Do you need money to be happy?

Historically, money was no more than a tool to help people achieve their 'real life' goals, like buying a home or raising a family. Even today, not everyone agrees that accumulating money for its own sake is their automatic objective.

It helps to bear in mind that the pursuit of profit is rooted in the evolution of our capitalist economies.

1. That money indeed provides happiness.
2. The crucial role your personal context & control plays.

Most of us have heard that money can’t buy happiness many times throughout our lives. You might find it hard to agree when you see bills piling up and you can’t commit to having fun or planning things like holidays or birthdays while your bank account lies empty.

While a lack of money didn’t seem to cause unhappiness in itself, that issue made people feel worse about other problems. But having more money only increased happiness up to an income of about $75,000. For people who earn more than this, their individual temperaments and life circumstances affected their emotional wellbeing far more than money.

The different income figures relate to different types of responses – which could be described as happiness compared to satisfaction.

Emotional wellbeing is about our day-to-day emotions, such as feeling happy and excited, or sad and angry. In contrast, life evaluation is more about making a rational evaluation – such as an overall assessment of your success. This could explain the higher figure, as it could be influenced by higher goals and comparisons to others.

The study, published in the journal Psychological Science, examined how 625 real people spent their money, following around 77,000 UK bank transactions over six months. It matched 59 spending categories to the Big Five personality traits often used in psychological research:

• Openness to experience (unconventional versus traditional)
• Conscientiousness (goal-oriented vs impulsive)
• Extraversion (extrovert vs introvert)
• Agreeableness (altruism vs self-interest)
• Neuroticism (emotionally stable vs instable)

The key is to take control and use your money in ways that express your personality and goals.

If you want to make sure that your money helps to make you happy, you have to make the decision not to let it define you or rule your life. You need to remind yourself that money is simply a tool that you can control and use to help express yourself.

During Money Rally: Money Mindset (2021), Jude Kelly shared that she has often been ashamed of doing things to make money. Have a listen to the following clip, and think back to the last time you felt proud of earning money - because why shouldn't you be!

So, does money bring happiness? While. a certain amount of money does make you happy, it's also very much dependent on how you use it. In other words, considering money as a tool and appropriately embedding earning and spending within your personal situation is most likely to yield the highest happiness and satisfaction.

This nicely leads us into our next module What are the hidden meanings of your money?, where we will be looking at some of the unconscious biases many of us have about money.