A famous 2010 study by Economic Nobel Prize winners Daniel Kahneman and Angus Deaton concluded that “happiness only increases with income up to $75,000.” A new study by Matthew Killingsworth published in 2021 challenged this widely accepted claim, determining that life satisfaction did in fact continue to rise with higher incomes without a plateau: For some people, more money did equate with more happiness.
To address these contradictory findings, Kahneman and Killingsworth published a collaborative paper concluding that in the end, that they were both right: for 80% of people, happiness does continue to rise past an income of $75,000. However, for an unhappy minority, no amount of money over that initial baseline brought greater happiness.
If money were the true cause of happiness, it would make everyone universally happy, and the more of it they had, the happier they would be. But this study corroborates the age-old wisdom that money itself can’t buy you happiness, as anyone who has eaten at a fancy restaurant with their partner while arguing the whole time can attest.
“If you’re rich and miserable, more money won’t help,” Killingsworth says. “For everyone else, more money was associated with higher happiness to somewhat varying degrees. Money is not the secret to happiness, but it can probably help a bit.”
His findings confirm that while money is often associated with a greater sense of well-being and life satisfaction, it is not in and of itself the cause of happiness.
How Money Does Buy Happiness
There are many situations in which money can buy happiness. At the very least, we need it to fulfill our basic human needs. According to Maslow’s hierarchy of needs, you first must fulfill your basic needs of food, water, warmth, rest, security, and safety, before you can focus on higher psychological needs like self-actualization and a spiritual path.
Much suffering is associated with a lack of financial security; lacking food, water, healthcare, or a safe home makes chasing more subtle forms of life satisfaction irrelevant. Earning enough money can improve your peace of mind, sense of freedom, and mental health so that you can live a healthy, safe life and experience feelings of dignity and self-worth.
Once you obtain financial security, there are still ways in which having more money can make you at least temporarily happier. Spending money on things you enjoy, whether it is a new handbag, mountain bike, or your favorite latte, does “spark joy” (however fleeting it may be). And rich people enjoy the privileges associated with high social status, opening the doors to influence, connections, respect, and resources.
So, yes, in many ways “money buys happiness.” However, money isn’t all you need to be happy, and believing it does sets you up for failure, because focusing on money as a sole source of happiness inevitably fails. Ed Diener—author of Happiness—says, “It is generally good for your happiness to have money, but toxic to your happiness to want money too much.”
How Money Can’t Buy You Happiness
If money could truly buy happiness, billionaires would be the happiest people on earth. However, this is hardly the case, and plenty of wealthy people are absolutely miserable. There’s no guarantee that money will buy happiness, just as Kahneman and Killingsworth found.
“Once I buy that new car, I’ll finally be happy.” “Once I have a certain amount of money in my bank account, then I can finally relax and enjoy life.” We repeat phrases like these to ourselves as we chase our financial goals, believing that once we reach them, we can finally be happy. But if you think about the last time you finally got something you’d been craving, how long did that happiness last?
We think that a new car will enduringly increase the happiness in our lives. However, finally laying our hands on a new material possession or satisfying a craving only produces a spike in happiness that inevitably fades back to your original level of happiness.
This phenomenon is known as the “hedonic treadmill,” where people chase external pleasures hoping to increase their day-to-day happiness. But in reality, we inevitably adapt to our new circumstances and then feel we need even more to again feel joy. The hedonic treadmill teaches us that the pursuit of material possessions or external achievements alone won’t lead to sustained happiness. It’s a reminder to seek balance and mindfulness in our pursuit of happiness, recognizing that lasting joy lies beyond the fleeting highs of external circumstances.
According to Buddhist philosophy, the more we experience attachment, the more suffering we will experience. If you are able to release this sense of craving and enjoy life as it truly is, your sense of well-being will increase immensely, regardless of how much more money you have beyond your everyday needs.
Finding Happiness Outside of Money
If money isn’t a sure way to find happiness, then how do you achieve life satisfaction? From the Buddhist perspective, the best way to cultivate emotional well-being is by serving others. The Dalai Lama says, “Helping others brings deep satisfaction. No matter how powerful we may seem to be, our survival depends on the community. Clearly the community is crucial to individual happiness, so if we make others happy, we too derive benefit.”
When getting too caught up in our own concerns, we can lose touch with our interdependent reality until even our mental health suffers. But when we care for others, it expands our perspective and brings a sense of connection. Of course, this is not to say that you should ignore your own well-being.
Another great way to cultivate true happiness is by improving your self-worth, self-esteem, and mental and physical well-being. At the end of the day, happy people are those who have a strong connection with themselves and with others. Finding a way to be generous, loving, and compassionate with yourself and others is what will ultimately bring long-lasting happiness.
Here are some ideas to generate happiness that don’t require you to spend money.
Spend quality time with a family member or close friend
Connecting with others is essential to leading a happy life. When we spend time with people we care about, it evokes feelings of love, belonging, safety, and joy. Find ways that you enjoy connecting with others, whether through deep conversations, hiking in nature, or enjoying a home cooked meal together.
Volunteer your time or donate money
In today’s society, it is easy to feel separate from others, which can make you feel lonely, caught up in your own problems. Focusing on others allows you to see a different perspective and feel connection. There are many ways to help others, whether it is volunteering your time or donating food, clothes, or other useful items.
Practice mindfulness
There are many ways to practice mindfulness, from yoga to meditation to forest bathing, but at its essence, mindfulness practice is acceptance and gratitude for the present moment. By staying present for everyday experiences, you can foster calm and peace of mind, reduce stress, and promote emotional resilience.
Practice self-care
By making self-care a priority, you invest in your well-being and the overall happiness of yourself and others: relax, reconnect with yourself, and cultivate feelings of radical self-acceptance. Popular self-care activities include journaling, yoga, reading, music, and loving-kindness meditation.
Spend time in nature
Nature provides a sanctuary from the stress of modern life. When we reconnect with nature, it allows us to also reconnect with ourselves. Being in nature encourages mindfulness and presence while revitalizing our souls and fostering a sense of contentment.
Move your body
Exercise not only improves physical health, but also enhances mental well-being. By moving your body, you release endorphins which naturally boost your mood. If going to the gym to lift weights isn’t your thing, don’t worry! There are plenty of others ways to get your heartbeat up like a hip-hop dance class, running outside, playing a sport, yoga, or mountain biking.
Channel your creative side
Whether through art, writing, music, or any other form of creative outlet, the act of creation sparks a sense of accomplishment and fulfillment. Engaging in creative pursuits stimulates the brain, while reducing stress and anxiety. It offers a space for self-exploration, encouraging personal growth and a deeper understanding of oneself. The joy derived from creative activities lies not in the final product but in the process itself, where you enter a flow state that brings a sense of peace.
Practice gratitude
One source of happiness that is seriously underrated is having a gratitude practice. Many studies have found that gratitude positively impacts happiness and an overall sense of well-being. Try practicing gratitude through journaling, volunteering, gratitude meditation, or making it a point to express your gratitude at least once in every conversation.
Religion or spiritual practice
Participating in spiritual or religious activities can foster a deep sense of connection, purpose, and inner peace. Practices like prayer, meditation, and communal worship connect individuals to something greater than themselves, aligning with their core values and creating a sense of comfort, stability, and community.
This list is endless, these are only a few ideas. If you feel like it, share some of the ways you find happiness that don’t require a certain amount of money through our Train a Happy Mind community or our Instagram.
