Who Says ‘Money Can’t Buy Happiness?’ Here Are 11 Ways It Can
The Beatles said money can't buy love, but can it buy happiness? New research says yes, at least up to a point -- but that point keeps moving.
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According to a study published in March in the Proceedings of the National Academy of Sciences journal, most people experience an increase in emotional well-being as they earn more income, but only up to a certain level. The report revises the dollar amount established in earlier research by one of the new study's co-authors, Nobel Prize winner Daniel Kahneman. In 2010, Kahneman published an influential and widely cited study that found happiness increases with earnings up to roughly $75,000, but that wealth has little impact on happiness beyond that.
But inflation continues to take its toll, and today, Kahneman and his fellow researchers believe that happiness increases with money up to around $500,000.
Whether it's 75 grand or a half-million bucks, dollars do make a difference -- and personal finance experts know it. GOBankingRates surveyed popular money pros to learn more about the ways in which cash affects emotional well-being -- and while money might not be able to buy you love, life is certainly better with it than without it.
Here's why.
Money Makes Frugality a Choice
When Stefanie O'Connell, blogger and author of "The Broke and Beautiful Life," started making enough money to feel comfortable, frugality became a choice rather than a necessity.
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Now, money buys her options whether she chooses to spend it or not.
"Being limited in what you can buy, do, give or experience because of insufficient funds is undeniably frustrating," she said. "Money is a tool that can be leveraged to lift those limitations. Having that kind of flexibility in my finances, and in my life in general, makes me happy and grateful every day."
Money Can Buy Experiences
Money can buy stuff, or it can buy memories -- and the latter is almost always more priceless and irreplaceable than the former.
"I believe money brings us happiness because it allows us to experience the things we dream of doing," said Lance Cothern, a certified public accountant and founder of Money Manifesto. "Without money, many of us would never be able to experience that once-in-a-lifetime trip to Europe or Alaska."
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Money Enables Generosity
According to the Cleveland Clinic, there's a direct connection between charitable giving and physical and mental well-being -- and it's much more than just good vibes. The act of giving can lower your blood pressure, reduce stress, increase longevity and flood your body with serotonin, dopamine and oxytocin.
You don't need money to engage in charity, but financial security sure makes a philanthropic habit easier to maintain -- and if you practice giving, chances are you'll pass the tradition down to your children just as you would generational wealth.
"A recent study conducted by Indiana University explored giving attitudes across generations of high-net-worth families," said Peter J. Klein, founder and chief investment officer of ALINE Wealth and author of "A Passion For Giving," a tutorial on charity-based legacy wealth planning.
"The study found that, 'Parents' decisions to give to charity influence their children's decisions to give; parents who give are more likely to have children who give. Parent volunteering has a two-fold impact on children; parents who volunteer have children who volunteer and give."
Money Provides Stability and Independence
Alexis Schroeder chronicles her journey to a happy, healthy lifestyle on FITnancials. As someone who has provided for herself since the age of 16, Schroeder knows firsthand how money can provide independence and the peace of mind that comes with having control over your own financial destiny.
"Money brings me stability and security," she said. "I'm able to take care of myself financially without relying on anyone else to keep me secure."
Money Buys Protection From the Unexpected
Michelle Schroeder-Gardner knows a thing or two about making money. She was able to pay off nearly $40,000 in student loan debt in just seven months by working side jobs in addition to a full-time job while also creating the blog Making Sense of Cents.
She has since earned more than $5 million blogging online.
Schroeder-Gardner said that money has brought her happiness because, by managing it well, she's been able to safeguard herself against the stress of unexpected expenses. "I am saving more money than ever and have been able to build my retirement and emergency funds," she said.
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Money Makes Life Easier
Philip Taylor, a certified public accountant, created the PT Money blog in 2007 to share his experiences managing his money and learning about personal finance. Sixteen years later, he's the one teaching his followers how to take control of their own finances.
"Money -- or my mastery of it -- certainly has made my life easier," Taylor said. "I have a ton of options, freedoms and protections. But an easy life doesn't equal happiness. I have to choose that daily."
Money Lets You Pursue Your Passions and Dreams
Jon Dulin dug himself out of $10,000 in credit card debt and now plans to retire by 50. So, the creator of the Money Smart Guides blog has seen for himself how money can give you more options in life.
"For me, money has brought happiness in this way," Dulin said. "Because my wife and I worked hard and saved a lot every month, I took advantage of starting my own business. Had we not saved as we did, I wouldn't have that option."
Money Allows You To Help Friends in Need
William Charles, an investment banker and founder of Doctor of Credit, has found that money makes him happy when he can use it to make others happy. In fact, Charles once helped his friend pay off credit card debt -- and the friend paid him back over time.
"It's an amazing feeling to be able to help somebody you deeply care about when they are in relatively small financial trouble that is causing them great stress," he said. "It meant the world to him, and it was a relatively small monetary gesture from me."
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Money Is the Antidote for Financial Stress
Nick Loper is the creator of Side Hustle Nation, a site that showcases his successes and failures with side businesses as well as lessons from other entrepreneurs. He has found that money can buy happiness in more than one way.
"The first is the obvious -- material comforts, food, shelter, entertainment, travel, etc.," said Loper. "But the second way is maybe even more important, and that's the mental anguish it helps dissolve. If you have a healthy savings cushion, you live with far less financial anxiety than someone living paycheck to paycheck, because you know you can weather a job loss, a trip to the ER or unforeseen car repairs."
Money Makes All Stages of Life More Enjoyable
Ben Edwards, author of "Get Out of Debt Like the Debt Heroes," has learned money can amplify happiness throughout all of life's chapters.
"For example, right now we're raising our three kids," Edwards said. "It makes us happy to be able to afford to pay for the extracurricular things that help them develop and learn."
Because he doesn't know what will make him happy in the next phase of life, he said it's important to save to have the money to pay for what will bring him joy when that phase arrives.
Money Offers Freedom
Tiffany "The Budgetnista" Aliche is an award-winning teacher of financial empowerment and founder of the Live Richer Challenge. Yet, she doesn't believe that money brings happiness directly.
"I believe that money brings options and greater freedom to choose," she said. "It's through those choices that happiness is found. Money has enabled me to travel the world, give back via donating and start my own business by doing my passion. It's those choices that have made me happy, not the money itself."
Whether you hope to retire a millionaire at 65 or work a job you love long into your golden years, you want the choice to be yours and not the result of financial necessity. Make smart money decisions now and enjoy greater financial freedom down the line.
Andrew Lisa and Gabrielle Olya contributed to the reporting for this article.
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This article originally appeared on GOBankingRates.com: Who Says ‘Money Can’t Buy Happiness?’ Here Are 11 Ways It Can
