There is now a definitive scientific study that states that money makes you happy. It’s a philosophical question that’s been debated for centuries. For many in the United States, money is too important to ignore and not have.
Two researchers of Daniel Kahneman and Matthew Killingsworth came to this conclusion after publishing their research that combats previous misconceptions that happiness levels out after $75,000 per year income. That couldn’t be further from the truth.
A 2010 study contends that happiness levels off after $75,000 income because all of our basic necessities of food, transportation, and housing are taken care of at that point for most parts of the country. There’s even disposable income leftover for spending on wants, too.
But in 2021, Killingsworth, a happiness researcher from the University of Pennsylvania’s Wharton School, found that happiness doesn’t peak at a $75,000 income. The *rate of increase* in happiness declines but the increase in happiness is still positive overall at higher income brackets.
After testing their theories on over 33,391 adults with incomes between $10,000 – $500,000+, Killingsworth found that happiness increases with the rise in income for the majority. Which demonstrates that, on average, money makes you happy.
Simply put, money can buy happiness.
Money Makes You Happy: 9 Ways it Does
Going further from the research, there are 9 concrete ways that money makes you happy. I personally got brainwashed into thinking “money doesn’t matter” from a young age and I’m so glad I broke free from the brainwashing.
Nowadays, I have a $500k net worth at the age of 28 with plans to grow that more. I am happier today that I’m rich than when I was poor and had no power to say no to anyone.
I was much more miserable when I was poorer.
1) Poverty Buys Nothing
Whether we like it or not, we need money in our lives. We need to purchase goods and services. Even though money isn’t everything, it is something. When I was poorer and was a recent college graduate, I was miserable being so poor.
I was so beholden to my employer that I couldn’t say no to anything they requested of me. Even if I wanted to say no. I was living in a run-down apartment in Birmingham, Alabama for $640 per month in a tiny little studio where the water wouldn’t run well.
I couldn’t purchase anything that I wanted but after paying my rent, food, transportation, and investments, I had nothing leftover. This is when I realized that money makes you happy. Although I was steadily building my net worth, not having disposable income made me feel so bad.
Even if money can’t buy happiness, poverty buys nothing. It is better to have money than it is to not have money.
2) Money Makes You Happy by Fulfilling Needs
The most basic needs we all have as humans is the need for safety and security. When I was poorer, I had no security. I was beholden to my employer and was worried that I could get laid off at any second without notice. It’s why I added as much value to my employer as much as I could.
The day that I crossed the $500k net worth threshold, I felt happiness. Not only did that prove that I was capable of building wealth and moving up in life, I had security. If my employer laid me off tomorrow, I could safely withdraw $20,000 per year to live on.
That gave me the basic sense of security that I desperately craved from day 1 of college graduation. That gave me the standing to take more risks with my career and my presentation to my bosses. Which ironically gave me more recognition at work because I was bold.
Money makes you happy because when our basic needs aren’t met and we feel insecure, we lash out against others.
Even when they didn’t do anything wrong to us. The tech layoffs of 2023 showed us that no one is safe from layoffs. Companies can kick anyone out for any reason whatsoever.
3) You Have Less Limits
Whether we like it or not, money constrains us. We have to figure out a way to use our limited resources to acquire as much as wants and needs we can. 2022 is when I truly felt the constraints, when I tried to buy a car.
Not only was I constrained to buying a used car, there was very little car inventory that year.
When I tried to go to the dealerships to negotiate, none of them would budge. I had no other choice but to give in because I needed a car to go to work. So I bought a 2017 80k mile Nissan car for a whopping $14.5k. Just one year later, it’s worth a measly $5k.
Even though I’m a frugal guy, I had no other choice. I felt powerless in the transaction.
Even when I was the one with the money! Usually buyers have the power. However, 2022 was when sellers had all the power in the world and buyers couldn’t do a thing about it. When you have more money, you don’t have to be so constrained with purchases.
You can easily find alternatives and/or not feel as much pain dishing out money for products and services. That’s why money makes you happy. It gives you standing and power.
4) Power
We cannot stand it when we are powerless. When someone else is taking advantage of us and we know someone else is taking advantage of us but we have no other choice but to say yes. Money makes you happy because money gives you the power.
The power to walk away and the power to say no. It doesn’t make us feel good when we have to do business with people who we don’t like or respect. We’re forced to associate with them and interact with them even if we don’t want to. That’s being powerless.
When we are financially independent, we have the power to walk away without caring whether we’ll do business with that someone ever again for the rest of our lives. Money gives you power not for the sake of having power but to give you choices.
You get to pick and choose who you let into your life. And that power is something worth having.
5) No Need to Associate Yourself With People You Don’t Like
There are many coworkers and bosses who I would’ve loved to flip the bird to. Who I would’ve loved to yell at and tell them some harsh truths. However, I had to keep my mouth shut and bite my tongue because I was a poor recent college graduate back then.
Money makes you happy because you can walk away from toxic relationships without worrying about negative consequences. Billionaires do not associate themselves with anyone who they don’t like because they had no desire or need.
The friend group that I have is very small and I intend to keep it that way because it’s filled with people who I love and respect. I personally don’t want a large friend circle and I like it. There will be many people in the world who you don’t like. Just a personality difference.
Money allows you to walk away, scot free. That’s less mental aggravation.
6) Money Lets You Relax
There’s no need to hustle. While I personally enjoy working and trying to better my life in this world, I would much rather be relax than work. Rather than stressed and worried that if I don’t provide results, I could get cut at any second.
There are business ventures that I would love to pursue. However, if I were to start one right now, that would give me way too much pressure to make it a success. Money makes you happy because there’s no need for additional stress if you don’t want to.
If it fails, that’s fine but if it succeeds, that’s just icing on the cake. There’s no need to constantly worry and let self doubt creep in. I used to thrive and crave the stress and the emotional toll that comes with working. However, these days, I would rather take my time to get ahead.
There’s no bonus points for getting there faster, anyway.
7) Money Lets You Pursue Your Interests
One of my biggest life goals is to start a business. I love the idea of starting a company that provides a service that others need and I, in turn, benefit from helping others. While I love my 9-5 job, my personal passion is starting my own company in which I control my own destiny.
Money makes you happy because it lets you pursue your own interests that you may have outside of work. A 9-5 job may not completely provide that level of satisfaction for you. Money makes you happy because it lets you pursue your interests.
We all have our own hopes and dreams of how we would rather spend our time. And it’s not to slave away at a desk working a 9-5 helping someone else get richer at our expense. There are many who choose not to pursue their hopes and dreams because their rent has to be paid.
Having a lot of money allows us to break free from the shackles and soar into the sky.
8) Money Makes You Happy Because it Provides For Your Family
We love providing for our families. Whether its through emotional support or money, we love putting food on the table and feed the ones we love. Without money, we can’t do that. Money makes you happy because your family is taken care of.
We don’t want to see the ones we love suffer. We want to take care of them and leave a better planet for our children. When our parents suffer, we feel the suffering alongside with them as well. Money allows us to solve more problems than if we didn’t have any money in the first place.
One of my dad’s wishes to vacation at is in Haiti. One day, I want to provide an all-expenses paid vacation for him to go to Haiti without any worries at all whatsoever. I just know that when I get there, it’s going to make me feel so much better than if I hadn’t bought the vacation package for him.
There’s just something special about taking care of the ones you love.
9) Money is a Way to Keep Score
Lastly, money makes you happy because whether we like it or not, it’s a way to keep score in the competition of life. We are secretly competing against others to get ahead and get to the top. The business world is a world full of competition.
We can’t help but compare ourselves to others, even though we logically know we shouldn’t compare ourselves to others. When we meet someone of the same age with a similar background, we can’t help but compare whether we’re doing better than them or not.
It’s human nature to compare ourselves to others and money is the way we keep score on how we’re doing against our competition. No matter how much we logically know we shouldn’t compare ourselves to others, we do it anyway.
We, deep down and secretly, want to be better than others in the competition of life.
Money Makes You Happy: My Story
When I graduated college, I had a deep desire to get as wealthy as possible. Therefore, I did everything imaginable so that I could build wealth and get rich. I started with a $40k cash balance from internships, part time work, and parental help. Then it was off to the races.
I socked away 50%+ of my income into my 401k. Thereafter, I maxed out my 401k every single year without fail. I wanted to pay as little taxes as much as possible. With a $52.5k salary, that wasn’t a lot of money leftover after taxes, 401k contribution, and HSA contribution.
I was living paycheck to paycheck as every dollar went into food, rent, and transportation. The other paycheck went all into 401k and the like. However, I don’t regret it at all because after 7 short years, my retirement account balances ballooned to $300k.
And it’s growing every single year! That’s when I started to feel a level of security. That’s when I realized how money makes you happy because if I were to lose my job tomorrow, I would still be fine financially. I kept going without fail.
In the subsequent 7 years thereafter, I wouldn’t be surprised if my retirement accounts balloons to $1mil. Which would give me the chance to be a part of the 401k millionaire club. I feel a lot better after having a million dollars in my bank account instead of not having a million+ dollars in my bank account.
Money makes you happy.
Money Makes You Happy and Others are Wrong
When I was little, everyone told me that “money is the root of all evil” and “money doesn’t matter”. For a while, I believed it, too. It’s why I majored in a liberal arts degree in college to start out. Then I wised up and went into the business school because I was interested in building a career for myself.
The ones who dismiss that money makes you happy are flat out wrong. They’re either trying to use propaganda to make you happy with your income currently. Instead of you trying to increase your income as much as you can to better your life.
Others who tell you that money doesn’t buy happiness secretly want money themselves to move up in the world and get ahead of others. It’s brainwashing when others straight up tell you that money shouldn’t be at the top of your priority list.
While money is not the most important to my life, I will never say that it is not at least in the top 3 list of priorities in my life. Money makes you happy no matter what others say to convince you otherwise. After 7 years of being in the building wealth game, I can absolutely say it with certainty.
There’s just too much at stake for others to shame you into wanting more money. We, as a society, shuns people who want money. They feel morally superior because they don’t want money as much as others. That’s just wrong. There’s nothing wrong with wanting more money.
I’m certainly glad that I learned the lesson early on in life.
Money Makes You Happy: 9 Ways it Does Shortlist
- Poverty buys nothing
- Money makes you happy by fulfilling needs
- You have less limits
- Power
- No need to associate yourself with people you don’t like
- Money lets you relax
- Money lets you pursue your interests
- Money makes you happy because it provides for your family
- Money is a way to keep score
