Two recently published studies shed light on the relationship between wealth and happiness. Their findings suggest that money doesn’t fulfill basic psychological needs, like belonging and competence. These findings help explain why making more money will not increase your happiness, even if you value money above other things.
In one study, University of Buffalo researcher Lora Park and her colleagues found that people who tied their self-worth to financial success engaged in more social comparisons, experienced more stress and anxiety, and felt less autonomy than those who didn’t tie their self-worth to income, regardless of their actual economic status.
People don’t have money problems; they have priority problems. Get your priorities right, and your money will get right.
Lora Park and her colleagues also found out that people who tied their self-worth to financial success experienced more stress due to financial stressors than people who didn’t tie their self-worth to financial success – implying that financially contingent self-worth made people less happy.
You say, ‘If I had more, I should be satisfied.’ You make a mistake. If you are not content with what you have, you would not be satisfied if it were doubled. – Charles Spurgeon
In a second study, University of San Francisco’s Matthew Monnot, studied financial success and well-being in China. He noted that as China’s economy has grown, its citizens seem to be facing similar issues as Americans – as a growing number of people equate individual success with making more money.
Monnot’s findings which aligned with prior research revealed that, “the correlation between income and job satisfaction is really small, to the extent that it predicts about five percent of job satisfaction.”
According to the 2012 General Social Survey, conducted by NORC at the University of Chicago, just 33% described themselves as very happy and only 27% said they were satisfied with their financial situation.
Interestingly, 47% described their lives as routine or dull. Asked about their work, 37% said they were only moderately satisfied and another 12% said they were dissatisfied. These numbers haven’t changed much over the past four decades, despite a doubling in inflation-adjusted per capita disposable income.
Takeaways from Monnot’s study:
- Look inside of yourself, not your wallet, for happiness.
- Focus on autonomy, develop a skill set to be good at what you do, develop long-lasting, meaningful relationships, and have a sense of connection to your community.
To master financial literacy, we all need to take a step back and assess the underlying motive behind our relationship with money. Money and finance affect every aspect of our lives. The way we handle money affects us spiritually, emotionally, and physically.
I hope you find these nuggets of truth useful:
- Your first and foremost goal should be to determine your purpose in life.
- Begin with the end in mind – your days on this earth are numbered.
- Find out what you are really good at, and do it really well. Find ways to excel at what you are really good at, because what you excel at is a solution for a problem. If you have kids, help them discover what they are really good at. If you have a spouse, affirm what they are really good and help them find opportunities to use their talents.
- When you figure out what you are really good at, and look for opportunities to make a difference, you will begin to understand your purpose.
- Set a vision that aligns with your purpose, and then figure out a way to live it out on a daily basis.
A purpose-driven son, daughter, father, wife, employee, or business owner, will not succumb to social comparisons, will be better prepared to handle stressful situations and anxiety, and will have better control of their finances. Money at this point becomes a means to an end, and not an end in itself.
Next: “Can Budgeting Make You Happier?”