The debate about whether money can lead to happiness is never-ending. Researchers, consumers, and citizens can never seem to agree, yet there are quite valid arguments on both sides.  Let us take a look at some of these issues.

Money Gives You a Social Life

Humans are very social creatures – perhaps the most social species on this planet.  Therefore, we do whatever we can to be in the company of others. Whether it is to go to a friend’s place just to relax, go out to town to watch a movie or have a couple drinks with friends, we will try to find something to do just so that we can be with other people. Many will agree that we can only participate in social activities with money, making us happy or at least content.  In this regard, money does lead to happiness.

But when you take a closer look, these social interactions happen only because you have money to spend on yourself and perhaps on your friends as well.  Then you may begin to ask yourself if they are your friends because they like you or because you have money to spend. This in turn can make you quite depressed, leaving you with the belief that you don’t have any real friends. As cliche as it may sound, it is up to you to see the glass as half empty or half full.

Stress Exists Because Money Exists

A blog about money and happiness by G.E. Miller , illustrates interesting arguments both for and against. Personally, I find money has a lot to do with stress. Having money leads to stress, not having money leads to stress.  Basically, the fact that money exists leads to stress! On one side of the argument, having more money leads to greed. If you have just gained access to a rather hefty sum of money (whatever this amount may be for you personally) you will be in search for more money. And so continues the ongoing never-ending cycle of seeking more money. Someone with a large sum of money will always be worried about how to sustain their wealth, keep it safe, and how to obtain more. It is the vicious cycle of wealth, leading to greed,  yielding stress.

But if the person is more responsible and can learn to appreciate the amount of money they have, then money can lead to happiness. If someone earns an income that provides them with the very basics – food, clothing, housing, bills – then money will at least lead to a content life.  And if that person can deal with their debt (by deal I mean not getting into large sums of debt) then they don’t have that added stress either.  Debt, of course, is something huge here in New Zealand and the rest of the developed world.  Having the ability to spend borrowed money has led to many problems for individuals and entire nations. Therefore, responsibility is a key factor in whether or not money equals happiness.

You Need Some Money to Live, You Want More Money to Live

An article by David Futrelle in Money Magazine explains this point rather clearly. When families of various income levels were asked whether or not they were very happy, only 22% of families earning less than $20K said yes.  This percentage goes up to 30% and 42% when asking families in the $20K-$49.9K and the $50K-$89.9K respectively. Going to the $90K+ bracket, happiness levels only go up to 43%.  So according to these numbers, happiness does increase with money to a point where people can at least be comfortable with their lives, covering the basic necessities that I mentioned before.  However, increased extraneous wealth does not lead to any additional happiness at all.

Source: U.S. Census Bureau; National Opinion Research Center; University of Chicago; David G. Myers, Hope College

Source: U.S. Census Bureau; National Opinion Research Center; University of Chicago; David G. Myers, Hope College

The same article shows the increase in average American family wealth, but no significant increase in levels of happiness. From 1957 to 2004, the average income after tax increased from $10,171 to $27,237, but the percentage of people being happy remained at a stable range of 35%-34% (Source: U.S. Census Bureau; National Opinion Research Center; University of Chicago; David G. Myers, Hope College.)

Happy Countries

Although there may be debate as to what the happiest countries are, Denmark, Bhutan, Sweden, Brunei, Switzerland, Puerto Rico, The Netherlands, Costa Rica, Finland, Canada and Colombia are generally on the list. What is surprising is that these countries have very distinct cultures.  Furthermore, nations like Brunei, Costa Rica, Bhutan and Colombia are on these lists despite being less economically stable than their developed Western counterparts. This suggests that money may not necessarily lead to the well-being of a country. The United States, the United Kingdom and Japan are generally considered to be less content than other nations despite them being some of the richest nations in the world.

Therefore, in terms of money, long-term well-being should be the focus, rather than temporary thrills.  So what gives you full fulfillment? Make a list of all the things that make you happy in life, and you may find you won’t need to splurge on an item to bring you temporary joy.  Appreciate everyone and everything that you have in life and you are likely to be more content.

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