How money affects happiness
There is absolutely a strong correlation between money and happiness, but that doesn’t paint the whole picture. There is a strong correlation; once someone is over the poverty line, that money can decrease happiness.
In the book, Your Money or Your Life, Joe Dominguez and Vicki Robin share about the relationship between spending and happiness. Once basic needs are met, the relationship between spending money and happiness is non-linear, meaning that an increase in income doesn’t mean an increase in happiness. It’s actually the opposite.
Basically, having more money to spend does create a more fulfilling life—until it doesn’t. They called this theory the Fulfillment Curve. It includes four sections of needs.
- Survival: A person at this level can meet their basic needs—food, clothing, and shelter
- Comforts: At this level, someone can purchase things that bring them joy, in addition to meeting their basic needs.
- Luxuries: Now, the person can afford luxuries.
- Overconsumption: At this point, your stuff starts to take control. Your things burden you and decrease your happiness.
Once someone makes enough money to reach level 4, money no longer adds value to their life. For all those in levels 1 through 3, making more money will usually make life easier and lead to increased fulfillment and happiness.
Money is a tool
Typically when people contemplate increasing their wealth, they aren’t thinking about accumulating the money itself. Instead, they think about the impact the money will have on their life. The dreams rarely end at money. Instead, they dream about buying a new home, traveling, paying off debt, and other possessions or experiences they could collect.
Money is the means to an end. It gives us the freedom to invest in things that we value. Money is simply a tool to create the life we want to live, but it is not what life is all about.
Life is short
At the same time, our lives feel like a marathon and a sprint. Balancing the dichotomy of this experience about our money can be difficult. Finding a balance between saving for retirement and living our life can be a lifelong journey.
This is the same reason why generating wealth for the sole reason of generating wealth will not lead to a satisfying life. While saving money for emergencies and retirement is vital to survival, using money to build a life worth living is also essential. It’s about balance.
Money is a necessary tool used to survive, and its pursuit can become all-consuming. Our goals may become solely focused on our monetary gains instead of goals that will enrich our lives further. Other goals could include improving relationships with friends and family, health goals, and goals surrounding hobbies.
We must find a balance between building our careers, finances, and our lives outside of work. This way, if our job becomes unhealthy or tedious, we have other sources of enrichment. If money becomes the sole focus of your life, you won’t be able to enjoy all the other, arguably more critical, aspects of life.
Things that are more important than money
Living for money can be a lonely life. Relationships, including family and friends, are crucial determinants of how we view our lives.
Experiences add undeniable value to your life. Exploring the world, starting a new hobby, and learning from new people will impact every aspect of your life.
Time is the only commodity we can’t get back, but we can buy more of it. Some of the happiest people repurchase their time. Time can be bought by paying a house cleaner to clean your home on the weekends, so you can spend time with family or explore a hobby.
Once we start to lose fulfillment from money, it becomes unimportant. Living a life full of joy is much more important than collecting wealth.
Making money the most important, all-consuming goal can increase stress and health issues. At the end of the day, nothing is more important than your mental and physical health.
- Kindness and respect for humanity
Acquiring a copious amount of wealth can be a selfish act. Respecting your community and sharing part of your wealth is more important than hoarding resources.
Ways to redefine success
Our pursuit of money is inextricably linked to our pursuit of success. As we increase our income, we begin to realize that an increase in money does not inherently lead to an increase in satisfaction for fulfillment. Here are a few different ways to redefine success.
- Silence the “should”
We all grow up in a world that constantly tells us who we should be and how we should live our lives. As we are socialized, we internalize these “shoulds” and believe they serve us.
Unlearning this behavior is the first step in redefining success. A life worth living is one built solely for you. So, stop living the life others want you to live and find your own purpose.
Finding your purpose is much easier said than done. Start by thinking about your values. What’s important to you? What, outside of your career, wakes you up in the morning? What have you always dreamed of doing, both in your career and life? In this initial stage, keep money out of the brainstorming. As we established, money is a necessary tool, but it should not be the main driver to determining how you want to live your life.
- Growth mindset
A growth mindset allows you to place a higher value on lessons learned from experiences instead of believing that your life and abilities are predetermined. Moving from a fixed mindset into a growth mindset will help you view success outside of economic achievements. Instead, success will be measured by life lessons, new skills, strong relationships, and development as a human being.
- Practice gratitude
Practicing gratitude fosters positivity. It keeps you grounded and keeps you focused on the positives in your life.
Reward yourself with self-care for nonmonetary wins. Whether it’s your favorite takeaway or watching your favorite TV show, building rewards for successes outside of your career will only improve your life.
All in all, money is a tool we use to build a life we love, but it is not what life is all about.