Can money buy happiness?

It’s an age old question

It is true that at any point of time, people with higher income are, on an average, happier than those
with less. But over the course of life, the average happiness remains almost constant for any group
of people even though they believe that they were better off today than in the past and will be
happier in the future than they are today. This is because people’s aspirations also continue to go up
along with an increase in income which lowers down the favourable impact of higher income. As a
result, experienced happiness turns out to be very different from projected happiness. This can be
explained by a simple example. Imagine you buy a new home and your neighbours are richer and
have more expensive cars. This will result in you wanting more. So, while higher incomes might lead
to higher life satisfaction but they don’t guarantee happiness. This can be explained by the simple
fact that humans are really good at adapting to the changes in their lives. This results in them taking
things for granted.

It has also been found that although rich people experience greater life satisfaction, people with
comparatively less money tend to find meaning in their lives mare than their wealthier counterparts.
This sense of meaning refers to the belief that life has purpose, value, and direction. It has been
found that this sense of meaning is associated with a long-lasting well being than happiness alone.
One reason why poor people tend to find this sense of purpose in their lives and rich people don’t is
because the financial constraints pose such practical and economical strain on their lives that they
have to learn to deal with the situation as it is whereas affluent people have access to external
sources of happiness and therefore do not feel the need to find a sense of purpose in their lives.

Moreover, several studies have shown that happiness is determined not by how much a person
earns, but rather, how one spends it. Evidence suggests that people experience comparatively higher
levels of happiness when they spend their money on others than when they spend it on themselves.
These kinds of prosocial acts are emotionally rewarding because they help us in building and
creating bonds with other people.

Also, even if people spend their money on themselves, they are a lot happier when they use it for
experiences like travelling, watching movies etc. rather than spending on material goods. This can be
explained by the fact that life experiences tend to last forever and meet our psychological needs and
therefore give us a long lasting pleasure whereas we get used to the same material goods that used
to give us a thrill in the beginning.

At the same time, it is equally important to consider what you are spending your money on will
affect how you spend your time. While it is not possible to quantify the benefits of time like money
but people, on an average, tend to derive an emotional benefit when they are able to save some
time for themselves. This might be done by outsourcing some of your tasks to others and using that
time to do something you like.

While the spending patterns of a person play an important role in his/her happiness, it is equally
important to check how much money you save and owe. Studies have shown that spending more
than one can afford can have a detrimental effect on one’s happiness and can even lead to mental
health problems whereas ensuring financial security and saving money tends to increase your level
of happiness. Therefore, it is essential to spend money to buy the essential commodities, paying off
the debts and building a safety net before spending money on any kind of luxury. This holds true
across a broad range of income levels except for people with low incomes as they do not have
enough money to buy the essential commodities and are compelled to borrow money in order to
survive.
But all this does not imply that money can buy you happiness if spent correctly. Money can buy
happiness only up to a certain point. While it is true that rich people are more satisfied with their
lives than poor people but it is not necessary that a person satisfied with his life will experience
positive emotions like joy, affection and tranquility all the time. After all, even high net worth
individuals suffer from issues like alcohol, drug addiction, depression etc.

To summarise, while having money contributes considerably to your happiness up to a certain point.
But, beyond that, more money doesn’t necessarily result in more happiness. However, spending
money with a little bit of thought can buy you a lot of happiness.