Money Can’t Buy Happiness… Or Can It?
Money Can’t Buy Happiness… Or Can It?
We’ve all heard the saying “Money can’t buy happiness.” And while it’s thrown around often when success and wealth are brought up, there’s one problem with that statement…
It’s not true.
I know… I know. But bear with me here.
Money can’t buy love, it can’t buy back a life that’s been lost, it can’t solve all your problems like a big green Band-Aid. Money isn’t the most important thing in life. Let’s get that out of the way right now.
But it sure does help! At least up to a point.
Studies show that the amount of money people make does indeed correlate with the level of happiness they experience. A recent study even managed to pinpoint the exact amount of income the happiest people bring in yearly.
To conduct the study, researchers asked participants to rank their lives on a scale of 0–10, with 0 being the worst possible and 10 being the best. The study surveyed 1.7 million people around the world, recording their annual income and happiness level.1
The results? People are happier the more money they make, until they reach a certain income.
And the ideal income in North America based on a one-person household?
The magic number, they say, is $105,000 per year.
Why Money Is Related to Happiness
Idealism aside, money correlates with happiness for a variety of reasons. People whose income is not sufficient to sustain them face a multitude of stressors that their wealthier counterparts do not. Financial insecurity causes worry and affects many aspects of life:
- Mental Health: People experiencing financial hardship report a much higher level of depression than those with a comfortable income. In fact, a 2012 study found that 30.9% in low-income brackets suffered from depression, while only 15.8% of those not living in poverty were depressed.2 Anxiety about making ends meet, working several low-paying jobs, not being able to afford to take a break or a vacation and living with the knowledge that any sort of crisis (a car repair, a medical bill) is financially overwhelming plays a huge roll in depression. The toll it takes on mental health is heavy
- Physical Health: People living in poverty have a higher rate of chronic disease, including asthma, obesity, high blood pressure and diabetes. Some of this is due to lack of access to good health care and some is due to environment and diet… You are more likely to develop asthma living in an area with air pollution, for example. Healthy food is notoriously expensive, which contributes to disease2
- Education: Money allows people to afford higher education and reduces the amount of student loans that graduates are saddled with. Not only that, but growing up in poverty has a negative effect on the brain development of children.3 While parenting skills play a huge role in a child’s brain development regardless of their parents’ income level, the effects of stress, environmental toxins, poor prenatal health care and diet all take their toll on a child’s development
- Money Is a “Shock Absorber”: Having enough money acts as a sort of “shock absorber” in life. When things get hard, having the ability to take time off, go on a vacation or grab takeout rather than cook after a busy day makes a big difference. Living in a safe home where you aren’t worried about paying next month’s rent makes a big difference. The bumps in life are far less jarring when you’ve got the padding of a savings account.
On the Other Hand, More Money Doesn’t Always Mean More Happiness
I mentioned earlier that happiness rises with income… up to a point. If having money relates to having happiness, doesn’t more money mean more happiness?
Not according to the study.1
The money-to-happiness ratio goes up steadily until it hits the $105,000 maximum-happiness point (keeping in mind that this is for a single-person household… for a family of four, that number would be $210,000). From there, however, it starts to sink.
Why is that?
There are most likely many factors at play. First of all, people with higher incomes may be spending more time working than those with the optimum “happy” income. They may have advanced to higher leadership roles in their career, leading to more job stress and therefore less satisfaction with life.
The shift might also be due to increased anxiety due to managing wealth. More possessions and investments can mean more problems, more management issues, more repairs and more time spent problem-solving.
Of course, there are plenty of outliers who are perfectly happy having very little and plenty of very happy millionaires.
The bottom line seems to be that the ability to not worry about money is an excellent indicator of how happy you will be.
I’d be remiss if I didn’t mention that studies are interesting and can be helpful, but when it comes to happiness your attitude, lifestyle and the ups and downs of life play a huge role in how happy you are at any given time and at any given income.
By focusing on the positive, being grateful for what you have and taking action to change the things about your life that you don’t like, you still have far more control over how happy you are than your bank account does.