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Can Money Buy Happiness?

November 29, 2023

They say money can’t buy happiness – but can it? I think we can all agree, it sure helps! According to a new financial happiness survey by Empower, 59% of Americans agree that money can buy happiness, and the price tag is apparently $1.2 million.

More findings from Empower’s Financial Happiness survey include:
  • Happiness in money milestones: Though 7 in 10 (71%) believe more money would solve most of their problems, for a third, a relatively attainable gain of $15,000 would make a meaningful impact in their lives, boosting financial happiness for six months. That number surges to 42% with a $25,000 gain but drops to 17% with only a $5,000 gain.
  • Millennials estimate needing more wealth than other generations to be comfortable: When it comes to salary, Americans say they need $284,167 per year to be happy, with men’s estimates much higher than women ($381k and $183k, respectively). Millennials put the number at $525k, Gen Z $128k, Gen X $130k, and Boomers $124k annually.
  • Employees count on employers for important money matters: 75% of Americans see work as transactional and if money were no object, two-thirds of Americans (64%) would quit their job tomorrow. Still, for 37%, saving for retirement is a top goal for the year ahead, and 67% believe their employer has a responsibility to help with financial planning, especially for retirement with 401(k) options. 72% say they’d like to receive financial coaching to decrease financial stress.
  • Advice is a top factor in determining financial happiness: More than half (52%) know what their financial goal is but feel they don’t know how to get there. Americans rank getting good money advice (63%) as a key determinant to financial happiness.
  • Coffee supersedes money: 62% of Millennials say they’re willing to spend $7 on a daily coffee because of the joy it brings. I did the math, $7 a day for coffee is $2,555 a year – which one would make you happier? The coffee or the money?

In another recent study published in the Review of Economic Studies researchers looked at the impact of monetary windfalls on happiness. They examined lottery winners in Sweden, focusing on prizes ranging from $100,000 to $500,000. They found that winners reported higher life satisfaction levels more than ten years after their winnings compared to those who either won no prize or received a smaller one.

Elizabeth Dunn, a psychology professor at the University of British Columbia and co-author of a book on money and happiness, says that a significant number of individuals express the belief that having more money would solve most of their problems. This belief cuts across various income brackets, including those earning $200,000 or more.

However, research from Matt Killingsworth, a senior fellow at the University of Pennsylvania’s Wharton School, found that once individuals achieve a higher salary, their aspirations often recalibrate, and they start aiming for the next income tier. This perpetual cycle can lead to a never-ending quest for more.

So, at what point does money equate to happiness? In another study that surveyed millionaires about their happiness levels, respondents were asked to rate their happiness on a scale from one to ten and, if not a perfect ten, to estimate the percentage increase in wealth required to raise their happiness by one point. Slightly over half of those with a net worth of $10 million or more stated that their wealth would need to grow by at least 50% to see an improvement in their happiness. This suggests that even among the very affluent, the pursuit of more wealth remains a persistent theme in the quest for happiness.

So maybe the old adage that money can’t buy happiness is true – for some.

By Mary E. Corrado, courtesy of SBAM-approved partner, ASE

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