The studies on the links between money / wealth and happiness are digging deeper and deeper. Previous studies found that we need a certain amount of money and wealth to be happy or we end up worried about providing for our and our family’s needs. At least one study found that happiness increased as income increased until we reached approximately $75,000 per year. Beyond this, money and wealth does not necessarily buy any further happiness, but it may provide a benefit to your overall life satisfaction.
So, what of importance have the new studies shown us?
While somewhat anti-intuitive, buying material possessions (things) provided less long-term satisfaction than experiences. Even though a nice car will last for years, humans tend to adjust their expectations to meet what they have, so the increase in happiness from such a purchase was short-lived. In fact, giving to others may provide more benefit to our level of happiness than buying material goods for ourselves. The opposite was true with the long-term happiness created by experiences, even though the experiences themselves may be short-lived. We as humans look back to the cool and significant things we have done (memories), which provides an on-going creation of future happiness. Do we feel happier thinking about the family vacation taken when the kids were young now that the kids are grown and out of the house or the car we used to own? Do we feel happier about the really cool world traveling we did with our loved ones or a current cool car we are leasing?
While experiences can help create more long-term happiness, it is critically important to not overlook the need to take care of the basics of family finances. Being in debt or on the edge financially will cause daily stress that will create on-going un-happiness. So, you need to deal with the basics of financial planning before these added experiences become worth taking, at least to the extent these experiences may be costly. The financial planning basics: being a net saver with relatively low debt, having a safety net of liquid funds or access to easy credit to deal with financial emergencies that may arise from time to time, and providing for and protecting your loved ones in case of tragedies, such as disability and death (insurance and estate planning).
Of course, life is complex and these findings are only related to financial factors. Other factors that may be even more important to your overall happiness include your health, your relationships (family and friends), your self-esteem (feeling comfortable in your own skin), and your job or other life activities (that make your life feel meaningful).
I think Professor Elizabeth Dunn, associate professor of psychology at the University of British Columbia and co-author of the book, “Happy Money,” stated it quite well. “Use money to buy yourself better time.” “Don’t buy a slightly fancier car so that you have heated seats during your two-hour commute. Buy a place close to work, so that you can use that final hour of daylight to kick a ball around in the park with your kids.”
See this article published in the WSJ discussing this topic. http://online.wsj.com/articles/can-money-buy-happiness-heres-what-science-has-to-say-1415569538?tesla=y&mod=trending_now_1
For those wanting to learn even more about finding happiness, you should see this great thought provoking speech by Jim Carrey, which will also make you laugh. This is a Jim Carrey we are not used to, but definitely worth listening to. Enjoy! http://www.mobiledia.com/news/199433.html.
By Richard M. Morgan