Can Money Really Buy You Happiness?

I think everybody should get rich and famous and do everything they ever dreamed of so they can see that it’s not the answer.

Jim Carey

We’ve all heard it before – money can’t buy you happiness.

Take three people. Person 1 makes $75,000 a year, Person 2 makes $125,000 a year, and Person 3 makes $200,000 a year. Who do you think is the happiest?

According to a recent study, the two people earning $125,000 and $200,000 are likely to report greater satisfaction with their life when compared to the person earning $75,000. However, the study funds that the person earning $200,000 a year is unlikely to be more happier than the person making $125,000. This is because Person 3 has an income above $125,000, which according to the study is the point at which greater household income in Australia is not associated with greater happiness.

Here’s the global income thresholds, where greater income above these levels doesn’t predict happiness.

Before you give up on money as a source of pleasure, here’s when money can make you happy (according to research):

1. You spend it on time

We’ve all faced this decision: Attend that business function, which kicks off at 5:30 pm, or go home and spend time with your family? Work weekends to build that business that will provide for your children, or spend time with them now?

Given the choice between more time or more money, which would you pick?

In our pursuit of happiness, we are constantly faced with decisions both big and small that force us to pit time against money. Of course, sometimes it’s not a choice at all: We must earn that extra pay to make ends meet. But when it is a choice, the likelihood of choosing more time over more money — despite the widespread tendency to do the opposite — is a good sign you’ll enjoy the happiness you seek.

2. You spend it on a fantastic experience

Cast your mind back to the last ‘thing’ you bought (that new gadget, smart phone, etc), that thing that made you smile then quickly faded into the background. Contrast this to that overseas holiday you took, the one you’d been planning for years, or that cooking class you took in Florence whilst you were over there. You recall it vividly don’t you?

Although experiences don’t last as long, the pleasure and satisfaction lasts a lot longer.

People do not have unlimited money, so buying one thing means not being able to pay for something else. Shifting your focus to not just say ‘let me make more income’ but let me just spend my money in ways that are actually making me happy is a really promising strategy.

Living your life isn’t expensive, showing off is.