“It is not the man who has too little, but the man who craves more, that is poor.”-Seneca
Does money really make you happy? Have you ever wondered why we have such a deep fascination with money? It’s a question that psychologists and scientists have been trying to answer for decades. Now, recent studies have turned up some interesting results.
Making a good income does appear to increase happiness and reduce stress, but only up to a certain point. Once we’re financially comfortable, earning a higher salary doesn’t seem to boost our mood much. In fact, it can do the opposite. How we think about and spend our money may even be more important to our happiness than how high our salary is.
What Is Happiness, Chemically-Speaking?
Let’s start with a scientific look at what happens inside our brains when we feel happy. There are four main chemicals that are related to us feeling happiness. These are Dopamine, Serotonin, Oxytocin, and Endorphin. They are released by our brains in several different areas. However, the Limbic portion of our brain is primarily the one responsible for our feeling of happiness. (Psychology Today)
Dopamine is released when we get something we have really wanted or when we get excited about something, like a raise or a gift. Serotonin starts flowing when we feel important or valued. Oxytocin flows when we have a feeling of trust and intimacy. Finally, Endorphins are pleasure chemicals triggered to help temporarily mask pain.
Now that we know which chemicals are released by our brains during “happy” times, let’s answer the burning question.
Does money make you happy?
Can money buy happiness? Money may actually be able to boost our mood if we spend it on the right things. Research consistently shows that spending money on experiences makes us happier than buying the latest gadgets. Shopping gives us a big rush of dopamine while we’re in the checkout line but it quickly fades once we get our purchases home. However, vacations, nights out, and other memorable experiences give us a burst of joy in the moment and in the future when we remember them, so they’re a much better investment in our long-term happiness.
You would think that because experiences bring us joy, having more money for trips and nights out would make us happier. But studies have shown money only increases our life satisfaction up to a certain income level. Once we reach a salary of around $60,000 to $95,000, our happiness doesn’t increase much by earning more. So if you make a comfortable income that allows you to provide for your basic needs and afford some little luxuries, you may want to focus on other aspects of life that increase happiness.
Reasons why money can’t buy happiness
Let’s look at the relationship between money and happiness from another perspective which may show why surpassing a threshold of income doesn’t make us happier. Despite the fact that we are the wealthiest civilization that has ever existed, we still have the shared feeling that we don’t have enough money. We also commonly feel that no matter how much money we already have, we would be happier if we had more.
In our article “How much money does it take to be considered “rich” in the US?” we found that achieving “rich” status is relative. The richest guy on the block will always want more, and will never be quite satisfied with what he’s got.
Why is it that no matter how much we have, we always want more? This theory can take us back to the release of that brain chemical called dopamine. Dopamine is not only released when we experience a moment of joy but also when taking several kinds of illegal drugs. The need to feel that “high” over and over again is what keeps an addict using drugs.
Similarly, it seems that no matter how much money we have, we need more to feel happy or satisfied. Like a drug addict, we are constantly chasing that feeling that will continue to escape us if we rely on the wrong things to achieve it.
How to increase long-term happiness
Beyond having enough money to meet our basic needs, let’s look at a few ways we can increase long-lasting, meaningful happiness.
Give to others
Believe it or not, people are happier spending money on others than on themselves. Giving back to others, whether through volunteering or gift-giving, decreases our stress levels, boosts our mood, and even improves our physical health and longevity. If you want to increase your own levels of happiness and life satisfaction, being altruistic is one of the best ways to do it.
Buy things that open up more time for you
Studies have shown that people get greater satisfaction from spending their money on time-saving services than material goods. Buying back some of your free time by hiring a cleaning service, for example, will allow you to do more of the things that are important to you. You’ll be able to use those extra hours to hang out with family and friends, participate in fulfilling hobbies, and practice some much-needed self-care, which will increase your overall happiness.
Purchase things that will bring you joy over time
Studies may show that experiences increase our happiness more than things, but that doesn’t mean you should not buy material goods. The key is buying things that you think will bring you joy over time, like a painting you can admire daily or a cooking set in your favorite color that will bring you joy every time you prepare a meal.
Thinking over a purchase before you make it can help you identify whether or not it will really bring you joy. Try not to make impulse purchases — those are the things that will sit in the back of your closet and collect dust.
Build relationships with friends and family
Having strong relationships with friends and family is even more important to your overall happiness than making a comfortable income. One study from the University of Chicago showed that people with five or more good friends are 50% more likely to classify themselves as “very happy” than those with fewer close friendships. Studies have also shown that having close and committed relationships with family members makes you happier.
So don’t feel guilty for spending money on flights back home, dates, or going out to eat with friends — those are some of the best investments you can make in your happiness.
Find active pleasures
After a long day at work, sometimes all you want to do is curl up on the couch and watch Netflix. But if you spend most of your free time on passive pursuits like watching TV or playing video games, you’ll be less happy overall than if you pursued more active hobbies.
To maximize your happiness, you should try to find a few hobbies that are both enjoyable and challenging, like dancing or learning to play the piano. Setting goals around your hobby and achieving them will get your serotonin flowing and give you a much greater sense of satisfaction than binge-watching The Bachelor.
Money can’t buy happiness but it can help
Building strong relationships with your family and friends is likely more important to your overall happiness than having a lot of money in your bank account. Although money isn’t the key to happiness, you still need it to meet your basic needs. You can also use it to carve out more free time to do the things that are important to you, like spending time with your partner or pursuing your hobbies. By spending your money wisely, you’ll be able to boost your happiness which can lead to a more fulfilling life.
So, while the act of earning or receiving money can trigger a sense of happiness, it is important to not get wrapped up in the addiction and constant need for more. There are many other things that can provide us with happiness in our lives, and while money may be one of them, it certainly should not be the only one.
Jessica Walrack is a personal finance writer at SuperMoney, The Simple Dollar, Interest.com, Commonbond, Bankrate, NextAdvisor, Guardian, Personalloans.org and many others. She specializes in taking personal finance topics like loans, credit cards, and budgeting, and making them accessible and fun.