6 Ways You Can Live a Happy Financial Life

Money does buy happiness -- but only to a point

•$75,000 is the magic number to happiness. Income beyond that doesn’t appear to add the same level of happiness.

•Why is that? It appears that once you have enough to live comfortably, extra money doesn’t really give as much in return.

Source: Kahneman, D., Deaton, A. (2010) High Income Improves Evaluation of Life but Not Emotional Well-Being. Proceedings of the National Academy of Sciences.

Except for your car…

•Interestingly enough, this is the one “status” possession that people associate with happiness.

•This is explained by “measures of social connections,” according to one study.

•The funny thing? The value of the car doesn’t increase the level of happiness we associate with it.

Source: DeLeire and Kalil: Does Consumption Buy Happiness?

It’s not the stuff that matters

•Most people over 50 say paying for experiences makes them happier than possessions like jewelry and clothing.

•Over time, past experiences tend to increase in importance, while material possessions lose importance.

•The biggest factors? Connecting with others, or giving to causes important to you.

The “American dream” may not make you happy

•Homeownership doesn’t guarantee a happier life, even though homeowners say they are happier.

•The additional expense, responsibility, and time appear to cancel out some of the benefits of owning.Source: Bucchianeri, Grace W. (2010) The American Dream, or The American Delusion? The Private and External Benefits of Homeownership

Giving -- to yourself and others -- makes you happier

•Giving to causes we find important does make us happier.

•Spending on others makes us happier than spending on ourselves.

•Paying for an experience with your spouse today correlates to future happiness in your marriage.

Source: Dunn, Elizabeth W (2008) Spending Money on Others Promotes Happiness

Treat yourself. Just do it less often to enjoy it more

•Paying for experiences in advance leads to enjoying them more.

•Splurging on treats less often leads to enjoying them more.

•Much like having more money, more treats doesn’t add up to more happiness.

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Time is more precious than money

•People with shorter commutes are happier with their spare time and their job.

•Higher income correlates to higher stress about time -- no matter how much you work.

•Is this why more income doesn’t add more happiness past $75,000? Maybe so…

Source: Stuter, A. (2008) Stress That Doesn’t Pay: The Commuting Paradox;HamerMech, D.D. (2007) Stressed Out on Four Continents: Time Crunch or Yuppie Kvetch?

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