What Role Does Money Play in Our Happiness?
When money impacts happiness…
Does money make you more or less happy? It really depends on your motivations.
On the one hand, if you’re tight on money, getting a little bit more does alleviate that stressor and increase your well-being. So yes, more money does make you happier.
It isn’t the money, however, that drives happiness. It’s the fulfillment of basic and psychological needs afforded by income (Veenhoven, 1991). It’s also because, according to the Conservation of Resource theory (Hobfall, 1989, 2002), we seek possession of resources as a safety net, and achieving that makes us happier.
This trend however only applies to a certain point. As we’ve mentioned in another article, this effect wanes somewhere in the $50K-75K annual household income range. Beyond that, additional money doesn’t either help or hurt your well-being.
Why is this? Because as our income goes up, so too do our aspirations. In other words, all of a sudden we want better stuff (Hudders & Pandelaere, 2011). But perhaps the biggest factor is that no matter our income, we tend to compare ourselves to those who are richer than us (Ferrer-i-Carbonell, 2005). So no matter how rich we are, when money is on the mind, something is to be desired.
Your perspective about money (and materialism) and how it impacts happiness
In fact, the more we think about it, the worse off we are. Chasing materialism, defined as “viewing possessions and acquisitions as central to one’s life and happiness,” has been consistently linked to lower well-being (Dittmar, Bond, Hürst, & Kasser, 2014; Belk, 1985; Kasser & Ryan, 1993, 1996; Richins, 1994; Richins & Dawson, 1992; Van Boven, 2005).
Wanting money seems to have a toxic influence on happiness, especially if it is fueled by motives such as seeking power, showing off, and overcoming self-doubt (Srivastava, Locke, & Bartol, 2001).
Materialism is also fundamentally at odds with intrinsic values concerning personal growth, close personal relationships, and helping others …all stuff that drives happiness. In other words, when you choose to value materialism, it forces you to de-prioritize these other values (Schwartz, 1992).
What’s the impact? Materialism is associated with compulsive consumption, engaging more frequently in risky health-related behaviors (like smoking cigarettes and drinking alcohol), a more negative self-image, less positive affect, more depression, lower overall subjective well-being, a less positive self-image, more anxiety, lower-quality romantic and friend relationships, more symptoms of a variety of DSM Axis I disorders, worse physical health, more negative affect, and lower life satisfaction (Dittmar et al., 2014). In short, it’s pretty bad for you!
Not to be confused, getting a raise at work by landing that dream job with prestige and responsibility is not the same thing as materialism. If you’re excited for the right reasons (landing a job that makes you happy because it satisfies your core values), then that’s cause for celebration! But if the primary motivation is money, then the long-term effect on well-being will likely be more bad than good (Ryan & Deci, 2000).
Conclusion and Next Steps
So the jury is in. Leading with a materialistic mindset is pretty harmful to your happiness. So what should you do about it? The most effective way to change your mindset is always to change your behavior – your daily practices. For more on that, read our full article on how to spend your time and money to optimize for happiness (LINK).
In the meantime, there are some simple ways you can adjust your perspective to be less materialistic.
- #1 Focus on Intrinsic Values. Get out your journal and write about your two most important intrinsic values, then remind yourself of these values every day for a month, reflect on those values, and read inspirational quotes about those values.
- #2 Inward Reflection. Pause and reconsider the way in which you have previously rated your values. (This causes people to think twice and place less importance on extrinsic values.) Mindfulness and gratitude reflections also cause you to deprioritize materialistic values, as do reflections of your own death. Not for a brief moment – it has to be a deep, sustained reflection about your death.
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