Does money buy happiness? That can be a complicated question that has been the subject of considerable research. One of our advisors, Benjamin Cummings, PhD, CFP®, looks at some of the recent research on this topic in an article he wrote for InvestmentNews. Here’s a brief re-cap of the research in the article.
Looking first at the income side, it turns out that income has only a marginal impact on how someone feels about their everyday life, and at higher income levels, there’s not much of an effect at all. Even at these higher levels, however, income does have an impact on how one views his or her life as a whole.
But it’s not all about what we earn. Much research has focused on how we spend. Some researchers suggest that spending on experiences rather material goods improves life satisfaction, but others argue that there may be different spending types, where some people simply prefer to spend on experiences rather than stuff.
In the end, does money buy happiness? Possibly the best answer to this question is that it can contribute to happiness when spending most closely aligns with one’s personality. Not surprisingly, if we spend our limited financial resources on the things that matter most to us – that align most closely with our personality – we end up feeling better about our lives.