Posted on Tuesday March 20, 2018

Can money buy happiness?

Money can’t buy happiness, or so the old saying goes. But is that really true? It’s a question worth considering. Being wealthy doesn’t mean you’re immune to sadness or psychological distress. And having more stuff—particularly stuff you don’t need—certainly isn’t a ticket to bliss.

But the freedom that money can bring, to be able to live comfortably, avoid going into excessive debt, share with others and do things you’ve always wanted to do, can make a difference. It’s a paradox that raises many questions and produces rather nuanced answers.

Happiness isn’t all about the money

Every year, the World Happiness Report ranks countries according to the overall happiness of the people who live there. The current world champion is Finland. Canada has been falling behind in recent years and is now ranked #15. According to the report, the happiest countries in the world are those where wealth and prosperity are accompanied by low social inequality and a sense of social trust.

The report reveals that even though COVID-19 has caused suffering, it has also fostered a sense of solidarity and encouraged people to look out for one another—two key contributing factors when it comes to happiness. It also showed that countries where people trust their institutions are happier and more resilient.

Job satisfaction, quality of life and caring for others all play an important role as well, as does income.

National economic situation

Some studies have shown that once you pass a certain threshold, earning more money doesn’t make you happier. But the report shows a clear link between collective wealth and happiness. Indeed, the countries at the bottom of the happiness ranking are some of the poorest in the world. And the countries that have taken a nosedive in the rankings are those experiencing an economic crisis, including Lebanon and Afghanistan.

How do you spend your money?

In an article published in The Wall Street Journal, University of British Columbia researcher Elizabeth Dunn found that the correlation between money and happiness depends on how you spend your dough. Say you used your money to buy a bigger house or a fancier car. You’d probably feel quite pleased when making the purchase. But how long does the feeling last? According to Elizabeth Dunn, not very long at all. Acquiring material goods you don’t actually need seems to have a limited impact on your happiness in the long run.

On the other hand, with more money, you could afford to do things you’ve always wanted to do, like travel. Do those types of experiences make people happy? Vacations go by awfully quick, after all. But even though they don’t last forever, trips are more satisfying than material goods.

Why? Because when you travel you create memories, share special moments and learn to see the world in a new light.

Spending money on positive experiences can therefore bring you closer to happiness, even though the experiences inevitably come to an end. That being said, expensive experiences such as trips require some financial planning. It can be a good idea to have a savings account you can use to put money aside for something special that you want to do. Call it your “happiness account.”

Sharing your way to happiness

Dunn’s findings also point to giving as one of the most rewarding things a person can do. It would seem that, whether you’re rich or poor, using your money to help others or treat them makes you happier than spending it on yourself.

Other researchers, including Philippe Tobler and Ernst Fehr from the University of Zurich, have come to the same conclusion. In their study, they gave some fifty participants 23 euros a week. Half of the participants kept the money for themselves, while the other half spent it on other people. The researchers found that spending the money on others was more stimulating for the area of the brain associated with feelings of happiness and satisfaction.

Basically, once you get past a certain threshold, how you spend your money is more important than how much you make, no matter what your annual salary.

At UNI, we believe that real wealth comes from sharing. That’s why we’re always there to support promising initiatives, whether for individuals or the community.

Thinking of ways to cultivate your happiness? Want to spread joy? Talk to your advisor for advice and support and make your dreams come true!