Does money buy happiness?

Does money buy happiness? The research is mixed. One recent study says yes, happiness rises in a fairly straight line as the amount of money you have rises. Others (including one I conducted myself) say that once you have enough to live comfortably, more money doesn’t provide a significant happiness boost. What Carolyn noticed is another financial happiness phenomenon – it’s all relative. How much you have isn’t nearly as important as whether or not you have more or less than the person in the next cubicle or the family next door. When everyone is in a similar situation, it’s easier to feel satisfied with what you have. That’s particularly true if you’ve got a decent grip on your resources. My study, conducted with the folks at Roper ASW, confirmed that having more control over your finances adds to happiness while feeling out of control detracts from it. Here are a few things to try if you’re feeling a little at odds with your money.

  • Pay your bills as they come in rather than stockpiling them to pay once or twice a month. When you deal with your obligations as they arise, you give yourself the opportunity to adjust your spending – and expectations – for the rest of the billing cycle. Say you receive a heating bill that’s significantly higher than you expected it to be. By opening and then dealing with that bill in real time, you give yourself a chance to reduce your spending on non-necessities for the next few weeks. And that means you’re less likely to end up in a hole at month’s end. Moreover, moving the big chunk of your money involved in paying a stack of bills at once is a little demoralizing. One at a time is less of a psychological hit.
  • Save 5 percent. Read enough financial advice columns and you’ll no doubt see a suggestion that you save at least 10 percent of your take-home. In terms of meeting your retirement obligations, that advice is sound. But where happiness is concerned, the bar is lower. If you can manage to sock away at least 5 percent of whatever it is you’re bringing home, you’ll feel better.
  • Make a money date. Finding yourself out of sync with your spouse or significant other where your financial goals are concerned can drive you nuts – and send your feelings of financial well-being plummeting. Money isn’t the easiest the thing to talk about (even for couples who have little trouble discussing most anything else). It’s worth sitting down and asking each other – what do we want? What are we trying to accomplish with our money both this year and in the future? And how are we going to get there? (And note: If you’re single, you should be asking these questions of yourself as well.)
  • Give back. Humans get an emotional boost from giving to others that’s tough to replicate in any other way. The good news: The form in which you choose to give doesn’t matter. You can give money, but you can also put your old belongings in the Goodwill box or truck them over to the Salvation Army. And if what you have to spare is time, volunteering is equally effective.
Jean Chatzky

About Jean Chatzky

Jean Chatzky, the financial editor for NBC’s TODAY show, is an award-winning personal finance journalist, AARP’s personal finance ambassador, and a contributing editor for Fortune magazine. Jean is a best-selling author; her eighth and most recent book is Money Rules: The Simple Path to Lifelong Security. She believes knowing how to manage our money is one of the most important life skills for people at every age and has made it her mission to help simplify money matters, increasing financial literacy both now and for the future. In April 2013 Jean launched Jean Chatzky's Money School , a series of college-style, interactive online personal finance courses that give men and women across the country the opportunity to learn from and interact directly with her. Jean lives with her family in Westchester County, New York.
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