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Personal Finance

Money can buy you happiness - but when does it stop?

July 20th, 2013 by

Cash can buy some contentment, but the real key to happiness is probably a lot closer to home - and more 'vanilla' than you think

 
 
 

Ask a group of people what would make them happier and you’ll get all kinds of answers, but you can bet that finances figure pretty highly in the mix. We long to win the lottery or cash in on a secret inheritance. And if we could just get that raise...

We know that money matters - the problem is we tend to give it way more weight than it deserves in determining our satisfaction and joy. Case in point: a recent study by Christopher Hsee at the University of Chicago. In it, participants were given the choice of completing two tasks. Choosing a shorter task would earn enough points to secure a pint of vanilla ice cream. Choosing a longer task would earn almost twice as many points, enough to be rewarded with a pint of pistachio instead. What’s interesting is that most people completed the harder task, even those who really wanted plain, old vanilla. Why? Because they felt better about having earned more points, even if those points contributed little to their sense of satisfaction. Hmmm...it seems that sometimes we’re just too focused on the bottom line to pay attention to what that money is actually doing for us.

The 2013 Organization for Economic Cooperation and Development’s Better Life Index took a look at how people in 35 countries lived, worked and felt in an effort to find out what really makes us happy. The results? Money is certainly a factor, but while you may never strike it rich, there are a few things you can do to tip the happiness scale in your favor.

Takin’ care of business

There are a few basic benchmarks we need to hit in order to feel happy. According to the OECD, the happiest countries tended to have homes with “modern amenities” and enough room for some personal space. Affordability factored high on the list, too. The key, though, is that while we are marketed to believe that our home should be our castle (or look like one), where we sleep at night doesn’t actually have to be all that grand to keep us content. In fact, the countries that ranked the lowest on this list lacked indoor plumbing…not granite counters and formal dining areas.

The employment rate mattered too, and many of the countries that ranked as happiest had employment rates that were higher than average. A study released in Britain in June by the Office for National Statistics backs this up. It found employment to be one of the key factors in how people rated their sense of satisfaction in their lives.

But here’s where the results take an unexpected turn: Although the index factored in household disposable income, household wealth and personal earnings, the countries that ranked highest in those areas didn’t necessarily rank highest for happiness. In fact, the United States ranked highest in all three, but only ranked 16th among the 35 countries analyzed in terms of their sense of satisfaction, well behind countries where people had less – in some cases, a lot less – of all three.

So why do we think money will make such a big difference?  The problem may be one of perception. A study published in 2009 in the Journal of Positive Psychology found that while many people assumed their life satisfaction would double if their salary increased from $25,000 to $55,000 per year, in reality it rose only nine percent. It’s better than nothing, but it’s far less than the 100 percent return many of us bank on.

Work-life balance

Remember how we said happiness is a tricky balance? Here’s one area where you really see how fine a line that is, because while being employed makes us happy, having to spend too many hours working can suck that joy right back out again (you know it, right?!). The OECD selected 50 hours per week as a threshold; more than 11 percent of Americans broke it, compared to less than four percent in Canada, which ranked ninth for work-life balance. Some other countries that scored highest for work-life balance included Sweden, the Netherlands and Denmark, countries that also scored high in terms of happiness.

We think Hillary Clinton said it best: “Don’t confuse having a career with having a life.”

Family and friends

If you were in trouble, do you have relatives and friends you can count on to help you when you need them? That’s one question the OECD posed worldwide; those in the happiest countries were more likely to answer yes. Numerous studies have shown that having a strong group of friends is a huge predictor of happiness at all stages of life. Good friends boost self-esteem, reduce stress levels and even help us live longer. We dare you to try to put a price on that (or a girls’ night out for that matter).

Health

In all studies of happiness, health is a major factor. Indeed, it’s much harder to live a full, happy life when our bodies won’t cooperate. Long lifespan was associated with countries ranked as being better places to live in the Better Life Index, as well as with how satisfied respondents were with their lives. But that doesn’t tell the whole story. A 2007 study conducted at the Harvard School of Public Health followed more than 6,000 men and women for 20 years and found that a sense of enthusiasm, hopefulness and engagement in life all appeared to reduce the risk of coronary artery disease. In other words, good health might not make us happy as much as being happy helps boost our health. One thing we know for sure: Rather than running around chasing after satisfaction, maybe we’d get a better payoff from slowing right down and enjoying what we’ve got.

The key to happiness

When it comes to living a happy life, money matters, but not as much as we think – or even enough to warrant much of the time and effort we spend chasing it.  If you’ve got a place to call home, food in the fridge, financial security and family to share it all with, but still feel you need something more…well, you’re normal. But chances are that wealth won’t provide what you’re looking for. Sure, you could work more or wish for a windfall, but in many cases, the answer isn’t so exotic. Sometimes, plain ol’ vanilla will more than suffice.

 
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May 22 2017 6:24pm
 
 
 
 

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