Traditional View of Weak Connection
Traditional view is that the connection between money and happiness is weak. When making this claim, the proponents usually mention research showing that people who won the lottery were not much happier several years later. Also some studies show that more money does not mean more happiness. A plateau effect exists, implying that income matters only up to the point at which people have enough money to afford their basic needs. For example, in a country like India with hot climate, a person who reaches an earning level to afford a fan will be happier. However, once the basic needs are met, more money might not necessarily imply more happiness.
My View of Strong Connection
I have a different view – I believe that money has a strong connection with happiness but it does not come on a platter; it has to be worked upon. We have to think carefully how we use our money, how we channelize our money and how we make our money decisions.
Financial security is one of the biggest reasons impeding happiness and most of the times this worry is unnecessary. In my practice, I get surprised that even people with enough money for their requirements still get worried about depletion of money. Many make their money decisions in a very painful way and many have lots of cognitive dissonance even after making their decisions-did I spend right, could I have bought something else, will it affect my relationship with others, how will I be perceived and so on.
However, there is lots of room for optimism since money is the most controllable factor amongst all other contributors of happiness-please read my previous article. For example, with simple budgetary techniques, one can decrease the number and increase the quality of money decisions to be taken. Moreover, strong money happiness connection is applicable for everybody since judicious use is lot more important than the quantity of money. Everybody has unique goals and they can bolster those by utilizing their money in their own specific way. This article is just the starting point- I will touch on some of the examples in which money can enhance happiness.
Buying experiences as compared to material goods
Happiness research shows that buying experiences such as going out for a dinner or for a vacation is lot more effective than retail therapy. Reason is that if we are using our money to buy pleasant experiences, we get the benefit of looking forward to the event, the actual experience, and in some cases, decades of fond memories. Material items lose novelty but we can relive memories indefinitely.
Experience of Countries ranking high on happiness list
Every year rankings based on happiness level of countries is published. Some countries are always in the top 10 and these include Denmark, Sweden and Canada. Common factors in all these countries include state support for comfortable and consistent lifestyle, low cost quality education for all and good almost free healthcare. It just shows that as individuals, we are happier if we do not have to worry about our important life goals. For example, if we are assured that we can provide good quality education to our children; a major concern is out of our minds.
In India, we do not have comparable benefits from the state but as individuals we can create those by planning and by defining and prioritizing what is important for us. We can channelize our savings towards these goals and seeing the progress being made makes us secure and happy.
Linkages between contributors of happiness
Money’s connection to happiness could be made much stronger by creating positive linkages and its ability to enhance role of all happiness contributors.
For example, good relationship is one of the contributors. A Harvard Business School study involving 3000 people in committed relationships revealed that those who spent more money on timesaving services were more satisfied with their relationships. Research paper concluded that buying timesaving services could improve relationships, in part because partners spent more quality time with each other. Utilizing some of our income to buy more time for leisure can improve well being.
I believe that money can be utilized effectively to forge a strong connection with your happiness. Judicious usage is lot more important than the amount of money; therefore the connection is applicable for everybody. Money is the most controllable contributor to happiness, the quote by Francis Bacon “Money is a good servant but a bad master” is very true. In the blog going forward, I will keep on building up on this theme by providing you with money steps, techniques and examples which will help in enhancing our happiness.