George W. Dudley, co-author of Earning What You’re Worth advises his clients to “Watch who you let near your mind” and this is sage advice when it comes to the scientific evidence on the assumption that money will bring you happiness.
So let’s analyse the facts, but before we do that, here are some of the positions that people tend to take on whether money can or can’t make you happy in life.
Two common sayings you’ve probably heard, and maybe even said yourself are: (1) happiness comes from ‘within’ and (2) money can’t buy you happiness. Then there’s this (3) it’s easy for those who have so much money to say that money can’t buy you happiness.
There have been major cross-cultural research studies that find a significant relationship between income and happiness (or as it is often referred to in the research as ‘subjective well-being’). For example, just one of the many studies (Yang 2008) shows that if you’re living in the United States and were in the lower quarter of income earners, your odds of being happy are reduced by about 20%, whereas, if you’re in the upper quarter, your odds of being happy are increased by about 13%.
The key to the research however is that being poorer decreases the odds of being happy more than being richer increases the odds of being happy.
So what’s the research really telling us?
Practically, what it’s telling us is that money does matter to our overall sense of well-being and happiness… but only to a certain extent. Basically, money will matter more if you have little of it, and will matter less when you’ve got more of it.
It kind of just makes sense when you realise that with more disposable income you’re able to potentially spend it to reduce stress, access better health care, and be less worried about ‘every-day’ necessities.
Research by Kahneman and Deaton (2010) arrived at a ‘tipping point’ that suggests once you’re earning enough money to live a comfortable life (in U.S. dollars this was found to be $75,000), any additional income would allow you to acquire more and have an increase in life satisfaction, but did little to improve your overall happiness and subjective well-being.
The importance of this research and other studies that support the findings, is that the pursuit of earning more income as the key to happiness will be a disappointing goal. Researchers refer to a ‘hedonic treadmill’ (or keeping up with the Joneses) which is where a person keeps setting higher and higher materialistic goals, aiming to acquire more and more ‘stuff’, in the hope that it will make them happy. However, the evidence is clear that placing a high value on money as a source of happiness will leave you less satisfied with life.
The research tells us that the key to happiness is on spending our money on experiences, on intentional actions that will support a more happy, flourishing and prosperous life and not just on acquiring more and more stuff.
The key question for us all to answer is what experiences ought we set as life goals to spend our money on?
And the answer to this question comes back to being clear on what you intention is for each of your life roles. With clarity of intention, what you want for the people in your life (including what you want for yourself), you become clearer about being able to answer what will have a relatively short-term impact on your personal pleasure, rather than significantly and sustainably increase your likelihood of living a more happy, flourishing and prosperous life.
The Intentionmics Blueprint of 9 Inescapable Truths for a Prosperous Life has been designed to step you through a series of intentional exercises and activities to help you gain clarity around your personal truth and what it will really take for you to be who you need to be, and to do what you need to do, to help you live a more happy, flourishing and prosperous life.
The evidence is clear. It’s going to be pretty tough to be happy if you’re living below the poverty line. However, for the majority of people, the research is suggesting that we take a clear and pragmatic look at how we are spending the money we are earning… whatever level of income that might be. Keeping up with the Joneses won’t make you happy, and It’s not money that will make you happy. The bigger home, the faster car, the more toys, the pursuit of more… these will not bring you more happiness either.
The key to how we can best spend our money, whatever level of income we earn, is this… so long as you’re spending your money on intentional experiences designed to ‘live life’ rather than ‘acquire things’, the way you use your money can absolutely bring you more happiness.