Can Money Buy Happiness? Financial Coaches Weigh In
Is it true that "money that can't buy happiness?" The famous saying originated in a 1750 proverb that said, "Money buys everything, except for morality and citizens." It has evolved to the phrase we've often heard repeated on TV and in self-help books. But how much truth is behind the saying?
According to a study conducted by Princeton University in 2010, a person's happiness increases until they reach an annual income of $75,000—and then plateaus. Meanwhile, a more recent study from Purdue University found that emotional well-being can be achieved well on a salary that's between $60,000 and $75,000. However, participants who earned a $105,000 salary noted that their happiness had decreased since previously earning less.
According to Shari Greco Reiches, wealth manager, behavioral finance expert, and author of Maximize Your Return on Life, this money-buying-happiness (to a certain extent and not beyond) logic centers on the adherence to adaptability—aka "lifestyle creep."
"For some people, money does provide happiness," Reiches explains. But, "for a majority of people, they adhere to the concept of adaptability," which undermines the happiness money could have bought. For example: "You graduate from college and get your first apartment, and you're so happy," Reiches explains. "Then, you adapt to it. And then you want the high-rise apartment with the amenities—and adapt to that. Your first car is a clunker, and you're happy until you want the Tesla. You start to adapt, and you keep thinking you need this money to be happy to adapt to the next level. It's a slippery slope, because you keep planning, yet you're never happy where you are today. Once you have the basics covered and you have some discretionary money, [staying put, income-wise], will bring you more happiness than the adaptability train."
Still, some argue that money can indeed buy happiness—beyond $75K per year, too. In a time when unemployment rates have reached 5.4 percent, pay inequalities against minorities and women aren't improving, and student loan debt in the United States is 1.71 trillion dollars and growing, the phrase "money can't buy happiness" can feel condescending—and tone-deaf to the real financial struggles of folks whose happiness would absolutely be increased if they were to make or come into more money.
Here's what leading money coaches and other experts in the financial industry think about the claim that "money can't buy happiness," and whether that assertion holds up in real life in 2021.