The curious relationship between money and happiness

Are happy people happy because they have more money? Or are people who are happy simply more satisfied with what they have?

For one writer, Melissa Leong, this question was something that needed to be answered, which she does, in a book called “Happy Go Money: Spend Smart, Save Right and Enjoy Life”.

Here are some of Leong’s more salient points:

Money CAN buy happiness

You know the old saying, “Money can’t buy happiness”. And to a degree, it is true since money can’t buy peace of mind, satisfaction, delight, or any of the feelings that come with happiness.

But Leong says that in order to be happy, we need to feel secure. And this includes financial security.

When Leong was newly married, her husband fell into a depression. And so she went on a personal journey to discover what brought happiness to people’s lives.

Leong writes that she was thankful her husband’s diagnosis came at a time when they were financially secure, and so she was able to concentrate on what to do for their lives, instead of worrying about finances.

Leong’s points are evidence-based, taken from the latest studies on finances, psychology, happiness, etc.

One study she cites from Purdue University shows that an individual reaches a level of peak satisfaction when his or her net worth is US$65,000 to US$75,000.

Believe it or not, any additional money actually causes a decrease in happiness.

More money, more problems

Leong explains that people who have more money often have more work. This means they have less time for relationships, which is a huge factor in personal happiness.

It can also mean more stress, more competition, a sharper focus on material goods instead of relationships (again) and meaningful life experiences.

As people say, material things end up owning you, instead of you owning them.

And speaking of things

The truth is, things can make us happy — for a while. The new phone, designer jewellery, a new car with its new smell.

Except that human beings experience a phenomenon called hedonistic adaptation – we quickly get used to the new things we have. They become our new normal pretty quickly.

And then we want the next new thing, which is why things don’t really make us happy, in the end.

What’s the big secret then? Step one to striking the right balance between money and happiness is recognising what makes us happy and spending our money on that, instead of the other way around.

We should not spend our money chasing happiness.

So what makes people happy?

  • Social relationships

The biggest predictor of happiness is social relationships. Not all relationships make us equally happy. Toxic relationships don’t. Let’s reserve our resources (time, money, energy, etc) for the relationships that bring us the most joy.

  • Experiences

Experiences are important because they bond you to people. Which brings us back to relationships again.

A friend took his 85-year-old mother to her favourite vacation town when they were young, just to enjoy ice cream and sit in the city square. He knew that she may not be around for much longer, and so he didn’t mind spending on a trip that they would both enjoy.

  • Timesavers

People who spend their money on things that save them time end up happier.

For example, if you can afford to hire a cleaning service for your house so you can spend more time with your kids, you’ll experience a jump in personal satisfaction.

  • Give (some of) it away

People who give to charity, no matter how much money they actually have, experience more happiness than those who don’t.

  • Healthy eating and exercise

Makes perfect sense. Health is wealth after all, so living healthier lives make us happier.

3 ways to be happier NOW

Leong also outlines certain ways that we can choose to be happier now, in relation to money.

It’s up to us to be proactive with our own happiness and well-being, and it’s good to know that there are things we can do in order to get happier.

  • Stop the comparison game

If comparing your life to others only makes you miserable, stop. What you can do is find someone you admire for their qualities and not necessarily their wealth or possessions. Finding out how they got to where they are in life can help inspire you as well.

  • Stop the negative language

Negative talk only leads to more unhappiness like declining a dinner invitation because you’ve budgeted your money elsewhere.

Instead of saying outright “I can’t afford to have dinner with you”, how about saying, “You know, I’m going to have to pass on that because I/m paying off some debts”.

This is pro-active and responsible, and your friends will admire you for it.

  • Look at your last three unplanned purchases

What were your last three impulse buys? Leong is sure you made the purchases when you were stressed. Look for better ways of dealing with stress — exercise, a hobby, a conversation with friends, etc.

Build an ‘Oh happy money’ tribe

Since peer support is important for success, it’s advisable to have your best people around you cheering you on when you’ve achieved your goals, and encouraging you on days when it’s tough.

Your “oh happy money” tribe will cheer you on, and celebrate your successes with you.

This article first appeared in thenewsavvy.com

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