Why money isn't buying you happiness
(MoneyWatch) The folk wisdom is that money can't buy happiness. The reality is that it tends to do a pretty good job doing just that. One recent analysis of a Gallup survey that looked at household income and happiness found that 100 percent of those with household incomes topping $500,000 per year considered themselves very happy. Even lesser amounts seemed to protect against unhappiness. Zero percent of people with household incomes over $100,000 per year said they were not too happy.
However, the response of those within the $100,000-$500,000 range varied according to the exact level of their household income. Some 60 percent of those with incomes of $100,000 to $150,000 described themselves as very happy, while 40 percent called themselves fairly happy. These percentages flipped to 70-30 for households between $150,000 and $250,000 of income.
Though most high-income people remain very happy, these numbers raise a question: Why are the 30 percent earning more than $150,000 less happy?
About a year ago, I wrote a book on money and happiness called "All the Money in the World" that looked at this question (the paperback is out this week). It turns out there are certain decisions we make that contribute to our happiness or unhappiness. If you are in the fortunate bucket of earning six figures and yet aren't very happy, here are a few possible explanations:
1. You're spending too much on fixed expenses. Research finds we get used to things over time. A car makes you happy when you buy it, but if you're still paying for it two years later, any extra cash beyond the basics for comfort and safety probably isn't contributing much to happiness. Housing is the biggest temptation here for most people. An extra $50,000 added to the price of a house is only about $300 a month. It seems like a lot more house. Yet $300 a month will also pay for a couple of nice dinners out with friends, a weekend getaway or a cleaning service, or it can also pay someone to cook dinners at your home once a week that you can freeze and reheat so you never have to cook. It's not an insignificant sum.
2. You're not spending to make your life easier. A high household income can't ward off the vicissitudes of life. You can still have parents in ailing health or a special needs kid. But money can buy help on all those fronts: shelling out for a few extra hours from a high-quality caregiver so you can get a break or for getting groceries and drugstore items delivered to free up your time.
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3. You're not making a joy budget. Few of us consciously sit down and ask what we really enjoy doing and how we can spend less on other things so we can we can increase our enjoyment. If your kid doesn't like playing the piano and you don't like bringing him to lessons, why pay for them? You might all enjoy a week at the beach more.
Money, in reality, is just a tool. Used correctly, it can be a quicker and more efficient means to happiness. Used unwisely, it won't help. Most higher-income people seem to figure this out pretty well, but those who don't can get there if they make well-thought-out questions.
Does money buy you happiness?
Photo courtesy flickr user superstrikertwo