Money and Happiness

Money does not automatically make you happy. So here's some information about how you can use it to make you happy.

Basics

Without the basic in life, of a roof over your head and food in your stomach, then your world may be quite miserable. Money helps you escape such hazards and a safe, healthy person is generally much happier than one who is not.

Once the basics of survival are covered, however, more money does not mean more happiness.

Potential

Having money is like having a battery or standing at the top of a mountain. It is stored power, ready for action. Money in itself does not create happiness. It is the thought of what you can do with it that can lead to happiness.

But the thought of spending it also may lead to thoughts of the unhappiness of not having it. Without money there is no anticipated pleasure of potential and basic hardships return, which can be a sad place.

Materialism

Money is often associated with buying things. Whilst there is often an initial thrill during the purchase process, just owning something does not make you happy. In fact it can make you anxious as you worry about it being stolen or others being envious. People who own rich estates worry about intruders, even after putting up barbed wire and employing security guards.

Just as the miser grimly hoards money, there is a danger of jealously guarding your possessions and thinking ill of others in angry imagining them stealing your goods.

Relativism

Feeling successful is related to happiness and we determine our success relative to others. If our friends are all billionaires, then being a millionaire may not seems that successful. If my yacht is smaller than your yacht then I may not be that happy. It is often the status that having money brings that leads to happiness (Boyce et al. 2010). The reason I am less happy about my yacht is because my richer friends look down on it (and hence me).

How we define relative success does vary with cultures, although money often (but not always) plays a significant part, at least in how it may be used. An example in the USA how much you have recently earned is more important than in the UK, where how much you have is more significant.

Experience

Money is better spent on experiences than goods. The happiness of having is not as intense and does not last as well. If you go on an exciting adventure holiday then the memory will keep you going for longer.

A reason for this effect is that experiences satisfy higher order needs, whilst having money mainly satisfies only lower-order needs.

Philanthropy

A simple way of using money to find happiness is, perhaps counter-intuitively, is to give it away. Happiness often has a significant social component and you can get a lot of social approval by helping others. Even if others do not directly praise you, you may well praise yourself for complying with strong values to help others.

The effect works at all levels of income. Dunn et al. (2010) measured happiness of a wide sample of Americans and found that those who spend money on themselves did not increase in happiness whilst those who spent on others became happier. They also measured happiness at a Boston firm where employees received a bonus of between $3000 and $5000. Those who spent more on others were happier. They also found that even small and regular spending on others had a distinct ongoing positive effect.