Money and Happiness: Does Money Make You Happy?

Published May 26, 2023

Can money make you happy? This is probably one of the oldest most debated questions in the history of money. And I bet, it’s something you’ve also been curious about.

Countless people have tried to answer this question. Some use logic while others use more scientific methods. But until now, we still haven’t settled on a definitive answer to this age-old question.

That’s why, in this post, we’ll attempt to untangle the complicated relationship between money and happiness. We’ll look at the latest studies and surveys to try and find out if more money really does make us happier.

The Link Between Money and Happiness

Admit it or not, money is a necessity in today’s world. Whoever says they don’t need money is a hypocrite. From the clothes we wear to the water we drink, almost everything costs money.

But does having money really make us happy?

Well, as I said, almost everything in today’s world costs money. We need it to acquire some of our most basic needs like food, water, and shelter. Unless you live alone in a very secluded place, it’s almost impossible to survive without it. In short, we need money to live.

So, to a certain extent, money can provide happiness – or at the very least, a comfortable existence.

That doesn’t mean, however, that it’s the be-all and end-all of happiness. Yes, we need money to buy our needs and wants. But material wealth isn’t the only thing that can make us happy.

In fact, as the famous saying goes, the best things in life are free. There’s so much more to life than just material possessions. Love, friendship, sunsets, and sunrise – the best experiences in life don’t cost anything.

To put it simply, money may give us happiness – or even just a fleeting feeling of satisfaction. But we need more than just money to be truly happy.

What Do the Numbers Say?

Over the years, there have been various studies on the relationship between money and happiness. Most of their results have, so far, been contradictory.

A 2010 study from Princeton University found that one’s happiness increases as their income increases, but plateaus at $75,000. Meaning, having an income higher than that amount doesn’t affect one’s happiness.

While another study released in 2021 suggests a different scenario. In this recently concluded study, researchers also found that an increase in income leads to an increase in happiness. But unlike the 2010 study, it suggests that one’s happiness doesn’t plateau after a certain amount of income.

In 2023, researchers of both studies teamed up to reconcile their data – and the results have been surprising. According to their findings, happiness does increase with income – but only if you’re happy to start with.

If you look at the study from an overall perspective, you’ll see that happiness does not plateau no matter one’s level of income. But if you look at it closely, you’ll see that it only applies to certain people. 

In different income brackets, there are people whose happiness plateaued after a certain amount of income. While there are also those who feel more happy as their income increases, no matter their income bracket.

With this, the researchers have concluded that more money can only make you happy if you’re already happy. If you’re miserable, money can only do so much.

A Harvard study also suggests that higher income can lead to less stress. In other words, money can make us happy in the sense that it allows us to avoid or lessen common day-to-day hardships and stresses.

For instance, if you’re hungry, you can just have food delivered to your doorstep. Or if you want a more comfortable commute to work, you can buy your own car. All these make life easier and more convenient, but they also require money.

The lack of money also makes people feel a sense of shame, which in turn, makes them more stressed. This stems from the commonly-held notion that people experiencing financial difficulties are somehow to be blamed for their predicament, rather than a victim of their circumstances. This “shame spiral” prevents them from forming healthy social relationships and sometimes can even lead to self-destructive behavior.