Money Made Us Happier

The researchers say that money can't buy happiness, but the research says that it can. Why the contradiction? It's all in how you look at the numbers.

You may recall a news story or two back in 2006 about money and whether it makes people happy. The headlines went something like this: "Science shows that money can't buy happiness." But if you were reading the story, rather than watching the abbreviated coverage on television, you only had to read down a few paragraphs to find some interesting - and contradictory - statistics.

The truth was that the research showed, as similar research has before, that people generally were happier as they moved from poverty to higher income. In fact, in the United States, they continued to become happier with more money up to about the level of the average household income - around $44,000. After that gains in reported happiness from higher income start tapering off pretty quickly.

In one study, people who made $50,000 per year were twice as likely to be happy as those who made $20,000 per year, but at $90,000 there was little or no increase in happiness. Researchers and reporters take that latter statistic to mean that money is unrelated to happiness. Apparently, as a group they make decent incomes and so see no hope for increasing their own happiness through money. They translate this into the idea that money just won't help anyone, in the process ignoring the many millions of people who make far less than the household average of $44,000 per year.

How Money Made Us Happier

My wife and I were living on less than the average social security check when we first married. We had no debt, so this isn't as bad as it seems. Still, our income was low enough to limit our options in many ways. Healthier food would have been nice, for example, as would a better climate than that in Northern Michigan. We wanted to travel more as well, and to visit my wife's family in Ecuador.

Skip ahead five years, and we are living in Colorado, near the mountains we love, in a much warmer climate. We eat out more often, go out dancing, and we are able to travel when we want to. Our current lifestyle costs several times as much as when we first married. Are we happier?

Absolutely. It isn't just in the things that we can buy, though. It is in the lack of money worries. We don't have to wonder if we'll have enough money for dental work, or to go to Ecuador for Christmas. We can eat healthy foods that were not in the budget before. We work for a few hours at our business each day, and then do what we like.

Now, you can certainly point to examples of people who have made more money and made themselves more miserable. Money alone doesn't help if you don't know how to use it, and you aren't clear about what it can and can't do. For example, some people will spend even more than any increase in their income, and so remain in debt and in stress. In our case, we spend three times what we used to, but we make four times as much, so we haven't fallen into debt.

Money won't take away your bad habits or buy you true friends. In fact, if you overeat, over-spend, or choose the wrong people to spend time with, more money is likely to just mean more trouble in your life. On the other hand, money can buy you the time and knowledge to overcome bad habits. It can buy the tools to help you be healthier and it can even put you in the places where better friends might be found. It just won't make these decisions for you.

Our own experience is this: It makes us happy to be able to help people more. It makes us happier to be able to afford to go out and socialize more. We like being comfortable at home, and having extra cash always available in the bank. We certainly think money can increase your happiness - if you use it wisely.

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