As Coco Chanel once put it, “There are people who have money and people who are rich.” So, how does net worth really relate to happiness? Dr. Samantha Boardman shares the bottom line on making your money work for your well-being.
We all know money can’t really buy happiness—but can it at least help? In an effort to understand the link between money and well-being, psychologists Elizabeth Dunn and Michael Norton conducted studies that provide valuable insight into how much money is needed and what it should be used for to promote optimal happiness.
So, how much is enough? According to Dunn and Norton, there is indeed a minimum level of economic stability that alleviates financial worry. They refer to it as a “comfortable standard,” and in the United States that magic number is an annual household income of $75,000. Norton and Dunn state that those making the minimum standard are happier than those making less. Beyond that, more money does not mean more happiness.
In fact, as it turns out, it’s how money is spent that matters most. Here’s how to get the most bang for your buck:
Don’t buy stuff, buy experiences. Rather than spend on a new handbag, take a class. Instead of buying a new car, go on vacation. Desperate for a new sofa? Learn how to reupholster your old one. The thrill of an experience lasts longer and is infinitely more rewarding than just another object you’ll soon forget about (and maybe even feel a little guilty about buying).
Underindulge. Yes, that $7 latte is delicious, but do you really need three every day? Moreover, do you even appreciate it anymore? Everyone loves blockbusters on demand, but maybe just two or three a week are better than seven. Underindulging makes us appreciate the little luxuries in life, saves us money and may, in some cases, be better for our health—especially those of us who love dessert!
Spend it on another. Norton and Dunn’s research shows that spending on someone else feels good. So give to your local animal shelter, buy a friend dinner or treat everyone in the office to bagels.
Concentrate on faith, family, community and work. Arthur C. Brooks of the American Enterprise Institute think tank offers a roadmap worth considering for a happy life. Instead of money, he says, it’s spiritual journeys, relationships and meaningful work that truly matter.