3 Surprising Insights About Money and Happiness (13)
3 Surprising Insights About Money and Happiness
Adapted from http://money.usnews.com/money/blogs/...-and-happiness
People have probably been wondering whether or not money buys happiness since money was first used in the Middle East sometime around the 9th millennium B.C.
This is also a common topic on STM as well, subject to a lot of different personal opinions. Recent studies, however, have come up with some answers to the age-old question that go beyond conjecture and personal opinion and have some basis in science and statistics. They also offer us a few suggestions about how our choices about money can make us happier.
1 . INSIGHT ONE: What makes you happy on a day to day basis is correlated to income, BUT only up to $75,000
One is called "emotional well being" and refers to a person's day-to-day experience, including how often a person laughs and feels stress, anger, joy and affection. These are the factors that make life pleasant on a daily basis.
The evidence suggests that beyond a certain point, more money does not make a person happier.
- A 2010 study by Princeton University economists Daniel Kahneman and Angus Deaton allows that people in the lower economic groups are not as happy as people who make more money. But beyond a level of about $75,000 a year, more income does not produce more emotional well-being.
- To be sure, this is the US average, and it will differ based on what part of the US you live. But the fact is, this kind of happiness has more to do with your health, social life and intimate relationships than it does with your paycheck or your portfolio.
- One other insight: time spent commuting lands at the bottom of the happiness scale. So once you retire your E-Z Pass or commutation ticket, your happiness quotient increases.
2. INSIGHT TWO: What makes you happier on a long term basis, however, is definitely correlated with money ... even beyond $75,000
- Kahneman and Deaton found that life evaluation levels do increase with higher levels of income as well as higher levels of education. And a 2013 study from the University of Michigan and Brookings Institution that looked at 25 countries around the world confirmed that richer people are more likely to be happy than those earning less.
- There was "no evidence of a significant break in either the happiness-income relationship nor in the life satisfaction-income relationship, even at annual incomes up to half a million dollars," the authors concluded.
3. INSIGHT THREE: What makes you happy in your older years is, in large part, a function of how much debt you carry (especially your mortgage).
On average, 36 percent of happy retirees will have their debts and mortgages paid-off within the next eight years, compared to only 24 percent of unhappy retirees.
What's so important about not having debts and mortgage in your older years?
- According to Wes Moss, author of “You Can Retire Sooner Than You Think”, your retirement income from Social Security, a pension and savings is static. When your debts and mortgages are paid off, more income is available for what you really want to do.
- In addition, a study sponsored by Ally Bank showed that 84 percent of respondents acknowledged that saving for a rainy day makes them feel more in control of their lives, leading to an overall sense of well-being.
- And a majority said specifically that adding to their retirement account gave them a sense of accomplishment and made them feel proud of themselves.
So how can YOU can be happier?
While our level of happiness depends on many factors, it is at least partly a result of our decisions about time and money.
- For one thing, if you are still working, you'll likely be happier if you spend more money to live in a place close to your workplace, rather than splurging on a McMansion that requires a longer commute.
- Also, we know that the consumer lifestyle does not necessarily bring happiness, while social connections do closely correlate to emotional well being.
So it definitely makes sense, like many people on STM, to work hard while you are young to seek to save enough money to provide you and your family with a debt free future. But it is also just as important to spend more time and money on friends, rather than going to the mall for a shopping binge or the car dealership for the latest model Porsche.
So go take your spouse out to dinner, invite a friend for coffee or arrange a golf game or a tennis match.
Not only will they appreciate it, but you will be happier as well!
To be sure, this is the US average, and it will differ based on what part of the US you live. But the fact is, this kind of happiness has more to do with your health, social life and intimate relationships than it does with your paycheck or your portfolio.
I am not saying money is not important, just that after some time it's just more digits in a bank account since I know I am not going to spend it anytime soon.
Money does bring comfort and peace of mind, and these two things do contribute to overall happiness. So you really can't disregard how money can impact your happiness.
It's how you use that money is what ultimately makes a difference.
Great article!
This might be a little off topic....but one HUGE issue I've had is paying for spouses and family.
Even though my family appreciate me buying them things, paying for flights etc, they have also feel pretty uncomfortable accepting those kinds of gifts. Buying things for my last two girlfriends, paying for rent, food etc, made them feel pretty bad too, like they couldn't contribute, like the someone how owed me.
I was just wondering how you guys deal with things when there is an obvious financial gap between your relationships?
Money = makes life good.
More money = ultimate comfort.
More More Money = Gets us resources to help others. ( This is the thing i enjoy the most ). Helping other yields best satisfaction in life. Making people's like better.
"Helping others is not your duty. Its a resolution, its a determination to make this world a better place. Otherwise, you will end up loosing your life like billions of other people. Only few people are have enormous power in form of money ( fill this place ). Every moment of our life draws us closer to death. But does this affect us ?"
After x amount of money, we don't have to struggle. Struggle = Happiness. You can't enjoy money if you have never been broke.
@Mr Green - I don't have any solutions, really, but I've experienced that too. When there's a significant financial gulf between you and someone you're close to, be that friend, relative or SO, it can be awkward. I'd be interested to know how people get around that too!
Originally Posted by Mr Green
You see this happen to celebrities and sports "ballers" all the time. Once they start making money, they start spending like crazy on not only themselves but also their friends. This usually ends very badly.
Smart people like Bill Gates or Warren Buffett of Mark Zuckerberg seem to have a very sound approach to this. All of them have pledged to give away most of their wealth to charity. Both Buffet and Zuckerberg live in quite modest homes, and I have never heard stories about them splashing out on lavish expenditures for their friends.
Originally Posted by cmdeal
I'm talking just day to day simple costs, my current girlfriend is your average broke student.
If I don't pay for a lot of stuff, we will be eating cheese n toast and noodles everyday, and living in a small mouldy apartment. There is also the travel thing. As an affiliate I attend a lot of conferences and meet ups, if don't take her every once in a while she will feel left out, if I do, then it goes back to that whole getting uncomfortable feeling.
What to do!?
Originally Posted by Mr Green
In most couples (and marriages), there generally is one partner who has (sometimes much) higher earnings than other at one or more points in their lives. I have plenty of friends where the woman supported the man financially during medical school or vice versa. Likewise, I have plenty of friends who were entrepreneurs who were solely supported by their wives for several years until they finally hit it big, and vice versa. When this is really done in the spirit of all great relationships--namely in the spirit of true partnership and sharing--that is a powerful thing.
On a final--more personal--note, when I often look back on my life, some of the very best memories that I have are from the years when the misses and I had no money, when we were living in a dingy apartment, and when we were eating macaroni and cheese from a box for most meals. There is no question that money (especially in today's world) buys you freedom ... both freedom from things like worries but also freedom to experience many new things.
But if you can't share these your experiences with those you care about, then they really become much less valuable.
There is a nice quote from a blog post http://www.marcandangel.com/2013/09/...o-differently/entitled 10 Things Happy Couples Do Differently which sums this up nicely: "The best relationships are not just about the good times you share, they’re also about the obstacles you go through together."
Amazing article. All of it correelates exactly with my own thoughts.
I have the same problem as MrGreen except my families loves it when i splurge a little with them.
Great recent photo of Mark Zuckerberg and his wife Priscilla Chan (who were friends from their Harvard, pre-Facebook days)
http://www.thecrimson.com/article/20...finitely-mark/
Originally Posted by Mr Green
With the spouse I let her pay 100% for certain things (food) then I'd pay 100% of other things (holidays, the apartment....), or I just made excuses such as "let me get it now and get me back later.."
Money can't bring happiness but my ass.
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