Well-renowned songwriters, such as The Beatles, have told us that money cannot buy love, but what about happiness? And if money can’t buy happiness, then why does everyone dream of wealth and the other “finer things” in life?
Let’s dig into happiness a bit further. Per the documentary film Happy, there are two types of happiness in this world:
Extrinsic happiness –contentment through material items, status and wealth
Intrinsic happiness – contentment through personal development and relationships
Extrinsic happiness has a short-lived impact. Think of buying an ice cream sandwich, for example. Although we all love ice cream on a hot summer day, the effects of that sweet treat wear off quickly. After 15 minutes, we either want more or want something else.
Intrinsic happiness, on the other hand, has longer-lasting effects. Instead of focusing on material goods as a source of happiness, imagine how happy you can become by focusing on yourself and those around you. Some of my happiest moments aren’t the nights where I spent the most money, but instead, hanging out in a friend’s backyard sitting around a fire pit or reading in the park on a cool autumn day.
Is a millionaire happier than your “Average Joe”?
We will tell you time and time again that money alone cannot buy (intrinsic) happiness – it’s true. You may have all the riches in the world, but without love or passion, it’ll be difficult to live a meaningful life you enjoy and are happy about. On the other hand, having no money poses its own challenges: debt, struggle, depression, etc. So we ask… where do we find that balance? How much money do we actually need in order to pull money out of the happiness equation?
In 2010, Time Magazine posted the results of a Princeton University study which uncovered the minimum household income to be $75,000. Once that threshold is met, a family earning $750,000 per year has the same chance of being happy as a family earning $75,000. At that point, the difference is not about how much money these families have, but instead, what they do with their money. This number may seem dated or maybe a bit low for a booming metropolis like Los Angeles or New York City, but it’s an average that gives us a better understanding of money and happiness.
“Money doesn’t buy happiness, but it does buy opportunity…” Anonymous
If we’re meeting or surpassing that minimum household requirement, then how can we make the most of our money to live more fulfilled lives? In November 2011, Michael Norton answered this very question in a TEDx talk. His response was simple: give to others. He tested this theory and was pleasantly surprised: spending money on others increased one’s personal happiness. It wasn’t about the size of the donation, but the intent. People who donated were proven to be happier people.
The moral of this story is simple: be more conscious of what you’re spending. Next time you plan on taking out your wallet, or swiping that plastic – think to yourself, “will buying this make me happy? If not, how can I use my money for a greater utility?”
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