According to a study by Empower, 59% of Americans believe financial security is crucial to happiness. However, the price tag for this happiness may be higher than you think: $1.2 million.
Money plays a significant role in shaping lives, identities, and potentially even happiness. It’s tempting to believe that well-being is directly tied to the balance in a bank account. You might think, “If only I had a 12% raise, I’d be happy,” or “An inheritance would make life easier.”
Can money honestly buy happiness?
Empower, a financial planning company, studied the complex relationship between money and happiness. While most Americans believe money plays a significant role in happiness, only 17% say it’s about reaching a specific net worth. Instead, 54% of people associate financial happiness with having the freedom to afford everyday luxuries without worry, 65% associate it with being debt-free, and 45% relate it to owning a home.
Money Matters, but More Than You Think
While 71% of Americans think more money would solve their problems, 32% say just $15,000 would boost their happiness for six months. Millennials, however, aim high, needing $525,000 annually to feel comfortable, compared to boomers, who’d settle for $124,000.
Retirement Dreams and Shifting Priorities
Gen Z wants to retire at the earliest age of 54, despite pushing back their target from age 49 last year. In a philosophical shift, 67% prioritize caring for themselves today over leaving wealth for future generations.
Work and Financial Planning
About 75% of Americans see work as a means to an end, but saving for retirement is still a priority for many. Additionally, 67% believe their employer should help with retirement planning, and 63% consider good financial advice essential for happiness.
Coffee Over Social Media
While a daily $7 coffee is worth it to many, especially 62% of millennials, about 73% would ditch social media altogether for financial happiness. This shows that for some, financial security trumps online presence.
The Broader Impact of Financial Happiness
Most Americans believe financial happiness leads to a healthier life, with 79% saying it boosts overall health, 77% seeing increased productivity, and 78% feeling more inclined to help others. Even better, 75% believe it can help close the wealth gap, creating a more equitable society.
How Your Money Choices Influence Happiness
Money can provide calm and control, allowing us to buy our way out of unforeseen bumps in the road, whether it’s a minor nuisance, like dodging a rainstorm by ordering up an Uber, or a bigger worry, like handling an unexpected hospital bill, according to Harvard Business School professor Jon Jachimowicz.
“If we only focus on the happiness that money can bring, I think we are missing something. We also need to think about all the worries it can free us from,” he shares.
Tom Rath writes in his book Well Being, that, “Money can increase our short-term happiness by giving us more control over how we spend our time.” This ability to prioritize what truly matters is a significant advantage that money can offer, paving the way for a more balanced and enjoyable life.
Although a 2011 study from the Society for Consumer Psychology indicates money alone isn’t the key to happiness, how you spend it can make a big difference. Invest in experiences over possessions, use your resources to help others, savor small joys, and avoid unnecessary insurance. Delaying gratification and considering the long-term impact of purchases can also boost your happiness. By focusing on experiences and the well-being of others, you can maximize the happiness you get from your money.
“At its most basic level, money can increase happiness because it provides security, stability, and a buffer against negative life events,” says Elizabeth Dunn, PhD, a psychology professor at the University of British Columbia and author of Happy Money: The Science of Happier Spending. But Dunn’s research found a boost in happiness even after basic needs are met.
Money Can Certainly Make Life Easier
Money can make life easier and open doors to a more fulfilling life. Financial resources provide the freedom to choose where you live, how much you work, and how you spend your time. It can also give you the flexibility to work when you want.
Instead of battling rush hour traffic, imagine living closer to work and enjoying more time at home, or picture trading in those extra work hours for precious moments spent pursuing hobbies, connecting with loved ones, or simply relaxing and enjoying life.
