Can Money Buy Happiness?

Can money make you happy? No doubt you’ve asked yourself this question, particularly if your experience with money and happiness has not lived up to your expectations. One thing is certain: everyone needs money to survive in today’s modern world. How much or how little you need depends on your attitude, lifestyle, aspirations and financial future.

Easy money?

Studies have shown that people who suddenly come into a large amount of money are generally happy for the first year or so, then they return to their “normal” state of mind shortly afterwards. So if you were happy when you came into money, it’s likely you’ll continue to be happy. But if you are prone to depression or feeling down, then despite having money, you won’t be entirely happy underneath.

We’ve all heard stories of people who win large amounts of money through gambling or the lottery and then squander it in a few short years. They find themselves almost back to where they started. Unfortunately, they get caught up in the moment and neglect to think about the future; they may also succumb to societal pressures that suggest money and happiness go hand in hand.

Many people underestimate the power of sudden wealth and what it means. It has the potential to destroy relationships and families, and some people feel pressured to share their windfall with family members because they would feel guilty if they didn’t.

A calculated question

If the mere mention of money and happiness in the same sentence makes you cringe, or you believe money is the root of all evil, perhaps your attitude towards making money is stopping you from deserving more money and happiness. That’s not to say you must focus all your energy and time on amassing money and nothing else.

Having a healthy attitude towards money is as important as having a healthy attitude towards your weight, the food you eat, your relationships and so on. According to American evangelist Billy Graham, “If a person gets his attitude toward money straight, it will help straighten out almost every other area in his life.”

So, what do the experts think? Does money buy happiness? I posed this question to psychologist Dr Timothy Sharp, founder of The Happiness Institute in Sydney and author of The Happiness Handbook . “There is no doubt, based on my years of experience and a considerable body of research, that money only buys happiness up to a point. Beyond this point, which is relatively low and requires only that a person is not below the poverty line, increases in wealth or income contribute only minimally to happiness. At the same time, I should note that this does not mean in any way that money is bad or that it leads to unhappiness; only that happiness and money are not highly correlated. The good news is the things that do lead to happiness (such as having a clear sense of purpose, optimistic thinking, good-quality relationships and the ability to live in and enjoy the moment) do not cost anything!” he says.

Retail therapy

If you’re thinking you have nothing to worry about because you’ve never used money for instant gratification, consider this. You’ve had a hard day at the office or a fight with a loved one, so you decide to hit the shops to let off some of your frustration. Perhaps, in some small way, you’ve fallen into the trap of using money for an instant lift. “Retail therapy” really does exist — Australia’s ever-growing credit card debt and consumer spending are certainly testament to this.

Dr Sharp has this to add on the subject: “The problem with satisfaction through retail therapy is that the pleasure or joy one gains from purchasing something new is typically very short lived. Although we frequently feel good after buying something, we also tend to adapt very quickly to the new purchase so that what initially seemed like a fantastic new gadget, car or piece of clothing is now simply the norm. Adaptability or adjustment quickly kills the joy of new purchases, so if you really want lasting and authentic happiness it’s recommended you focus more on other activities such as those I mentioned earlier.”

Childhood inheritance

Have you ever thought about where your attitude towards money and its potential for happiness comes from? Perhaps it was entrenched in your childhood. Rightly or wrongly your parents’ attitude to money would have influenced your beliefs. For example, did you grow up in a household where money was never talked about, or even thought socially unacceptable? Did your parents argue constantly over money, possibly tainting your views about money and happiness?

It doesn’t matter whether you grew up in a household with little money or if you had an abundance of money. People who have lots of money still face financial pressures. In fact, some would argue the more money you have, the more problems you face.

Life and business coach Jackie Nagara, of Self Directions, spends a lot of time with her clients discussing their belief systems around money. She believes our upbringing has an impact on our attitudes to money: “If you grew up in the Depression or through war, or your parents did, then you have a scarcity mentality, always cautious and saving for a rainy day.

“Money really is a source of energy. It’s how we use it that is of the most importance. Some people keep seeking things, hoping to find happiness — a new car, bigger house, better job — and it’s still never enough. They think it will fill a void, but there is still a lot of emptiness.

“The reality is you don’t solve money problems with money; it’s generally something else. If you get in touch with your values, along with a strong sense of self worth, then money starts to flow towards you,” she says.

Money talk

So what do everyday Australians think? Here are some responses to the question “Can money buy you happiness?”

• Vicky, 50, stay-at-home mum: “Of course, money can’t buy you happiness, but poverty … it stinks!”
• Maria, 47, working mother of two: “Money can buy you happiness and it can buy you misery. It all depends on what you spend your money on.”
• Janet, 32, single, career woman: “Yes, money can bring you happiness — if you want to travel around the world or even buy a new pair of shoes. I think it depends on what makes you happy. If you’re just happy to sit on a beach all day, then you don’t need a lot of money to do that. It depends on what your priorities are. When I think about the times I have money in the bank, I’m a lot less stressed than when I’m in debt.”
• Barbara, 55, executive manager, divorced mother of two: “I grew up in a family where we had a lot of financial pressures. I’ve learnt that money is about independence; it’s about being in control of your own security. That’s reassuring.”
• Kate, 48, newly single: “Give me money any time … it’s hard work being poor.”

Can’t buy me love

We all want to be happy in love, but some people fall into the trap of “buying” love to find happiness, as the following story illustrates. When Patrick, 30, married Jennifer, 26, he thought he was the luckiest man alive. Before they married, Patrick lavished expensive trips, shopping expeditions and clothes on Jennifer. The more he gave her, the more she expected. Unfortunately, this spending spree continued into their marriage.

Two years later, Jennifer’s spending habits have not abated. The reality is the couple are now heading for bankruptcy. With a mortgage and a new baby, Patrick finds himself struggling to make ends meet, while Jennifer’s expectations continue. Her weekly hair appointments, regular manicures and pedicures, the latest clothes and the pressure for him to buy her gifts have caused many arguments.

When they first met, Patrick constantly bought Jennifer extravagant gifts and took her away to exotic places and she didn’t expect this to change just because they were married. “We don’t have the lifestyle we started out with and that has put stress on our relationship,” says Jennifer. Patrick thought that by buying her things she would be happy.

Patrick now realises that no matter how much money he spent or how many gifts he bought for his wife, it was never enough. Was he really buying her the gifts to make her happy or was he trying to buy her love, in turn making himself happy? Either way, this story suggests that using money for instant gratification will never buy happiness or, more importantly, love. The couple are undergoing counselling.

A personal account

My personal journey with money began quite by accident. Eight years ago, while I was attending my regular book club meeting, we talked about having one of our meetings in a foreign destination. I piped up and said, “Wouldn’t it be great to go to New Orleans!” This was the setting of a book we had just read and it seemed an exciting place to visit. Unfortunately, we didn’t have the money to go on this wonderful trip. If we’d had the money, what an experience we could have shared as a group. From that meeting, five members of the book club, including me, went on to start an investment club. It formed the basis of the book The Money Club (Random House), which I wrote with three other members.

Over the past seven years, since writing several personal finance books, I’m beginning to understand why having money and security is important. It’s the difference between being able to pay your bills or not, taking the trip of a lifetime (like the one we wished we could have taken to New Orleans) or just simply being able to take your family out to dinner. I’d like to add I take great pleasure in walking on the beach, picnics in the park and spending time with my family and friends — all of which are free. Financial security gives you peace of mind and allows you to enjoy life, whether it’s taking a walk in the park or driving a new car.

I’ve learnt it doesn’t matter how much you earn; it’s what you do with it that counts. That’s right — people who earn high incomes are not necessarily successful at managing their money, and when people come into a lot of money, some of them squander it. Many people who earn relatively low incomes find happiness; it boils down to where you find pleasure or what matters to you most. It’s safe to say that happiness lies in self worth and not net worth.

Whether you have a little or a lot of money, like everyone, you deserve happiness. True happiness comes from being able to enjoy your friends, family and work — in short, your life as well as all the goodies money brings your way.

*All names have been changed to protect privacy.