It’s commonly accepted that money can’t buy happiness. However, there is some evidence that there may be a positive relationship between money and happiness. It just depends on how money is used.
Several studies have shown that happiness increases with income and with net worth. But as people reach a net worth of several million dollars, the happiness levels off. So having enough money can certainly make a person satisfied, but once needs are comfortably met, more money doesn’t necessarily mean higher contentment.
What is perhaps more telling about the relationship with money and emotions is the emotional impact of how money is spent. More people report more positive feelings after spending money on experiences than when they spend money on things. So money spent on a family vacation or entertainment will produce more pleasure for most people than buying an expensive car or fancy clothes. While many people might think that purchasing experiences is frivolous, the enjoyment of experiences can suggest otherwise. This is not to suggest that we should all ignore paying to meet our basic needs of housing, transportation, clothing, and food. But it’s worth considering whether luxury solutions to these basic needs will be as satisfying as we might hope.
Studies also suggest that some luxuries are enjoyed more as treats than as every day occurrences. One study gave two groups of people chocolate. Half of the group was given chocolate and a supply of chocolate they could eat for a week, with instructions to feel free to eat as much as they wanted and enjoyed during that week. The other half of the group was given chocolate, then told not to eat any chocolate for a week. At the end of the week, all participants in the study were given chocolate. The group that hadn’t had chocolate for the week reported higher enjoyment of the chocolate than the group that had as much chocolate as they wanted during the week, suggesting that it may be possible to get too much of a good thing. This indicates that we can save money on our favorite pleasures and have more enjoyment of them if we indulge in them less often.
Buying time is another way that money can increase our satisfaction. Everyone has something that needs to be done in their life that they don’t enjoy – and often they aren’t even good at it. There are some pretty common ones like ironing, house cleaning, and cooking. Paying someone else to do that chore can be satisfying. It frees up time and provides a livelihood for someone who does the activity well.
That accomplishes another satisfying monetary transaction. Studies have shown people gain more satisfaction from giving money to others than spending it on themselves. Charity, helping loved ones, and paying an appreciative vendor can be rewarding to the person paying, not just the recipient.