The Truth About Money and Happiness

The popular game show “Who Wants to be a Millionaire?” offers an intriguing question.

Of course, virtually everyone wants to be rich. But why? As Americans, we place a high value on money and physical possessions because we believe such things will make us happy. Have we always believed this? If not, when did money and happiness become so closely connected?

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The Truth About Money and Happiness

Recent data show that materialism has risen in the last four decades. A 2005 study of American college freshmen revealed that 71 percent of those polled believed that it’s very important to be “very well off financially.” In 1967, only 42 percent of participants agreed with this sentiment. When participants were asked if it is very important to develop a meaningful philosophy of life, the results were quite the opposite. Although 86 percent of participants in 1967 agreed with this statement, just 52 percent of the 2005 participants felt that meaning in life was very important1.

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As Americans, we certainly seem to place a great deal of importance on money and possessions. Unfortunately, data show that this is especially true among women. A Gallup Poll from earlier this year showed that women aged 18 to 49 were the most likely to believe that they need an annual income of $100,000 or more to live comfortably.

However, the relationship between money and happiness is not so simplistic. Today, Americans live more luxuriously than ever before. And yet, violent crime has skyrocketed, divorce rates are higher than ever, and diagnoses of anxiety and depression are on the rise. If money truly does make us happy, why do these problems persist?

For the record, there is evidence that money and happiness are related. However, this relationship is weak and not nearly as powerful as people tend to think. Furthermore, money does not necessarily lead to happiness; the data indicate that it is just as likely that being happy leads to greater wealth.

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Of course, we all know that money is necessary to take care of basic needs like food, clothing and shelter. If these needs are not met, our wellbeing will diminish. However, beyond the satisfaction of fundamental necessities, money does not help us to become substantially happier. Indeed, a poll of the 100 wealthiest Americans found that they were only slightly above average in happiness2. If money makes such a minimal impact on our happiness, why do we value it so highly?

Sure enough, recent evidence suggests that being materialistic actually lowers wellbeing. One study found that people who identified themselves with expensive possessions experienced fewer positive moods3. Another study found that students at upper-tier colleges and universities who had a primary goal of making money were more likely to have lower life satisfaction and to suffer from a variety of mental disorders two decades later4.

Do you see the irony? The very thing we chase to make us happy tends to cause more harm than good! Furthermore, these study results suggest an unsettling characteristic of human beings: we are never satisfied.

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Take a moment and reflect on how you feel when you buy something new—the excitement of new jewelry or the thrill of adding an additional item to your wardrobe. Such purchases most likely gave you a boost in happiness, but how long did it last? I’m willing to bet not very long. We inevitably grow accustomed to our new possessions and return to our pre-purchase happiness level5. From here, we desire an even newer piece of jewelry or more fashionable clothing, just so we can experience that happiness boost again. This cycle repeats continuously as we acquire something new, grow used to it, and desire something else.

This might explain why the shoes that you once loved haven’t been worn in months! Buying new things is an expensive, uphill struggle to stay happy, and you should expect no long-term benefit from this endeavor.

The next time you treat yourself to an expensive dress, pay close attention to how you perceive the clothing of others. How long will it be until you spot a woman with an even better dress? In our culture, we are constantly reminded of the extravagant wealth of celebrities and other famous people; no matter what we acquire, someone else will always have more. Betting your happiness on material things may pay off temporarily, but it’s ultimately a guaranteed loss.

QUIZ: How Satisfied Are You With Life?

If you are too focused on being rich, I have good news: you can rise above materialism! The following strategies will help free you from this fruitless and self-defeating ideal.

  1. Complete five sentences that start with, “I’m glad I’m not ________.”6 This will help you feel grateful for the many good things in your life. No matter how bad you think things are, someone else probably has it worse—and they may be as happy or even happier than you!
  2. Focus on developing and maintaining close, meaningful relationships. One study found that this was more closely related to being happy than material wealth7. Strong, loving ties with friends and family will prove far more valuable to you than a big bank account.
  3. Remember that time, not money, is the most precious resource in your life8. Many people make the huge mistake of working too many hours just to make more money. Are you willing to put a price tag on even one hour of your life? Work enough to meet your basic needs and enjoy the rest of your day knowing that you chose time over cash.

As Americans, we are socially conditioned to value material wealth above all other things. Although it might take considerable effort, reevaluate the way you think about being rich. In time, as you gratefully focus on your loving relationships and the precious nature of life, you will see money as it is: a means to an end, but not a means to happiness.

RESEARCH: You Can Buy Happiness, Depending On What You Buy

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