Will Millions Make You Happier?
by Stacy Francis, CFP®, CDFA
You’ve heard it ad infinitum, “Money can’t buy happiness.” Now there’s scientific data to give the old saw new teeth.
University of Southern California economist Richard Easterlin surveyed 1,500 people over nearly three decades to see what gets high marks on their “Happy-O-Meter.” His results revealed that time with family and good health are the stuff of happiness.
Money? Did this play a role in happiness? The study found that wealth doesn’t necessarily lead to joy and contentment. In fact, the magic number that equals satisfaction is far lower than you would expect. It’s $40,000 a year. Once enough is earned to meet basic needs, money in relation to happiness is a very personal equation.
Oprah’s magazine says so. And so does Harvard psychologist Daniel Gilbert, who studies such things. In fact, the rule is well established in research: The first $40,000 makes a big difference in one’s level of happiness. After that, the impact is much smaller. The difference between someone making $40,000 and someone making $15,000 is far greater than the difference between $100,000 and $1 million.
So technically, most of you should be happy. And if you’re working for the next big raise, forget it. You’re better off working on teaching yourself how to look at your money with a different eye.
The sad truth is that we’re twice as rich as we were in 1957, but only half as happy. As Dr. David G. Myers, an authority on the psychology of happiness, wrote in Does Economic Growth Improve Human Morale?, “Never has a culture experienced such physical comfort combined with such psychological misery. Never have we felt so free, or had our prisons so overstuffed. Never have we been so sophisticated about pleasure, or so likely to suffer broken relationships.”
Despite air conditioning, TiVo, carb-free wine and high-speed Internet access, we’re not as happy as our parents and grandparents.
Super Rich ≠ Super Happy
But what about the Donald Trumps of the world? Surveys reveal that even lottery winners and the superrich soon adapt to their affluence and are little if any happier than the average Joe. Moreover, those who strive most for wealth tend, ironically, to live with a lower overall well-being than those focused on intimacy and relationships.
“By far the greatest predictor of happiness in the literature is intimate relationships,” Sonja Lyubomirsky, a researcher at the University of California-Riverside, told a Chicago Tribune reporter. “It’s definitely not money.”
In the end, happiness is about wanting and managing what you already have, spending time with friends and family, as well as taking care of yourself. So the next time you get green with envy when you see your favorite Fendi handbag go parading by, take comfort in knowing you would not be happier even if it was on your own arm!
Stacy Francis is president and CEO of Francis Financial, Inc., a fee-only wealth management practice dedicated to investment advisory services for women, couples and those experiencing divorce. She is also the founder of Savvy Ladies®, a nonprofit organization that educates and empowers women to take control of their finances.