This is a guest post by Robert, who lives in Calgary and worked as a financial adviser before retiring at age 35. He is married, has three kids and has returned to school with the goal of eventually living and working overseas.
Can money buy happiness? The obvious answer is that no, it can’t. But I’ve recently seen a couple articles that argue. In fact, I remember a financial advisor once explaining that, while money doesn’t buy happiness, it’s one of those things that you’d rather have than not have. I must admit that I’ve never believed there’s honour in being poor.
It has been said that beyond about $70,000 per year of income, more money doesn’t make a person happier. This was first described as the Easterlin paradox, which found that within a country, people who had more income were happier. But between countries, the amount of income didn’t correlate to level of happiness. There are two likely explanations usually given to explain this counter-intuitive finding. One is that we have a satiation point where we have everything that makes us happy. That seems to be equivalent to saying that we run out of ideas on how to spend our money, which doesn’t seem particularly realistic. The other is that we are so busy comparing ourselves to others that we lose sight of how much we really need and we only feel happier in proportion to how much more we have compared to those around us. That’s why it’s interesting that a new study shows that happiness does tend to continue to rise with income.
Of course, that doesn’t prove that the income is the source of the happiness. It could just as easily be true that happy people earn more income, or that the income and the happiness are both the result of another cause. And that’s where Carl Richards suggests that happiness comes from spending money on other people. That’s an interesting idea, because it explains why money and happiness are sometimes related (you need to have money in order to spend it on others), but why people aren’t necessarily happy with more money (spending it on themselves). So it seems that money can buy happiness, but only indirectly, but using it to make other people happy.
Having just celebrated my daughter’s fourth birthday by spending money on a new pet fish, a horseback ride, presents and a family BBQ with her cousins, I’d agree that there’s nothing that would have been a better use of that (relatively small) amount of money. Do you get happiness from spending on yourself? On others? Or have you found a better way to find happiness in spending money?