It’s the age-old question: Can money buy happiness? In theory, we know the answer is “no.” Yet, many pursue it in great expectation that when they finally get enough of it, they’ll be happy. If you get the bigger house, the right car, the right salary, then you can kick up your heels and revel in your success. But researchers have discovered some interesting facts that may challenge your notions about money and happiness. First of all, the less money you have, the more it can impact your happiness when you get more of it. If you make $10,000 and you quadruple your income to $40,000, your life satisfaction will improve significantly. But beyond $40,000, life satisfaction increases only slightly with increases in income.
That’s not to say you shouldn’t pursue making more money, just know some of the factors that allow money to make you happier. These three questions are among the most important:
1. Can I pay my bills?
The biggest predictor of happiness as it relates to money is not how much of it you make, but whether you can pay your bills. So, focus on widening the gap between your income and expenses. There are three ways to do that – spend less, make more, or do both. If you double your income, then double or triple your expenses, you set yourself up for stress and anxiety. The easier it is to pay your bills, the happier you’ll likely be.
Bottom line: Living below your means increases happiness.
2. Do I make more or less than the people around me?
According to studies, if given the option between making $100,000 in a community where everyone else makes $200,000 or making $50,000 in a community where the average person makes $25,000, the majority of people actually choose to make $50,000. Most people are more concerned with making as much or more than their peers than they are with the actual amount they make.
Bottom line: People feel better when they are above average.
3. Do I spend my money making someone else happy?
Not that we needed research to confirm it, but it does: It is better to give than to receive. People report higher levels of happiness when they spend money on others than when they spend it on themselves. There’s nothing wrong with spending on yourself, but make it a rule to do something for someone else – just for the joy of it.
