Money Buys Happiness - Sort Of

Can money buy happiness? Many researchers say no, even though the research says yes. The contradiction has to do with what they choose to see in the numbers their studies produce.

Back in 2006 this issue was in the news, with headlines that went something like this: "Science shows that money can't buy happiness." However, if you read the story, rather than watching the abbreviated coverage on television, you only needed to read down a few paragraphs to discover some interesting and more enlightening statistics.

The research showed, as similar research has before, that people generally were happier as they moved from poverty to higher income. One study showed that in the United States, people are happier with more money up to about the level of the average household income - around $44,000 at the time of the study. Beyond that level of income, gains in reported happiness from higher income taper off. Another study demonstrated that people who made $50,000 per year were twice as likely to be happy as those who made $20,000, while at $90,000 there was little or no increase in happiness compared to the $50,000 level.

Interestingly, researchers and reporters used the latter statistic to justify their announcement that money and happiness are unrelated. This might suggest that as a group they make decent incomes and so see no hope for increasing their own happiness with higher income. But to translate this into the idea that money won't help anyone be happier ignores the many millions of people who make far less than the household average income.

Money Made Us Happier

We were living on less than the average social security check when my wife and I started out. With no debt, this isn't as bad as it seems, but our income was low enough to limit our options. Better food would have been nice, for example. A warmer place than Northern Michigan would have greatly improved my wife's mood as well. We also wanted to travel more and to visit my wife's family in Ecuador more often than once every three years.

Six years later we are living in Colorado, near the mountains we love, in a warmer place. Healthier food and more meals out are part of our lifestyle now, as is dancing and travel. This lifestyle costs several times as much as before, but are we happier now?

Yes, absolutely, and it isn't just because of the things that we can buy. The lack of money worries makes for a much more relaxing life. No more wondering if we'll have enough money for dental work, or to go to Ecuador to visit family. No more walking past the healthy foods in favor of the cheaper ones. We spend a few hours of work at our business each day, and then do what we want.

There certainly are examples of people who have made themselves more miserable despite a higher income. After all, money alone doesn't even help with financial problems if you don't know how to use it. If you aren't clear about what it can and can't do, it won't help with happiness either. Many people will spend even more than any increase in income, and increase their debt and stress. We spend three times what we used to, but make four times as much, so this isn't a problem.

It is also true that money won't eliminate your bad habits. If you overeat, over-spend, or choose the wrong people to spend time with, having more money is likely to mean more trouble. Then again, money can buy the time and knowledge to overcome bad habits - if you choose to use it that way. It can help you be healthier and it can even put you in places where better friends might be discovered. But it won't make these decisions for you.

This is our own experience: We are happier to be able to help people. We are happier to be able to afford going out and socializing more. We are happier to be comfortable at home, with extra cash always available in the checking account. Money can increase your happiness - if you use it right.

For more on this and other deeper questions about money, visit The Meaning Of Money .com and sign up for the free Money Matters Newsletter.

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