Can money buy happiness? According to science, it can. We’ll investigate the science of buying happiness.
If you aren’t buying happiness, you’re using your money the wrong way. Science is here once again to save the day and show us exactly how to spend our money (or our time) to increase our level of happiness.
1. The Amount Needed to Be Happy
In 2010, a study was published declaring that the amount a person needed to earn per year to be happy was $75,000.
People say money doesn’t buy happiness. Except, according to a new study from Princeton University’s Woodrow Wilson School, it sort of does — up to about $75,000 a year. The lower a person’s annual income falls below that benchmark, the unhappier he or she feels. But no matter how much more than $75,000 people make, they don’t report any greater degree of happiness.
But that was then. Eight years later the number is higher. Damn inflation!
The Sweet Spot
An updated study at Nature now says the sweet spot is $105,000. That number can be household income, not just a single salary. The study used the following example:
Three single American women, aged 33. One earns $40,000 per year, another $120,000, and the third, $200,000. According to the study, the two higher-earning women are likely to report more satisfaction with their lives than the one who makes $40,000.
However, the one making $200,000 is probably no happier than the one making $120,000. This is because both the $120,000 and $200,000 women have incomes above $105,000, which is the point at which greater household income in the US is not associated with greater happiness.
It’s Down To Stress
You might think that higher earners are happier because they can buy more stuff or take more, nicer vacations. But it’s mostly down to stress. When you aren’t making a lot of money, you might have a hard time making ends meet; you might live in an unsafe neighborhood, you might have no emergency fund, you might be drowning in debt.
All of those situations are stressful. But maybe the most stressful part of not having enough money is the lack of choice that comes with it. If you hate your job, you can’t just up and quit. Your kid goes to a subpar public school, but you can’t afford private school.
Money isn't everything, not having it is.Tweet This
Something might be really wrong with your health, and your primary care doctor has referred you to the best specialist in the area. But that doctor doesn’t take your insurance, so you have to see someone else. Or you can’t see any doctor at all because you don’t even have insurance.
Choices are freedom, and human beings aren’t happy when their freedom is curtailed.
2. Spending Money on Experiences
It’s not what you spend; it’s what you do. Buying things is not buying happiness.
Quick, what is the last thing you bought you were excited to buy? Do you even remember? Probably not. If you do remember, do you have fond memories of buying it? Do you look back happily on your trip to the store, your interaction with the salesperson? Probably not.
When you bought this thing you wanted, did someone come with you? Did you spend time picking out the item together? Do the two of you reminisce about buying it? Probably not.
After you bought this thing, did you regale friends and acquaintances with the tale? Did the hang on your every word, enjoying the story? Probably not.
Now, About Your Last Vacation
Now, answer all of those same questions about the last vacation you had. You remember that vacation and think about it often. You and your spouse wax nostalgic about that trip, the little bar you wandered into, the great meal at that little bistro the Uber driver recommended.
Andrew and Laura travel a lot and they have shared some great stories with me. My favorite is about the time they went dog sledding (they really did) in Canada and Laura’s sled tipped over, and she hurt her wrist.
I wasn’t happy she hurt her wrist of course but how many people do you know who can tell you about the time they went dog sledding and fell off?
Matt loves going to Portland because the food and craft beer scene there are great. Andrew loves taking cooking classes. I haven’t been to Portland, but I can attest to the cooking classes.
If you ever come to New Orleans (and you all should) check out the New Orleans School of Cooking. For about $35 you get a cooking lesson, a history lesson, a three or four-course meal, beer, lemonade, and iced tea.
I have done it four or five times, and it’s hands down the best money I have ever spent while on vacation.
Even when you’re super stoked to buy something, how long does that excitement last? How long does that thing last? Unless it’s a cast iron skillet, it won’t last as long as the memory, and you can’t lose it, ruin it, or have it stolen.
Buy experiences, not things.
Get our best strategies, tools, and support sent straight to your inbox.
The kind of people who love to spout trite platitudes like to say “Tis better to give than receive,” but it turns out, they’re correct. And you don’t necessarily need to spend money to do it.
For those of us who aren’t sociopaths, we like to help others; we don’t want to see other humans in distress. A great example of this is the Cajun Navy. They are a group of Louisiana residents who own boats. When disaster strikes, as it increasingly does on the Gulf Coast, they Cajun Navy springs into action, rescuing people stranded by flooding.
They don’t get paid nor is this their job. They’re simply a group of volunteers who have been there and want to help people in a situation they once found themselves in.
Making Someone Smile
You don’t have to do something as monumental as start your own rescue group to pluck stranded people out of flood waters to get those “charity endorphins.” It can be something as small and simple as buying someone a coffee or a drink.
It can be taking the time to speak to an elderly neighbor who doesn’t have a lot of family and doesn’t get out much. Five dollars of your money or five minutes of your time can make someone’s day. And that makes you feel good.
You’re Doing Something
In the current political climate, it’s easy to feel helpless and like whatever you do won’t make a difference so you might as well do nothing. But feeling helpless is one of the scariest feelings in the world. It’s not like you can forget about what’s happening by giving up. It’s still there, churning around in your brain all the time.
This is how I’ve been feeling so I have changed how I give, both my time and my money. The only kind of charity I engage in now is activist charity. I give my money and my time to organizations that are fighting what I want to fight.
For me, that’s Planned Parenthood, ACLU, Freedom From Religion Organization, and Committee To Protect Journalists. For Matt, it’s NRDC (Natural Resources Defense Council). These groups are all fighting for things that are under grave attack, reproductive rights, civil liberties, separation of church and state, a free press, and the environment.
Andrew donates to the ASPCA because he and Laura are animal lovers and there are never enough resources to protect and care for animals. He also donates to the Patreon accounts of people who create things he appreciates because he is a creator and knows how much work and money goes into creating great things.
Action always feels better than inaction so if you’re pissed off or worse, despondent, about an issue, give your time and money. It will make you feel more in control which is a happier feeling than feeling helpless.
Do check out where a charity’s money is going before you donate. You don’t want your hard earned and well-intentioned money going to pay outrageous CEO salaries.
4. Nurture Your Relationships, Not Your 401k
People have nothing on money when it comes to making us happy. Satre said “Hell is other people,” but people make us happy.
The More The Merrier
How many friends do we need to be happy? Here’s the magic number:
Large-scale surveys by the University of Chicago’s National Opinion Research Center (NORC), for example, have found that those with five or more close friends are 50% more likely to describe themselves as “very happy” than those with smaller social circles.
Being healthy is a big component of being happy. That’s why people with the flu are so grumpy. Turns out, having friends is good for your health too, mental and physical!
Pick the Right Fish
If having good friends is important, having the right partner is essential.
Even more important to your happiness is your relationship with your aptly named “significant other.” People in happy, stable, committed relationships tend to be far happier than those who aren’t.
Among those surveyed by NORC from the 1970s through the 1990s, some 40% of married couples said they were “very happy”; among the never-married, only about a quarter were quite so exuberant. But there is good reason to choose wisely.
Divorce brings misery to everyone involved, though those who stick it out in a terrible marriage are the unhappiest of all.
If you screw up in choosing a partner, it won’t really matter what else you do right; you make $105,000, you give to charity, you have more than five friends, you’ll still be pretty miserable. So choose wisely.
Easier Said Than Done
It can be harder to make friends the older you get. In school and college, potential friends were pretty much everywhere. Once you leave school for the real world though, you have to try a little harder.
When I moved to New Orleans, I didn’t know a soul, not one person. And I was working from home. And I don’t have kids. So no established friends, no office to go to where I might meet some, and no kids who have friends whose parents might become friends.
So I had to go out into the world, ALONE, and meet people on my own. Now, because it’s New Orleans, it’s kind of easy mode compared to some places. I walked two blocks straight out my front door to a Mardi Gras parade and met one of my neighbors who is now my closest friend in the city. And through her, I have made other friends.
Easier or not, I still had to go out and make an effort to meet people. And once you’ve established those friendships, look after them. Don’t take them for granted. Host parties where you can see your friends and maybe meet some of their friends, expanding your circle.
Pick up the check if you’re in a position to do so. (I will attest to what Matt said. Andrew and Laura never let me pay a check). If you see a little something that reminds you of your friend or that you think they might like, buy it and give it to them. Unexpected gifts are the best kind.
I’m one of the quarter of never married people who are “very happy,” so I don’t have any advice for you married folks, sorry!
5. Buying Time
When asked what they would like more of, most people will say time. While it’s true that we all have 24 hours in a day no matter how much or how little money we have, money can buy time.
It’s Costing You Money
I work from home, so if I’m home, I could be working. But someone has to clean the house. I’ve done the math, and if I spend the hour it will take to clean my house, it costs me money because the cleaning person charges less than I make an hour.
I have married friends, all of whom work, who argue over cleaning the house. I never understand this. You both work, pay someone else to clean the damn house! What a dumb thing to fight over when it could be easily resolved.
Remember how I said I had no advice for married people? Turns out I do. If you both work and you’re fighting over cleaning, hire a cleaner.
You Just Hate It
Most aspects of adulthood are pretty gross and depressing, but one of the really good parts of it is the fact that you don’t have to do anything you don’t want to do, not really. There are consequences sometimes though.
If you don’t do what your boss asks, you’ll be fired. If you don’t show up for jury pool, you’ll be fined and maybe arrested (I added that one because I’m sitting in jury pool writing this and really effing salty about it). But you don’t have to do anything.
You don’t want to clean the house, cook, or do laundry? Fine, don’t do it. Because you can use your money to pay someone else to do those things for you. Hire a cleaner, order Seamless, and send the laundry out. Not only do you avoid doing something you hate, but you’ve also bought yourself time.
Hate running to the store for little things like toilet razor blades, toilet paper, and laundry detergent? Fine, don’t. You can automate them which saves you time and money. Get your razor blades from Dollar Shave Club (I’ve been doing that for a few years. It’s awesome!). Use Amazon Subscribe and Save for the staple items you use regularly.
6. Buy Things You Will Frequently Appreciate
You only have so much money to spend so you can’t afford the best of everything so where should you spend your money to get the most happiness?
What Comes Between You and the Ground
I think I read this on Reddit ages ago. You should spend more money on things that come between you and the ground, things like shoes, tires, and a bed. Those are things you use every day. You might not always think about them when you’re using them, but if they’re giving you problems, you’ll surely notice.
Cheap shoes hurt your feet, bad tires are dangerous to drive on, a crappy mattress means you don’t sleep well.
Ornament Not Use
Not every penny you spend has to be spent on a functional necessity. If you see a piece of art, you love, buy it. You’ll get pleasure from that piece of art every time you look at it. Maybe there is an interesting story behind the artist or the subject you can share with other people.
Humans can survive surprisingly well eating only buttered white potatoes. But what pleasure is there in that? You work for your money, and you are allowed to spend it on things that aren’t strictly necessary if they give you some pleasure.
You’ll Do X More
Sometimes we don’t do things that we should do because we don’t have the right tools for the job. Or we have a tool, but it’s not really a fun tool. If you can buy something that will make you more likely to do something you should be doing, something that is good for you, more often, that’s a good use of your money.
An electric toothbrush is a good example. You can get by okay with a manual toothbrush but using an electric toothbrush is oddly fun. So you brush more often or for longer.
A good kitchen knife is another example. We all know that cooking at home is better for our health and our wallets. But if all you have is one dull, crummy knife that slips and doesn’t cut very well, you’re not very likely to cook as often as if you had a good knife that did its job.
We Get To Define It
Everyone gets to define happiness for themselves. Watching cycling makes me happy. You might find it really dull. But some aspects of happiness are universal. Science proves it. And that’s the great thing about science. It’s true whether you believe it or not.
Beer Geek Breakfast: An Oatmeal Stout.
Rumpkin: A pumpkin beer aged in rum barrels.
Join the Listen Money Matters Community on Facebook by visiting listenmoneymatters.com/community to send in new catchphrases for the show.
And if you have any questions or topics you’d like us to talk about, email us at email@example.com. All the tools and resources we usually mention on the show are available at listenmoneymatters.com/toolbox.
Thank you to our sponsors: Harvest Returns and Neat