A lot has been said and written about money’s relationship to happiness. The following two statements are made most frequently in this respect:
- Money cannot buy happiness directly and
- Money may be required for happiness up to a certain amount (so that we can fulfill our basic needs), but its impact on happiness thereafter is very limited or does not exist at all
While these statements certainly have a great deal of truth in them, the question which arises is how much we should actually strive to acquire significant wealth. Does the second statement above imply that we should slow down our drive for riches once our basic needs are satisfied?
The answer to this question will, I believe, be different from person to person, as substantial wealth comes with several new elements that may have potentially good or bad impact on our happiness, and depending on how susceptible we are to every one of them the conclusion will go one way or the other.
This article aims to initiate a discussion towards a more comprehensive picture showing how money may have an impact on how happy we are.
Risks and drawbacks of being significantly wealthy
Before I get you hyped up with the advantages of being wealthy, causing you to stop reading this article, throw your laptop into the corner of your room and run out and search for money, let’s have a look at money’s potential drawbacks first.
Killing our drive / losing our task / not knowing what to do with the freedom
Money is very often a key goal of our efforts, but we should remind ourselves the path to the goal is as important as the goal itself. Having a goal in mind gives us motivation, energy and a positive spirit, all crucial ingredients for happiness. Once we’ve achieved the goal, however, we risk losing these benefits, and need to find new goals that fulfill this role to the same extent.
How difficult this can be is something I am observing now with friends of mine retiring, which is a comparable situation; the challenge to fill the gap for a new task may be too big, causing substantial unhappiness.
Things money can buy are no longer special
The pleasure of saving money for something which we would really like to have, the anticipated joy of having it (which is just as real joy as any other joy, a subject to be dived into more detail in future posts), then actually buying and being happy with it, is heavily reduced once we could have it immediately. Unlimited wealth to immediately purchase material goods may look like a shortcut to happiness from the poor man’s perspective, but the rich guy knows it’s not.
Disappointment that money cannot buy happiness
Despite knowing on an intellectual level that money cannot buy happiness, emotionally we still often tend to believe otherwise. Once we are rich we also “emotionally discover” that this is not the case, the disappointment of which can lead to unhappiness or at least substantially reduced happiness. The effects of expectations on happiness is a very interesting subject in itself, which will be addressed in one of the future posts of this blog.
Unfavorable change in personality
Wealth may lead to a change in personality, or buoying of negative character traits to the surface, such as feelings of superiority, enhanced level of greed etc. This can lead to unhappiness, both for the wealthy person as well as the people around him or her. A Chinese proverb goes “gold is tested by fire and man is tested by gold”, which I believe has a lot of truth in it.
Fear of losing it again
Those who climb high can fall deep, and this is also true for the very wealthy. The rich have to look after more assets, potentially raising the feeling of risk of losing it again, which may have a negative effect on happiness.
Outside threats / theft
People who are well-known to be wealthy have to take special security measures to ensure that they will not be victims of theft, kidnapping or similar. Even if it never happens, the protection shield that needs to be set up is real, and can have a substantial impact on the lifestyle, mostly not for the better.
Friends and other people behaving differently
Due to the special status of wealth in society, people may behave differently towards wealthy people, even if the latter have not changed their behavior in any way. This may lead to unfavorable consequences, such as disturbing effects on the “chemistry” in relationships between people of different wealth, in the worst case leading to end of long-term friendships, which can have a substantial negative impact on happiness, as relationships are a key element of happiness.
Beyond these points there are several more potential drawbacks, such as a feeling of burden (e.g. responsibility which comes with wealth) and others, but the 7 points above should cover the main bulk of it (they don’t? Please add a comment below!).
Advantages of being wealthy
Freedom & independence
To me, one of the greatest advantages of having a lot of money would be (you’ve noticed the subjunctive… sob) that I could freely chose on which activities I spend my time on. Instead of selling my time, arguably one of the most precious goods there is, to my employer 60 hours a week; I could think and write about happiness the whole day ;-), spend time on personal development or pursue other projects that I find interesting.
I am sure the same is true for many people; provided, of course, that there are other fulfilling activities in which we would find a challenge, and not fall into a depression with no mission or task, as mentioned above.
Capability to do good
Money is power, and we can use this power to help other people. Doing good this way is very rewarding and it’s no wonder that philanthropy among the rich is on the rise, even though there might be a short dip due to the financial crisis. The best ways on how to spend the money in order to maximize happiness is another interesting topic to look into (philanthropic giving is becoming more professional already, but there is always room for improvement).
Capability to buy material goods that give us pleasure
Buying goods directly instead of saving for them also has drawbacks as mentioned above, however there are also things we could have never afforded otherwise as they are prohibitively expensive. In those cases money could give us more pleasure (of course, there again the counter-effect that we kill our dreams of what still may come, may reduce happiness again).
However, this source of happiness seems to be short-lived. Apparently there is a clear limit of how much we can positively influence our happiness from “outside” by material goods.
To some, wealth is a form of status in society, and therefore may be important with respect to happiness. I believe that the underlying concept of this view also has substantial risks due to its superficial nature, but there do seem to be people for whom the status effect does have a substantial and enduring positive impact on their happiness.
Wealth may lead to new security concerns as mentioned above, however it can also give us the feeling no matter what happens, we are far away from suffering and will never have to be concerned on how to get our next meal. Also, in case something happens to us where we need considerable amounts of money to “fix” it (e.g. expensive medical operation) we know that the chances are better if we had the required money on the bank account than otherwise.
Beyond these advantages actually materializing, another level of benefit can be thinking about or being consciously aware of these advantages, which could give us pleasure in itself.
These are the main advantages of wealth of which I am aware. Again, if you can think of others, please add your comments below.
Conclusion I (if you are not wealthy)
Assuming that money’s advantages outweigh its disadvantages for you (however, there are certainly people for whom this is not the case, I propose an honest self assessment) I suggest that you make wealth generation a key goal, while keeping in mind that wealth does not solve all our problems by far. It comes with serious traps and provides new challenges, towards which it is important to pay enough sincere respect.
It may be worthwhile to point out that just like with happiness, acquiring wealth most often does not come by thinking about it directly (“How can I be happy now? Happy now! Happy now! …” is certainly not the route to happiness) but through activities that you enjoy doing and where you think you can add value to society, thereby laying the foundation for earning your reward.
Also it may be good to mention that this article mainly dealt with the comparison of the states “being averagely rich in a western society” with being “filthily rich”. If you are reading the article now, it means that you are both literate and have access to a computer and internet, which puts you way ahead of the 1 billion+ people who live with less than 1 dollar a day. From the perspective of many people who inhabit this planet today, you are indeed rich. Everything is relative; sometimes it is important to remind ourselves of that.
Conclusion II (if you are wealthy)
If you are rich, be thankful for being in a state that so many people covet and strive to achieve throughout their entire lives, most of them unsuccessfully. Appreciate the circumstances that have lead to your privileged situation which enables you to access all of money’s advantages. Maximize those advantages, e.g. by tapping the rewarding experience of using money to do good to other people. Limit the risks and drawbacks by being fully aware and developing the right plan on how to deal with every one of them.
That’s it for the moment, please review my thoughts critically and share your views!