With inflation and a looming recession, you may find money impacting your mood as you worry about how to afford everyday items. So, just how much money do you need to be happy?
Well, according to CNBC, the relationship between money and happiness is a complicated one. While money influences nearly every facet of our lives, even psychology researchers disagree on how much money affects people’s well-being.
Based on research, money does often lead to greater levels of happiness – but not always. Harvard business administration professor Jon Jachimowicz explains that the main benefit of making more money is that it can give you more of a cushion when faced with problems in your life – like ordering takeout when you’re sick or being able to afford rent if you lose your job.
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“Money is not just a way that people can buy themselves happy moments; it is also a crucial tool for safety, security and stability,” Jachimowicz adds. “Money can help soften the blow of bad times; a lack of money can make even benign things much more distressing and painful.”
How much money do you need to be happy?
A previous study from Daniel Kahneman and Angus Deaton famously detailed that happiness plateaued when someone made at least $75,000, but new research has found quite the opposite. In fact, in a new study from Matthew Killingsworth, people’s sense of wellbeing increases with their income, even if they make above $75,000.
Where Kahneman and Deaton’s research measured happiness by having participants evaluate their feelings retrospectively (evaluative well-being), Killingsworth’s new study evaluates people’s emotions in real-time (experienced wellbeing). Using this alternative form of measuring happiness, Killingsworth discovered that as income rose, so did both evaluative and experienced wellbeing. So, making more money ultimately made you feel more positive day-to-day, and when reflecting on your overall experiences.
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What comes first: money or happiness?
According to Yale psychology professor Laurie Santos, getting a job that makes you far more money won’t necessarily make you that much happier. While the research shows that making more money does affect your happiness, that effect is much smaller on large incomes.
“Again, I think our intuitions are wrong – it might be that if we worked on our mental health and burnout, we’d perform better at work and this might lead to more positive outcomes in terms of our job success and salary,” Santos explains.
In fact, studies have found that happiness comes before you make more money, not the other way around. If you have a more positive outlook on your future, you’re more likely to be more driven at work and ultimately earn more money.
While money does seem to be related to happiness in some way, it’s not the only factor that affects our wellbeing. If you’re looking to improve your mood and have a more positive outlook on life, it may be a better move to practice things like getting enough sleep, exercising or spending time with the people you love. Then, as a result, you may even end up making a little more cash.
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