You may believe more money makes you happier. With more money, you could buy luxury cars, bigger homes, new gadgets, and exotic vacations. You could eliminate your debts and retire early. You could hire a cook, maid, gardener, personal trainer, accountant, and lawyer. But would any of this make you happier?
You may believe money will make you happier because we’re surrounded by the money-equals-happiness message. Books, magazines, and television track the lives of billionaires like Bill Gates and Warren Buffet. Advertisers only show happy people using their product implying that buying their product will make you happier. Governments measure happiness in terms of national income (Gross Domestic Product) instead of Gross National Happiness.
We also learn the money-equals-happiness message from our parents and teachers. While in High School, I studied the Declaration of Independence with a history teacher who was my favorite teacher. He interpreted the phrase “Life, Liberty and pursuit of Happiness” as “Life, Liberty and the pursuit of Property”.
Contrary to what you might expect, research shows that money can make you happier only if:
1. You lack enough money for a minimum standard of living.
A minimum standard of living implies that you have shelter, safety, sleep, food, and clean air and water.
We can relate the minimum standard to Maslow’s Hierarchy of Needs below. Maslow created a pyramid that represents our needs with more advanced levels built on top of basic levels. The Physiological and Safety levels represent the minimum standard of living that we can buy with money.
Money is irrelevant for levels above Safety (Love/Belonging, Esteem, Self-Actualization). For example, money is useless for friendship, respect for others, creativity, and so on. This is consistent with the results of the research.
We must carefully define the Safety and Physiological levels. For instance, you may think the definition of “food” means gourmet meals. Maslow defined “food” as basic sustenance that provides physical nourishment. The “food” can be very simple. Similarly, you may define shelter as a mansion, when only a tiny apartment is necessary.
Since you currently have access to the internet to read this post, you probably have at least a minimum standard of living.
2. You spend your excess money helping others.
The research shows that the more excess money you spend on others, the happier you will be. In a similar way, a goal to help others may also make you happier.
Your motivation determines how much helping others with money makes you happy. For instance, you will be happier if you give money out of a desire to help others, rather than because you feel guilty or want to brag.
More precisely, unless you are poor, money will increase your happiness only if you use it to help others.
Try This
For the next 30-days, mindfully observe how you spend money. Did your purchases make you happier or just give you a moment of pleasure?
Make a small donation to your favorite charity that helps others. How does it make you feel?
I’m interested in your comments. Do you agree with the research? Have you had any experiences with using money to help others?
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Tags: Happiness, Money, Psychology
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Hi Roger
I tend to agree that money can only make you happy if you haven’t yet met the most basic of needs. Apart from that money buys you things that are mostly cool for a while, but when the novelty wears off so do the feelings of “happiness”. Looking for happiness through things is a thirst that can never be quenched.
With respect to giving money to a charity to make you happy, while yes it does make you feel good to know you’re helping others who really need it, we find we actually get a lot more out of donating our time.
When we can see, meet with and talk to people that we are helping we can establish a connection with them. That’s a pretty big contrast to writing a check and sending it off to an anonymous person in an office somewhere. That’s what makes me truly happy when it comes to helping others.
Don’t get me wrong I really do think it’s important to give financially to those who need it but it’s making that human connection that makes me the happiest.
Sherri,
Excellent point! In general, I agree that giving your time increases your happiness more than just giving money.
I wonder, however, if there an inflection point. For instance, if I could give a day of my time or $1 million, would I be happier giving the money? Maybe this is not a realistic question because if I could afford to give $1 million, I should also have plenty of spare time.
Interesting post Roger,
Personally…it makes me feel really good to be able to help another with my money.
When I make more money…I would rather physically go and build hospitals, wells, schools myself, instead of just like Sherri said, “writing a check and sending it off to an anonymous person in an office somewhere”.
-Sherri, I also like to interact with the person/people that I help. I usually buy food for street people in downtown Vancouver rather than giving them money.
Unless we live on a farm in timbuktu…we live in a money driven society. However, it is up to us to use money for the betterment of mankind.
Hi Roger,
Great post. I agree that spending money to help others is a great feeling and is a source of happiness. I always feel great when I have been able to help a person in need. I think that is true because when you give, there is no focus on oneself but rather on the other. As for being happy when our basic needs are met, I think that applies to Western society. I have traveled and lived in parts of the world where what we consider basic is luxury and yet people were still happy.
Nadia,
I agree with you - “basic” depends on where you live. Given the state of the world economy, it might a good idea for us to redefine our “basic” needs.
Not only do I agree that spending money on others is one key to happiness, I found out about a very creative way to do this. I recently learned about micro-loans and a man named “Yunus” (2006 nobel peace prize winner) who is eradicating poverty putting his idea into action. Basically, the impoverished are given small loans to start a business. Then, they pay the money back and are eligible to get a slightly larger loan next time, and so on.
The amazing thing about this type of “micro-credit” system is that if you or I donate money to a charity that helps make this happen, at the end of the year, you get your money back.
My point is that for those who have trouble giving away their money, even to charities, this is a type of giving that comes back around and you can either receive your money back or opt to re-donate it.
My husband and I gave these donations to charities on behalf of family members for Christmas because we don’t believe in the consumerism of buying Christmas presents. Anyway, it’s pretty cool because at the end of the year, each family member will be contacted by the charity (KIVA in this case) and they can receive the money back or opt to re-donate.
my year without,
That is really great! I assume that you are talking about
http://www.kiva.org/
I really like it because it’s so direct. I’m spending more time on the Kiva site to learn more.
It’s an interesting question, and while I agree on an intuitive level that helping others is likely to increase one’s happiness, I think you’re vastly oversimplifying things here. According to your post, someone with enough money for an apartment and food cannot make themselves happier with an increase in resources, because “money is useless for friendship, respect for others, creativity, and so on.”
But if I don’t have enough money to do things with friends, that impacts my potential for relationships. If I don’t have enough money for good clothes, that impacts the respect some people will have for me when I attend a formal event. If I don’t have enough money for equipment or supplies, that has an impact on my capacity for creativity or problem solving. And all of these things, combined with sociological pressures and influences, will impact my self-esteem and confidence. So, to a certain point, it seems an increase in my money will also increase these things, and therefore increase my happiness.
This is an issue I’ve struggled with for quite a while. On the one hand, it’s clear to me that pursuing money for its own sake leads to UNhappiness. Yet on the other hand, it’s also clear that happiness in nearly any culture depends on having enough resources to achieve one’s goals and meet the expectations of others. I’d be interested in other people’s thoughts on this.
Blake,
Thanks for the thoughtful comment!
I think you brought up a great point about “sociological pressures and influences” which relates to the United States and some other nations at this point in time. More specifically, I think we’re dealing with differences of degree and culture.
The degree is related to how much money you need before you reach a point where spending $1 to help others will make you happier than spending $1 on yourself. In some countries, because of income and sociological pressures, this point is very low.
At this point in time, in the United States, we’ve created a spending culture. My parents were born during the depression and didn’t spend like we do. When they were in their twenties, they had fun by having friends over for a spaghetti dinner and to play bridge. Not very expensive.
In Costa Rica, my son reported that friends talk and play together in inexpensive ways.
In the United States, friends need to spend money to be friends - go out to dinner, clubbing, movies, etc. I think it’s a cultural problem and needs to change. Can’t we have friends without spending a lot of money?
When I discussed respect, I said “respect for others” not “respect from others”. But I agree that other will judge you based on how you dress. It’s also a United States culture issue. You can buy cheap clothes that look good - they just don’t have a designer label.
You have a great point about creativity being limited by equipment and supplies. I hadn’t thought of that. You can’t write a great software program without a computer. I suppose if you’re creativity is designed to help others, it would still qualify as spending money to help others. But you’re right - some creative endeavors require significant money.
Your idea that “happiness in nearly any culture depends on having enough resources to achieve one’s goals and meet the expectations of others” is also interesting. I have a separate post on goals and happiness. It’s not clear that goals will make you happier, but if you have goals I think that goals that help others will make you the happiest. I think that
“meeting the expectations of others” is what has created large personal and government debt in the United States. We need to adjust our expectations, so that we don’t destroy the planet or our children’s economic future.
Blake - you brought up so many great ideas that this may be worthy of a separate post.