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I’ve seen up close that the lack of money brings great fear and anxiety. So Think money can certainly buy peace of mind. Money can buy a certain level of happiness, but it’s too easy to get get caught up in the hedonic treadmill. More stuff does not buy happiness, just more stuff.
A long time ago I realized that money doesn’t buy happiness. Instead does buy protection against one form of unhappiness. Namely, always miserably struggling to survive. You can be wealthy and still miserable, and relatively poor and quite happy.
If you have enough to take care of yourself and those you love with good health, good food, and comfortable shelter you can choose to be happy with that or anything more that your money can buy. But if the “anything more” becomes “more than you can afford” you will get in trouble. Often those in this situation think they only need to win a lottery and then they will be happy are much more likely than not to find that huge sums of money gained suddenly are not an answer to unhappiness, but source of many new and unfamiliar problems and sources of unhappiness.
So no, money does not buy happiness.
I think the biggest effect is paying off unhappiness. I no longer worry about the immediate bills, and if there is enough to make it to payday. I can hire someone to mow the lawn instead of spending 3 hours on it myself. I no longer balance and reconcile the checkbook because it never gets down to the last dollar – it used to! There is so much less stress and worry that I can actually pay attention to the good things in life.
It absolutely can, although as other commenters have noted, money on its own does not guarantee happiness. Life satisfaction is correlated with income both across and within countries. These are only correlational findings, but they suggest that the money-happiness link is real.
This is the most insightful paper I’ve read on the relationship between money and happiness. The authors note that although the money-happiness relationship has empirically been found to be weak, that may simply be because most people do not know how to use their money effectively. The authors offer eight concrete recommendations on how to use money most effectively to promote happiness:
And those old studies that suggested that winning the lottery doesn’t make people happier? It turns out they are likely bogus. Winning the lottery probably does make most people happier.
Money helps. Paying people to do tasks you don’t enjoy or take away from time with family – like lawn care or shopping – likely improves happiness. But there’s more here. One cannot simply automate or delegate everything in life. We must always work to cultivate relationships and feel a purpose in society. Money won’t address those issues in full.
Like everything, happiness is a continuum – maintain and build relationships and purpose using money as a tool to farm out stuff you hate doing.
Another aspect is finding what you really enjoy and spend a little extra money there if possible.
Perhaps a third point is reducing risk through money – paying up for a little more insurance coverage or a higher-quality car can prevent potentially costly and harmful accidents and car trouble (as one example).
My own family’s experience closely mirrors the conventional wisdom: Where we’ve been able to use money to buy experiences, it has brought happiness. In fact, I’d go as far as saying that we weren’t buying experiences; we were investing in experiences.
That’s like asking, “Does a hammer build a house?” Money is a tool. When used correctly and in the proper measure, money allows for more choices which can lead to more options to happiness. There is also the danger of using the tool too much. There is such a thing as tyranny of choice, where the plethora of options causes angst and worry (not to mention the fear of losing all one has acquired). An oft-quoted highpoint of money/happiness correlation is an income of $75,000 a year: http://content.time.com/time/magazine/article/0,9171,2019628,00.html