Money: how much should we strive for it to become happy?

24
Aug
Nick

Pursuit for money

A lot has been said and written about money’s relationship to happiness. The following two statements are made most frequently in this respect:

  1. Money cannot buy happiness directly and
  2. 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.

  1. 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.
     

  2. 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.
     
  3. 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.
     
  4. 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.
     
  5. 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.
     
  6. 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.
     
  7. 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

  1. 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.

  2. 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).

  3. 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.

  4. Status symbol
    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.

  5. Security
    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!

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17 Comments »

 
  • James says:

    Thanks for the link, Nick!

    The Buddha acknowledged the need for the basics–food, shelter, medical care (and to this, we might add education). He also understood the difference between need and want, the latter of which is often at the very root of our troubles. There seems to be plenty of evidence to support this view: Contemporary studies on the topic tell us that it’s true that money makes us happy, as you point out, because with it we can meet our basic needs. Beyond the basics, though, money ceases to be a reliable measure for happiness.

    That doesn’t mean money’s bad, of course, and I agree–it’s a double-edged sword.

    We ran a section on happiness (“The Happiness Craze”)–maybe I should make it publicly available, but it’s late now and I have to be in the office early.

    I enjoyed reading the post!

    James

  • [...] The more we can pre-live the future moment (or “emotionally model it in our brains”), the higher the expectations can be, and the higher the potential disappointment Our capability to pre-live future happenings is different from event to event, which therefore also has an impact on what we “emotionally expect” from it, and thereby the implications on happiness are different.    For example, “taste” is one of the dimensions which is not easy to pre-live. On an intellectual level, you can expect a lot from a restaurant you are visiting where you’ve heard they serve good food, and therefore can also be disappointed if they don’t, but the emotional letdown is limited, because you couldn’t pre-live the experience authentically beforehand. On the other side, there are events that you can picture very strongly, and might even be a victim of incorrect or overblown, vivid expectations. A classic example is a holiday. We tend to remember the positive peaks of our last holidays, which we can re-live very well (by remembering of how great it was), and therefore run the risk of expecting it for future holidays as well, which may make the holiday not as enjoyable as it could have been.Another example is wealth. We can picture very well of what it would be like to be very wealthy (we tend to focus on the positive, thinking of all the things we could afford which we couldn’t in the past, leading to positive emotions), therefore the letdown can be very high when we realize it’s not as good as we imagined it to be (also see “Money: how much should we strive for it to become happy?”). [...]

  • John says:

    To me the biggest negative about money is that earning it takes a lot of time and effort. So to consider how much good it is doing you, you need to think about the opportunity cost, that is, what are you giving up to get it? Not to mention that the job that would may you the most is not necessarily the one you would enjoy the most. As I said over on my blog, the thing that correlates most strongly with happiness is having lots friends, or more generally having strong connections with other people. If working your way up the corporate ladder takes time away from maintaining friendships, then it will probably be a loss no matter how much money you earn.

  • Mukund says:

    Nick,

    I liked your analysis on the advantages and disadvantages of money in trying to get us happiness. I do, however, strongly feel that trying to have suggest that there is a one-to-one correspondence between money and happiness is a bit simplistic. There are a number of factors that bring us happiness: Stable relationships and love, purpose and meaning in life, leisure to pursue our interests, intellectual stimulation through work and challenges, social status, ability to bring comfort and happiness to others, etc. Unless we realize and understand all the levers that control happiness, and the extent to which they need to be shifted to attain the right amount of happiness, we might be completely miss the picture. For many, money might have little impact on happiness. So to make it a goal and pursue it might be a waste of time if they are not able to find, for example, love and affection that they are seeking.

    My conclusion, is that we should first understand what are the various factors that will give us happiness. And then, we need to see how many of these factors can be positively influenced with money and wealth.

    I enjoy your blog and hope you are your readers find mine interesting, too: http://lookingfortranquility.blogspot.com/

    Happy Blogging,
    Mukund

  • Nick says:

    Hi Mukund,

    thank you for the good points!

    I fully agree, a lot of other things can have impact on our happiness as well; I was planning to compile a “long list” of all possible factors (it will really be a long list!) but that may take a bit of time…

    Just had a look at your blog, I very much enjoyed reading your posts! And I fully agree with your blog’s premise: Happiness can indeed be found in the most ordinary of things. It would be interesting to analyze in which situations we are capable to find joy in simple things, and what to do in order to be more often in the required “mental state” to enjoy them.

    Thanks again,

    Nick

  • [...] and/or because they believe that significant wealth would solve all their problems (which is questionable). The latter perception may be because they only see the advantages of being significantly wealthy [...]

  • hansuke says:

    Hi Nick.

    Thanks for reading my post. I didn’t really espect for anyone to read it.

    Well, your post is very good and well detailed and I thought that you have put a great deal of effort of defining Happiness in a scientific way as you have decribe to me earlier.

    I do agree to a certain level that money do give hapiness to someone who is wealthy but I also believe that at a certain point in life they tend to feel that there are something missing from all the richness they have and maybe some also feel that something is just not quite right. They tend to seek the lack of hapiness in them although with tones of money which can be spent to gain hapiness.

    People live in a different environment and with different views in life. I’m pretty sure that ‘filty rich people’ anywhere in the world are totally enjoying themselves in this short life. But to some of them maybe being rich is just pure emptiness.

    Being said that, I believed that in order to be happy in life is to have faith in your religion and towards God you believe in. No matter how rich you become but without knowing your God or your religion is just pure emptiness. Simply for some people money is not everything as there are other factors that can make you happy such religion, love and effections, meaning towards life and the list goes on. That’s what I believe anyway..:D

    Thanks for sharing your article and I hope you would produce more great article in the future.

    Hansuke.

  • Helen says:

    Nick,
    I enjoyed reading your post. The relationahip between money and happiness is very interesting to me. I think we tend to either worship or demonize money in our society in ways that are far too simplistic. As I mentioned in my post, I believe the ability to buy experiences probably brings more lasting happiness than material items. I really appreciated your point about the impact of delayed gratification. When we do purchase something we’ve saved for or wished for for a long time, it is almost always much more likely to bring joy than an impulse purchase.
    Helen

  • [...] Another effect to mention in this context (which I believe is considerably less strong than those mentioned above) is: if our peers earn or possess more, we see more clearly what more wealth would bring us, as it is closer to our lives and therefore closer to our reality (which may cause us to feel envy, as it is so close, yet so far…). This may be due to the fact that we are inclined to only see the advantages that come along with money, which is not the full story (see Money: How Much Should We Strive For it to Be Happy?). [...]

  • Good stuff Nick… it is easy to jump straight to the conclusion that more is better when it comes to money and how we obtain the money is almost an after thought. I appreciate the stance you take in comparing the advantages as well as the disadvantages of wealth relative to happiness. And I especially appreciate your treatment of the proces of obtaining wealth… that the path to one’s goal is much more rewarding and character building than the actual destination. If we earn a $1million savings balance we will inherently feel different about it and more fulfilled by it that if we were simply handed the money. The trip itself is part of the preparation process whereas instant arrival is somewhat deflatting… not that I’d reject the check.

    Thanks for fnding my site and commenting on my recent article on the topic of money and happiness. I look forward to reading your work again.

    Dave

  • Rizal Affif says:

    Hi Nick :)

    I followed you here through the link you provided me on my blog :) After reading your post, I realize we view the connection of money and happiness from different point of view. I drew my conclusion from personal spiritual experience and contemplation; that eventually, on deepest level of human nature, money (and any external objects beyond ourselves) is completely unrelated to true and profound happiness. On the other hand, I see you wrote on objective-analytical basis; and eventually you could map the detail connection between money and happiness on the level of practical human experience. So, I guess it’s just natural if we don’t come up with the same conclusion :D

    Anyway, I highly appreciate your work as I believe it involves serious data analysis–it’s an article at a price of a research! :D I also admire your neutral stance that you concluded money could correlate both positively and negatively with happiness. I myself would highly recommend your blog to those who want to know concrete-practical aspects of happiness (as opposed to abstract-fundamental understanding I offered).

    May I recommend you another source? My friend C. Om shared similar view with me on connection between money and happiness, but he wrote in more down-to-earth explanation :D You might find several of his posts interesting. His blog is http://adapt2whatis.blogspot.com/. I hope it is useful to your further research :)

    Regards, Rizal

  • cyberfish says:

    Hi Nick,

    Thanks for visiting my blog! My “discussion” on money vs happiness was just a joke :) a gross over-simplification at best. I wrote it right after my math final on differential equations.

    I agree with your comprehensive analysis, and I can personally relate to quite a few of your points.

    I read an article a while ago about materialism vs consumerism, and I thought that was pretty interesting. The author argues that our society is not materialistic, but consumeristic. People in a materialistic society would cherish what they have, and would find satisfaction in owning things. That’s not quite what’s happening in our western world. We keep buying more and more things, get the adrenaline rush from unwrapping them, play with them for a few minutes, and leave them aside or throw them away. So it’s about buying stuff, and not owning them. This is quite apparent around this time of the year.

    I really appreciate your in-depth thoughts on this subject, as I have not devoted as much time to it myself, and your post cleared up many things I would like to think about, if that makes sense :).

  • Sina says:

    Hi Nick

    Thank you very much for your interesting comment, which I added to my New Year’s wishes. As well I added your link to support your blog. In the next days I will hopefully find some quiet time to read carefully your theory and leave my comment!

    You can’t buy happiness with money, it’s something inside of you to lead to happiness!

    From the bottom of my heart, all my best for the coming year ;o))

    Sina

  • C.V.Rajan says:

    Again another good analysis from you.

    Incidentally, I too have an article in this subject at Helium. Please drop in:
    http://www.helium.com/items/1476123-the-link-between-money-and-happiness

    CVR

  • Daddy Paul says:

    Good read. If money could buy happiness the New York Yankees would be full of happy players. Just imagine how happy Washington DC would be.

  • Vishal says:

    Hi Nick, thanks for sharing and a wonderful attempt to spread happiness.

    I wish you luck in the endeavor finding happiness.

    I have defined “happiness as state of equilibrium of mind and soul, by self choice and beliefs.”

    No one can make you happy or sad, its all within you. I don’t think I can make anyone happy except myself – others will have to make the same attempt to be happy. Although you can give pleasures to someone but those needs to be repeated and will eventually become a work for you.. Seeking happiness is matter of “no effort” – you don’t have to do anything to be happy. It is a beautiful- but you have to know your own self well… You may have to work on listening to self and being self…that is a journey of self discovery and one must take that to realize that “life is beautifully twisted”

    I have made a concept of Globezen – its a concept of ‘Way of life” you can read it – see if make sense. its twisted
    Please feel free to visit http://globezen.org.

  • Rochkirstin says:

    Hi Nick,

    Thanks for visiting my page and commenting on my post, which led me to gaining new insights from reading yours.

    My hat’s off to your comprehensive analysis and brilliant thoughts! More power to your blog. I wish you more happiness.

    By the way, I have another article regarding happiness. Feel free to read it by clicking here. :)

    Regards,
    Rochkirstin

 

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