They say money can’t buy happiness. But, the relationship between money and happiness isn’t as simple as you might believe. Finances play an important role in your physical, emotional, mental, and financial well-being. But, the way they affect you may surprise you.
In order to understand happiness, let’s take it all the way back to ancient Greece. Philosophers distilled the subject of happiness down to two basic classifications: hedonic and eudaimonic.
According to Socrates’ student, Aristippus, happiness is all about increasing pleasure and decreasing pain. This theory, known as hedonism, emphasizes anything that makes you “feel good”. For some, this translates to getting a massage or manicure, going on vacation, or shopping.
Aristotle contrasted this by claiming that happiness was actually all about virtue, or doing the “right” thing. This approach, eudaimonism, says that happiness is the result of accomplishing something meaningful. Something beyond yourself and rising to the challenge for personal growth and the greater good.
The science of happiness
According to Sonja Lyubomirksy, Professor and Vice Chair of Psychology at The University of California Riverside, “income and happiness are indeed significantly correlated, but the relationship isn’t super strong.” Those with higher income report being happier than those with lower income. However, this only applies to general, or overall happiness, not on a day-to-day basis.
Although many researchers assume that money drives happiness, it is entirely possible that the reverse is also true. That happier people tend to be more adept at earning money. A large study surveying more than 1.7 million people from 164 countries, found that salary range most closely associated with optimal emotional well-being was between $60,000 and $75,000 a year. That aligns with past research, which found that people are happiest when making about $75,000 a year.
Does more money mean more problems?
It may be possible to make too much money! Researchers have found that life satisfaction declined after the $95,000 mark. They speculated that being wealthy, past the point required for daily comfort and purchasing power, could lead to unhealthy social comparisons and unfulfilling material pursuits.
Does that mean that getting that raise won’t make you happy? We’re guessing it will! But, according to a phenomena known as the “hedonic treadmill”, that happiness will eventually fade as you “get used to” having the additional money.
Money and mindfulness
According to Chantel Chapman, mindful money coach and founder of What The Finances, and Trauma of Money, the way we approach and manage personal finances is intimately associated with the way we perceive and experience happiness or emotional well-being.
Chapman completely disconnected from her busy life as a successful mortgage broker in Vancouver, and traveled to India to study meditation. That’s when she really tapped into the connection between mental well-being and our financial lives.
According to Chapman’s research, “addictive, compulsive behaviors and the belief that we are never meant to feel any discomfort is influencing our relationship with money”. She teaches people to deeply re-examine the “why” behind their financial choices, transforming the way they think about money. Because our behaviors may be a narrative from some sort of trauma. Sometimes that’s societal, generational, systemic, or relational. Intentional mindfulness with your personal finances isn’t predicated on the amount of money you make, or your net worth. It’s about setting the purpose or intention for what you do have. Mindfulness around money can help create some space to slow down and make an informed decision on the present moment. Rather than "spending under the influence" of a brain hijacked by scarcity or trauma.
How you spend affects your happiness
Research suggests that, regardless of how much you make, how you spend your money can affect your happiness as well. Spending on experiences rather than things, delaying consumption, and not shopping based on comparison with peers or society are all part of the eudaimonic framework. Steph Kersta, founder of Toronto-based meditation studio, Hoame, says “often, we focus on the lack of money, which causes stress and worry. Mindfulness teaches us to focus on abundance. Essentially, the power of positive thinking and laws of attraction.” Kersta says that mindfulness allows us to “be more aware and more present. This leads to making more well thought out, informed purchases.”
Be mindful about where your money goes, and how that makes you feel. Ask yourself questions like, “Why am I buying this?”, “How does/did it make me feel?”, and “Is this purchase bringing me closer or further away from my goals or dreams?”. Approaching even the most mundane of purchases from this perspective will help align your buying power with your beliefs. Now, that’s something to be happy about!