Liam Croke: Would more money make us any happier?

I hear this all the time: “If only I earned more money I would be happier”. In many situations this is actually true – but only up to a point. Research was carried out recently in the States which discovered that for anyone who earns beyond $75,000 each year, any extra income beyond this amount does not make them any happier.

I hear this all the time: “If only I earned more money I would be happier”. In many situations this is actually true – but only up to a point. Research was carried out recently in the States which discovered that for anyone who earns beyond $75,000 each year, any extra income beyond this amount does not make them any happier.

I suppose when your financial situation is OK, meaning you are lucky enough that you are not thinking about it all of the time, then having surplus money may or may not make you happy once your basic needs are met.

However, if you are living pay cheque to pay cheque then money, or the lack of it, could make you miserable and unhappy.

For those who think earning more or having more money in their account will make them happier, it may not in fact be the case.

The reasons I put forward for this are: We get used to having more money or we end up wanting even more.

Even if we earn more we are likely to compare ourselves to others who make even more. It has been proven that people are happier to have an income similar to those they live alongside, than earn a higher income but live alongside people who earn more than they do.

The interesting thing from research conducted by a company called Happify, is they found that money can indeed make you happier – if you spend it right.

Let me outline for you what I took from their research because it is very interesting.

They discovered that people are happier when they spend money on experiences rather than on “things” except for spending on the car.

This is the one status possession that people associate with happiness. The researchers theorise that cars help people feel more connected to others. The study found that spending money on a car reduces loneliness and depression and increased optimism. The funny thing is that the value of a car doesn’t increase the level of happiness associated with it.

The majority of people find that paying for experiences they have with their family for example, make them feel happier than it does by spending money on things like jewellery or clothing. Over time, past experiences tend to increase in value and importance and make for memorable stories and are unique while material possessions lose their importance over time.

For those people who like to shop, there is of course a temporary happiness from purchasing something they think they want. The problem is, of course, that once they buy the item and get used to it, the same item no longer brings them the happiness it once did, so they have to shop to replicate that happy feeling. This can be very dangerous particularly when people are buying things using credit.

Happify also found that working towards a financial goal, like becoming debt free or increasing our savings also makes us happier. If you set yourself a goal, whatever that is, and work towards it by sticking to a budget for example, it can produce happiness and the happiness you experience isn’t necessarily the end result it’s from the effort you put in along the way.

Homeowners, interestingly, in the same study were found to be no happier than renters – in fact homeowners often experience more burden than joy from owning their own homes due to the additional expense, responsibility and time and these appear to cancel out some of the benefits of owning your own property.

There is a very interesting thing here – people consider time more precious than money.

People with shorter commuting time are happier with their spare time and their job than those who have longer commutes. And people who make more money also feel more rushed in their lives regardless of how much they actually work. Feeling like your time is valuable can make it seem scarce. Is this why people who earn more than $75,000 aren’t any happier?

Spending money on someone other than ourselves makes us even happier. This really resonated with me because I always remember my mother, when we were younger, buying me and my siblings things – I can’t remember what the things were, they were probably insignificant but I always remember asking her why she didn’t buy something for herself and her reply was always the same: “I get more enjoyment from buying things for you than I would for myself.” I always thought she was mad. How could you get more pleasure from buying things for others than for yourself? But she was absolutely right.

Giving to charity will also make us feel better – a small donation of just €5 will help you feel happier than if you spent it on yourself. Happier people give more and giving makes people happier.

This study reminded me of a book called the Happiness Project and the author, Gretchen Ruben, set about trying to see if money could indeed buy people happiness. She carried out a study where people were offered two salary options. The first option over three years was - €30,000, €40,000 and €50,000. The second similar yet decreasing in amount - €60,000, €50,000 and €40,000.

The second option would give you more money, €150,000 compared to €120,000 at the end of year three, the majority of people chose the first option as they felt that growth would make them happier than more money.

It seems quite clear to me that buying material items will not make us feel any happier in the long run, the trick to being happier is not earning more but spending what we have smarter.