Does more money really make you happier?
It’s a question that many have pondered for decades, and one that may never have a definitive answer. But over the years of helping our clients to manage their wealth, we have found that how you choose to spend your money has a lot to do with whether or not money can make you happy.
Read on to learn more about the relationship between money and happiness, and how your planner can help you calculate how much you may need to unlock a happier lifestyle.
Studies have revealed conflicting answers about whether more money can make you happier
Over the years, multiple studies have attempted to answer the question of whether more money makes you happier. Perhaps unsurprisingly, the findings have been conflicting.
- A 2010 study found that money did improve happiness but only up to a threshold of $75,000 a year – income that exceeded this threshold didn’t appear to have a material impact on happiness.
- In 2021, a study found that happiness did improve with higher earnings, without any evidence of an upper limit.
Interestingly, after the second study was published, the authors decided to collaborate to uncover the reason behind the differing findings. They discovered that there was an important nuance to the study of money and happiness.
It seems that accumulating wealth alone isn’t enough to achieve happiness, but you can use your wealth to create a fulfilling life
In the most recent study, the authors discovered that for people who already felt happy and fulfilled in life, more money tended to lead to even greater happiness. But for those who were unhappy or unfulfilled, more money did not help them to feel any happier.
This suggests that it isn’t money itself that creates happiness, but rather how you use money to build a satisfying and joyful life.
This supports our experience of helping our clients to achieve their long-term goals.
Of course, having a certain level of wealth is important to enable you to pay the bills and save towards your future. But we have found that the people who are happiest are those who know what brings them joy and contentment and who work hard to fill their life with more of these things. That might include:
- Travelling the world
- Pursuing hobbies you enjoy
- Taking every opportunity to learn new skills
- Supporting charitable causes that you believe in
- Building a business that enables you to give back
- Working less so that you can spend more quality time with your family.
Creating a happy life starts by understanding what makes you happy. This is different for everyone, so if you’re not sure what this might look like for you, take some time to reflect on your happiest and proudest memories. These could provide a helpful starting point.
Read more: 3 practical ways to decide how you’d really like to spend your retirement
Your planner could help you to calculate how much you need to be able to achieve your goals and create a lifestyle you love
When you know what you’d like your lifestyle to include, the next step to achieving this is to calculate how much you need to be able to afford your goals. For example, if travelling is what makes you feel most content, how much will you need to be able to afford to take multiple abroad trips each year? Or if you’d like to fill your time with new hobbies and interests, how much will you need to cover the cost of equipment, memberships, or travel to enable you to do this?
Your planner can help you to work out how much income you may need to achieve your goals. Then, they can help you set enough wealth aside for the future while also enabling you to create a lifestyle you love today.
