Do you ever wish you had more money? Do you ever dream of being rich? Have you ever thought about why that is the case?
For many people, the desire to be wealthy is extremely common, but is there a root cause to wanting to be rich? Does money make a person intrinsically happier?
As it turns out, the short answer is yes. However, there are some nuances to the subject that make it a bit more complicated.
If you want to understand why money is such a sought-after commodity, then take a look at what the research says and decide for yourself if having tons of money will make all your dreams come true.
Are Money and Happiness Related?
For many years, this question has been at the forefront of people’s minds. The idea that money can buy happiness has been touted by both sides of the issue, with one side saying that happiness comes from within, and the other saying it’s easier to be happy in a Rolls Royce than in a Daewoo.
So which side is right?
Well, like all good arguments, the reality is that both sides make compelling points, which means that there is no correct answer.
Ultimately, how happy money can make you will depend on your own personality, life situation and thoughts on the subject, but this is what research has to say.
Recent surveys conducted all over the world say that richer people tend to be more satisfied with their lives than poor people.
However, it is important to note that this relationship shows a correlation but not necessarily a causation. In other words, the increase in happiness could be caused by factors than money.
We also need to consider the Plateau Effect and the amount of variation in happiness.
The Plateau Effect
Let’s say for the sake of argument that you win the lottery tomorrow. To keep things relatively simple, we’ll say that the lottery is worth $100 million.
Chances are most of you have thought about how you would spend that kind of money if you got it, but what happens if you get that kind of money every year? Instead of a giant windfall, what if you earned $100 million annually?
Winning the lottery is a thrilling moment, but eventually, you will get used to it, right?
As with all vices, money has the same plateau effect as anything else. The more drugs you take, the more you have to ingest to get the same high. The more alcohol you drink, the higher your tolerance level.
Money operates the same way, which means that once you reach a certain amount you become desensitized to it and you don’t feel as happy about it anymore. After all, if you have plenty of money to take care of your bills and family, then what will you do with the rest?
According to research, there is a limit to how much money can make someone happy. One study concluded that beyond $75,000 of family income and $40,000 of individual income, more money did not lead to more happiness.
Once you have at least that much money, other factors such as health and friendships become much more valuable. This makes sense, because once your base needs are met, then you seek out other ways to make yourself happy.
Variations in Happiness Based on Income
Poorer people will have much higher hopes for financial gain because the effect is so much more pronounced when you have little to begin with.
But how much is the variation in happiness between people of different income levels?
As per research, people who earned $32,000 a year were just 10% happier happier than people who earned $2,000. And moving from an income of $40,000 to 80,000 increased life satisfaction from 6.5 to 7 out of 10.
So money might make people happier but not my much.
So What Does All Of This Mean For Your Career?
As we have seen, money doesn’t increase happiness by much, especially above a certain income level.
Also, an analysis of more than 100 studies revealed a very small relationship between money and career/job satisfaction.
So the conclusion is simple, don’t make money the main focus of your career. Also think about what you would do if money was not an obstacle, use evidence from science to guide your career path and see what your personality says.