Does more money really make you happier?

“Money can’t buy you happiness” is a well-known adage, but is there any truth to it? 

At first glance, it seems as though the answer is obvious: of course more money can lead to greater happiness if it enables you to pay your bills, live in a nice house, take regular holidays, and pursue your hobbies. But dig a little deeper, and the answer isn’t quite that simple. 

Two major scientific studies have reported conflicting findings on this question. It seems even the greatest minds have struggled to agree on whether more money really does make you happier. 

Read on to learn more about the link between money and happiness and how you can unlock a happier, more contented lifestyle for yourself and your family. 

A 2010 study found that money doesn’t make you happier beyond a certain threshold

In 2010, renowned author and psychologist professor Daniel Kahneman conducted research into the effect of higher incomes on happiness. His findings suggested that more money can improve your emotional wellbeing up to the threshold of $75,000 (roughly £60,000) a year. Research subjects didn’t seem to display any further improvements in happiness or wellbeing if their income exceeded this amount. 

This research was very influential. What was particularly remarkable was that the threshold at which happiness seemed to peak was very achievable for many people. 

It led some to question why you might continue to accumulate more wealth if there wasn’t any benefit to your happiness. 

A more recent study suggested that more money does increase happiness without limits

In 2021, a new study revisited the question of whether more money can make you happier with a vastly different outcome. 

Dr Matthew Killingsworth studied how increased incomes affected people’s happiness using an app. He sent participants questions at random intervals throughout the day asking about their general happiness. 

He found that more money does seem to be linked to greater happiness. This outcome was observed regardless of the level of income. In other words, there was no threshold above which more money did not improve happiness. 

The researchers found that your baseline level of happiness affects how you respond to more money

At first glance, these studies offer contradictory outcomes, so the researchers collaborated to dig deeper into the findings. 

When they did so, they discovered a fascinating caveat that meant both sets of findings held truth.  

While more money can make you happier, this is only the case if you are a happy person. If your emotional wellbeing is already low, more money won’t help to make you happier above the $75,000 threshold. 

Increase your happiness by viewing money as a tool rather than an end goal

This fascinating finding has a direct implication for your own financial plan. Of course, accumulating wealth can enable you to achieve your life goals, but you’ll only be able to enjoy your money if you are already happy. 

This means that taking a job that has a much higher income but that makes you miserable is unlikely to have the effect you’re hoping for. In this instance, more money is unlikely to lead to greater happiness. 

So, when you’re facing a financial decision, it’s important to include your personal happiness as one of the key factors for consideration. That’s why your financial planner will always begin your relationship by talking about your goals, dreams, and priorities in life rather than any financial subjects. 

If you start your financial planning journey by focusing on what’s most important to you, you’re more likely to derive happiness and contentment as you grow your wealth. 

Get in touch

If you’d like to learn more about how we can help you to build a lifestyle you love while also growing your wealth, please get in touch. 

Email enquiries@metiswealth.co.uk or call 0345 450 5670 today to find out what we can do for you.

Please note

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.