Once I saw a bumper sticker that read, “People who think money can’t buy happiness must not know where to shop.”
While I abhor the empty-headed entitlement of the statement, I have to say that its underpinnings are true. I’ve been broke and I’ve made a decent salary. Guess which is better?
In the strictest sense, money can buy happiness. Having enough cash means you don’t have to choose between heating and eating, or beg the landlord to give you another week to come up with the rest of the rent. When your car breaks down you can fix it; if your kid gets strep throat you can pay for the antibiotics.
Money can’t buy “a fixed amount of happiness,” said Harvard University’s Daniel Gilbert, in an interview on National Public Radio. But he also pointed out it’s ridiculous to believe that cash has nothing to do with contentment.
“All you have to do is go stand outside with no coat, no shoes, nowhere to go and hungry, and in about five minutes you go, ‘Wow, money would make me happier,'” said the psychology professor and author of “Stumbling On Happiness.”
“So money is obviously related to happiness, but its relationship is intricate and complex.”
You don’t necessarily need loads of lucre to be happy; in fact, there seems to be a point of diminishing returns. A Princeton University study from a few years back indicates the magic number is $75,000.
The lower a person’s annual income falls below that benchmark, the more unhappy the person feels. Yet no matter how much more than $75,000 people earn, they do not report greater feelings of happiness.
To be clear: The study is not saying that higher salaries won’t improve your life. Instead, it suggests that after $75,000 a person’s emotional equilibrium is more affected by factors such as “temperament and life circumstances.”
Rethinking how we spend
Recent studies also show that people get more bang for their buck by investing in memorable experiences rather than more stuff. The Wall Street Journal cites two researchers making this point in a recent article. However, many people get it backward, often cutting back on experiences instead of material goods when they are in a money-conscious mode. According to Ryan Howell, associate professor of psychology at San Francisco State University:
“People think that experiences are only going to provide temporary happiness, but they actually provide both more happiness and more lasting value.”
Experiences meet more of our psychological needs, according to the article:
They’re often shared with other people, giving us a greater sense of connection, and they form a bigger part of our sense of identity. If you’ve climbed in the Himalayas, that’s something you’ll always remember and talk about, long after all your favorite gadgets have gone to the landfill.