Lately I’ve been thinking about happiness. How will my financial decisions today affect my future happiness? Will the career I choose, where I choose to live, and the people I associate with ultimately lead to a happy life? Finally, how much money do I need to have to be happy?
I had the pleasure of reading an article recently that talked about people’s needs at different income levels. These days if you make between $50,000 and $250,000 you are considered middle class. The reporter interviewed four men at different income levels, from rich to borderline poverty. The men were asked things like what their most recent big purchase was, whether they have a budget, and what they feel they can afford. They were also asked how much money they’d need to have the life they want. At each level the men said they needed a bit more. The guy who makes $7/hr said he’d be happy with $50,000 a year. The guy who makes $50,000 said he’d be happy with $200,000 a year. Finally the guy who makes $1 million said he’d like $25 million.
What does all this tell me? It’s not about the money. We tend to have this idea that a certain income or set of circumstances is going to make us happy. In my own life I set financial and personal goals for myself and when I attain them it doesn’t tend to generate happiness for me. I just move onto the next goal and think that the new thing will make me happy. This endless pursuit is what keeps us in the rat race. The good news is we can outsmart that old thinking by understanding the ways money really can add to happiness.
The old saying goes that money can’t buy you happiness but it really can. Money increases our happiness when it gives us more security and financial independence. Money can make us happy when it buys us a roof over our head, reliable transportation, or the comfort of knowing our kids can go to college. After all, the purpose of money is security. But there does seem to be a threshold where money is no longer going to increase happiness and according to recent research that number seems to be around $75,000 annually. That is the point where money isn’t a big stressor in life and people can focus more on other areas. The trouble is that we forget easily and often that stuff doesn’t increase happiness. The third time I step into my new car it’s just my car, the same goes for a house or a boat or an airplane. It’s all just stuff.
The research seems to suggest that we’re at our happiest when we get to help others. People who spent $20 on someone else instead of themselves reported being happier. In fact, it doesn’t seem to matter the amount that’s given away but just the action of giving. Turns out giving to others makes us feel more wealthy ourselves even if we might be struggling to make our own ends meet. Over and over again, I see that happiness is strongly linked to our sense of togetherness with others.
I believe that a more direct path to happiness is to foster social relationships. The happiest people I know are the ones that live connected lives, who are involved in the community or have a large family they spend time with. I think our society is aware of the link between isolation and unhappiness. In the same way our “stuff” tends to get in the way of being with people and it creates isolation. A good example is having a house you can’t pay for. If you weren’t working your butt off to pay for the house you’d have time to be with friends and family more.
Scientists have long studied happiness and its link to social connectedness but they’ve also gone as far as to assign cash values on our social lives. The happiness increase in volunteering once a week is likened to a $55,000 increase in yearly pay. Being in contact with your neighbors earns you an extra $60,000. In the case of a breakup or divorce your happiness decrease is as if you lost $90,000 in income (Social Connection Makes a Better Brain). When you lay it out like that building relationships seems a lot more important.
I think American society is one of the most materialistic around–and it’s no wonder. Someone’s got to buy all that stuff they advertise and support our economy. There’s nothing wrong with wanting better things for yourself but you don’t ever put money before love and connection. I would be willing to bet we have some rich people in this country who are more miserable than people living on the poverty line. Humans are incredibly social animals and we weren’t meant to seek material wealth. Our purpose is to find our passion and what makes us feel whole, we get loving relationships and stay up late laughing. That’s happiness. Finding financial independence gives us piece of mind so that we can pursue our dreams and that’s it.