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There’s a common saying that money can’t buy happiness.
But this can be confusing to some, as more money would certainly help more than it would hurt.
But can money buy life satisfaction?
How much does happiness cost?
In this post, I’ll explore how money plays a role in our mental health and well-being, and whether or not earning a higher income would actually serve to make you feel happier in your daily life.
Table of Contents
How Much Does Happiness Cost?
Having More Money May Make You Feel Better, But It Doesn’t Guarantee Happiness
For those living in the U.S., the skyrocketing cost of living can certainly be a source of anxiety.
Rental prices are on the rise, grocery prices are on the rise, and even used cars are on the rise.
If you were to live in a city like Los Angeles, for example, you’d have to earn at least six figures in order to affordably live your life.
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Struggling financially can certainly be one trigger for mental illness and greatly impact your emotional well-being.
While one could argue the definition of happiness, the reality is that having enough money can lead to happiness.
After all, when you’re able to successfully provide for yourself and earn higher incomes than you were previously earning, happiness will naturally follow suit.
But what exactly does this mean? What is the cost of happiness?
Happiness often looks like:
- Having enough money to pay for all of your expenses regularly and without feeling stressed. You need an income that will allow you to manage your expenses with relative ease.
- Being able to save money away and invest it. You should feel like you have enough cash to be able to cover emergency expenses and to save towards certain goals and retirement.
- You have enough money to provide for your family and emotional well being. You don’t always need a new car, but you might like to go to the gym, go out with your friends, or buy toys for your children every once in a while. It’s not so much about being rich as it is about being able to afford the things that make you happy and allow you to lead a lifestyle that you truly want.
It’s true that there is a happiness price tag, but it can give you the support you need to feel content and pursue the things that make you happy.
For many, there’s a threshold where they have too much money that they don’t know what to do with it.
Finding that sweet spot and being able to bring in reliable monetary compensation can mean the difference between dealing with chronic stress and having the financial freedom needed to find happiness in your life.
Factors That Work Against You When Trying To Use Money To Buy Happiness
The upsides of extra money in the above situation are clear.
But the reality is that higher levels of income often comes with some major drawbacks.
When you’re trying to determine happiness costs, you should also be figuring out how much it will cost in terms of your time and your energy.
Making more money can often mean dealing with:
- Working longer hours at a job or finding multiple sources of income in order to afford the things that you need. This can end up taking away time that could be spent on yourself or on your family.
- Not being able to fully enjoy your profession. When your focus solely becomes about money, it can suck the joy and passion out of your job. If you’re spending long hours at work and you don’t see any point in what you’re doing, you’ll end up feeling burnt out and stressed, which can take a major toll on your mental health and your relationship.
- More money doesn’t mean a happier life. Money is exchanged for your time and your energy, and when it simply piles up in the bank, that doesn’t necessarily serve you. Of course, financial stability is good, and being responsible is important to financial health. However, if you’re just piling up cash and you’re not able to do anything with it, it won’t make you happier.
These are all things to take into consideration when you’re working towards trying to earn extra money in order to find the satisfaction you want in life.
While you can be satisfied when earning more, things get complicated when you commit too much time to the pursuit and could easily end up unhappy.
Focus On Your Values And Passions
The truth is, oftentimes you can’t put a price tag on happiness.
Happiness comes from the things we do and how well that aligns with our purpose, mission, and values.
Money is important, but so too is what you do outside of making it.
If your only focus is earning more, you can’t find the things that satisfy your needs.
Instead, set aside some time to create some goals that you’ve always wanted to achieve and figure out what matters most to you.
What do you wish you could spend more time on?
What do you wish that you could accomplish in the next few years?
What are some hopes and dreams that you want to pursue during your free time?
What things are important to me and how will those play a role in my life moving forward?
More importantly, you’ll want to figure out how to balance the need to work with the need to live life to the fullest.
Do you need to pursue higher education? Do you have a business that you can scale and delegate tasks to employees you bring onboard?
Are there things that you can cut out of your life that you don’t need to do in order to free up more time in your schedule for the things you love?
Can you work fewer days and supplement some time with higher-earning activities that give you that extra cash you need for your budget?
- Read now: Here is how to start budgeting
Tips To Find More Happiness In Life
So now you know there are costs involved with earning higher income levels.
But you might be able to avoid or lessen some of these costs by following these tips.
#1. Move To A Lower Cost Of Living Area
As mentioned earlier, if you live in a high cost of living area, like Los Angeles, you are going to need to earn a high income.
The same is true with living in New York City or any major city for that matter.
If you are open to it, moving to an area where the cost of living is less, could be your ticket.
The lower cost of just about everything means you can get by on a smaller salary and still find happiness.
And with the explosion of remote work, you might even be able to keep your current job if you like it.
If you don’t, chances are you can find another good paying remote job.
#2. Do A Life Evaluation
This one will take some time as you need to look within yourself.
Spend some time thinking about the things that truly bring you happiness or put a smile on your face.
This isn’t something you can do in 5 minutes on the weekend.
It is a process that will take you time over a period of weeks.
But if you put in the effort, you will have a better understanding of yourself.
And this will help you to find you ideal income point and review how you are spending money.
Many times you will find you spend money that is not in alignment with your values and as a result, can reduce or eliminate many things you regularly buy.
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#3. Review The Science
Conventional wisdom is that the greater your wealth, the more happiness money can buy.
But research has shown there is a point of diminishing returns.
There have been a handful of studies about happiness and money over the years.
One of the most popular ones showed that people are happiest when earning an income of $75,000.
It showed that happiness levels peaked at this salary and there was little benefit from earning more.
But new research found this number to be $85,000.
The study was published in Proceedings of the National Academy of Sciences and says that once you start earning $85,000 you level of happiness greatly increases compared to those earning less money.
The belief is that you can cover your basic needs and this takes away lot of the stress and worry you experience when earning a low salary.
The catch is that it doesn’t mean you have to earn this income level otherwise you won’t be happy.
Earning this salary opens the door for the opportunity for happiness.
When you have more money, you can save and invest it to improve your financial situation and your life overall.
The problem is that most people don’t use this opportunity correctly.
- Read now: Learn more about opportunity cost
They spend the money on things they think will make them happy but really don’t.
The result is a never ending cycle of unhappiness.
To fix this, you need to follow the tips above to figure out what brings you happiness, and spend your money on those things.
- Read now: Here are 23 things money can’t buy
Finally, know that happiness is not a fixed idea.
Happiness varies from person to person.
Therefore, don’t take this research as what you have to do in order to be satisfied in life.
Follow the steps outlined above to find sweet spot.
There are the things to think about when it comes to answering the question of how does much happiness cost.
Figuring out how to be happy is its own journey, and money is the resource that allows you to do more things that make you happy.
However, when you try to equate money with happiness or put a price tag on it, you’ll find that no amount of money in the world will give you true happiness.
And trying to achieve a goal of greater wealth could lead to unhappiness, the loss of friends, and an overall worse well being.
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I have over 15 years experience in the financial services industry and 20 years investing in the stock market. I have both my undergrad and graduate degrees in Finance, and am FINRA Series 65 licensed and have a Certificate in Financial Planning.
Visit my About Me page to learn more about me and why I am your trusted personal finance expert.