent doing it yourself.
When you purchase material items, you can boost the happiness it brings by thinking about your purchases first. Consider buying yourself multiple small treats to spread out the excitement a little. You can also think about what you want more than anything else, so your purchase can make you feel good.
Money gives options.
Having more spending money gives you options for what you want to do. You can travel, pay for more experiences, invest, work on home improvements, or do many other things. Having these options improves happiness because it gives you control over your life.
It helps meet basic needs.
When your salary can pay for your basic needs, you’ll experience more happiness. Not having to worry about where you’ll get money for groceries, utilities, or a place to live is a relief.
Money allows for fixing problems.
More money can alleviate hardships, as you’ll have the financial stability to fix problems. You won’t get as stressed because you know you’ll have the money to take care of mishaps as they occur.
Additionally, you’ll experience less negativity regarding daily frustrations because you’ll feel more in control of hassles that require money to fix.
Protects people from things that deplete happiness.
Money can protect you from things that interfere with your happiness. It allows you to pay for solving problems that would otherwise leave you uncomfortable or inconvenienced.
Without money, you might also have to turn down social invitations. It can leave you feeling left out or create unintended separation from your friends and loved ones. Missing these events can bring negative feelings, while having money would prevent it.
Another negative situation that earning more money can help you avoid is asking others for help. You might lose some happiness when you ask your friends or loved ones for cash or to pay for something. With money, you won’t have to worry about asking others for financial help, allowing you to experience peace and contentment.
Financial issues can lead to shame, and reaching this point often causes you to avoid dealing with your problems. It creates a negative spiral where your problems worsen.
Shame occurs when you feel like their money issues are your fault. You won’t think of the external factors contributing to the lack of disposable income.
Financial hardship can also affect your job performance, decision-making skills, and relationships. The more areas of your life are affected by a lack of money, the more shame you experience. Making more money eases these feelings and the issues associated with them.