It’s been said that money doesn’t buy happiness. But ask most people what they want and they say more money.So, what gives?
It turns out more money can increase happiness. But, how much and to what extent?
There’s a lot of new and useful data from quality studies come to find out.
Here are 5 ways to approach money management science has proven beneficial.
# 1 – Increasing Your Income
For most people, increasing income increases happiness. However, once you get to a certain level of income, increases no longer have the same impact.
The income level to aim for where another increase would have diminishing returns varies by location. One study has the level of income at $75,000. In New York, this rises to $99,150. In Mississippi, it’s $65,850.
The reasoning here is pretty simple–we buy the important stuff first. Someone on a $75,000 a year income is well-fed, lives somewhere safe, and has some some discretionary spending.
# 2 – Don’t Stop At $75,000, If…
Some will continue to see an increase in happiness as their income rises above $75,000.
If you look at happiness as a combination of:
- Your day-to-day mood and,
- How you feel about yourself.
For some, increasing income above $75,000 helps increase how they feel about themselves. One study showed that people continued reporting increase in life evaluation as income levels rose above $200,000.
This makes sense for people whose performance in their careers are heavily correlated with income. For example, a business owner or commissioned salesperson.
# 3 – Make Financial Decisions To Optimize For Autonomy & Leisure
Fortunately, this doesn’t give workaholics an excuse. Two of the main predictors of happiness are leisure and self-control, according to one study.
By sacrificing either of these, in a quest for a higher and higher income, you start to decrease overall happiness.
What’s also important are that leisure and self-control increase the more you save. Making saving money one of the best things to do to increase your overall happiness.
# 4 – There Are Easier Ways To Increase Happiness Then Increasing Income
When it comes to increasing your happiness, there are far larger factors than money.
One study showed doubling the number of friends has the same impact on happiness as a 50% increase in income.
Another study showed an increase in health from 3-4 (on a scale of 1-5), has the same impact on happiness as a 6,531% increase in income!
# 5 – Emergency Funds & Savings Raise The Happiness Floor
Difficult times in life are inevitable. From a car breaking down, to a job loss, or even a loss of a loved one. Saving money has shown to increase how far you’ll far at times of hardship.
So, get out of debt, build your emergency fund and save money. It will make you happier when you hit those rough patches in life.
Can Money Bring Happiness: Helpful Resources
Here are two great resources that don’t read quite like journal articles for those interested.
Science has provided some insight into how money brings happiness. Having this knowledge is a great starting point to determine your financial goals.
But there’s a lot more to setting financial goals and priorities that bring your joy. That’s why I created the free workbook: How To Set Financial Goals That Actually Make You Happy.
This step-by-step and proven process will set you up for optimizing your financial goals for greater fulfillment and purpose in life. Just enter your name and email address below and I’ll send you the workbook immediately.