Money Does Buy Happiness

money-does-buy-you-happiness

Money does buy happiness, but it depends on how you spend it which determines your level of happiness. How many stories have we heard about people who have won the lottery, but end up broke, poor, alone, and unhappy? This is known as the lottery effect. The same goes for professional athletes who come from nothing to a significant income source.

When you look closely at why these individuals end up unhappy, it is because they spend most of the money on themselves and make bad investment choices. They also alienate themselves from “family” and “friends” who come to them for a hand-out.

We also see this with individuals who create Ponzi schemes. Usually these schemes start out legitimate, but because of greed and the need to spend more on themselves, it escalates to being unhappy with what they currently possess. Being rich doesn’t always mean being happy.

How Does Money Buy Happiness

As stated earlier, happiness with money depends on how it is spent.  There is strong data and a strong correlation between giving money away and happiness. According to a Gallup poll done for the Charitable Aid Foundation, it found that there is a strong correlation between happiness and giving than between wealth and giving.

In other words giving doesn’t make you wealthier, but giving makes you happier. The survey was conducted in 153 countries and essentially asked questions on charitable giving and level of happiness.

Often times, people go on shopping sprees to cheer themselves up when they are feeling down, but this practice is unlikely to help in the long-run. In fact, there is also data to show that the more sad we are, the more we will spend on a particularly good or service. Bad moods can lead to a cascade of poor financial decisions.

I agree with the data, but would also throw in that there should also be a mix of spending money on life experiences with the ones you love. Personal experiences boost our spirits in the long-term. We often remember fond memories, than we do tangible objects. Twenty years from now, you are more likely to remember that awesome vacation in Barcelona with a loved one, or making someone’s day by buying them dinner, than that iPhone you purchased.

About The Author

Edwin is a marketer, social media influencer and head writer here at I Am 1 Percent. He manages a large network of high quality finance blogs and social media accounts. You can connect with him via email here.


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4 Comments

  1. Josh @ Live Well Simply

    Happiness comes from a lot of variables in our lives including relationships, the weather and what time of day it is 🙂 I would agree, however that financial circumstances affect our overall level of happiness.

    Reply
  2. Shannon-ReadyForZero

    I’m not sure if I think money can buy happiness, but I do know that struggling with money can lead to depression. Like all things in life, happiness requires balance. I agree with your words on giving though. I have found in my personal life that I can more quickly raise my mood by giving back or helping someone else than I can by focusing on my problems and looking for quick endorphin fixes like shopping.

    Reply
  3. Wayne @ Young Family Finance

    This is so true. All of my best childhood memories were from family vacations. They weren’t even flashy overseas vacations; camping in the backwoods in Maine, camping at Disney World, canoeing in North Minnesota. My family spent a portion of what little we had on spending time and making memories together, and we were very happy. I am trying to capture that in our own financial decisions today. Admittedly, Barcelona would be a little cooler than our budget-friendly “stay-cation” that we have planned, but we will still have a great time!

    Reply

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