Money As A Tool, Not A Goal

Does having more money lead to greater happiness? Some people will say yes, and others will say no. The answer is actually more nuanced. The effect income has on happiness can vary greatly depending on factors such as how much money one already has, cultural attitudes, and individual priorities.

The Initial Boost in Happiness

For people at lower income levels, increasing income has a notable effect on overall happiness and life satisfaction. Research shows that money significantly boosts a sense of well-being when it helps people meet basic needs, including housing, clothing, food, and health care. After basic needs are met, additional income can help a person improve their leisure time or seek less stressful or more fulfilling employment.

The Happiness Plateau and Diminishing Returns

The idea of a “happiness plateau” has been widely discussed. Studies have found that after reaching a certain level of income, where basic needs and some additional comforts are covered, earning more money yields smaller and smaller increases in happiness.

For example, a person moving from $40,000 to $70,000 in annual income might experience a substantial boost in satisfaction, but someone going from $100,000 to $150,000 may feel only a small increase in overall happiness. A 2010 study concluded that a person’s feeling of happiness and emotional well-being begins to diminish above $75,000 (in 2010 dollars).

Read more about the effects of money on happiness.

Money as a Tool for Happiness, Not the Goal

Research suggests that though income can contribute to happiness, it is most effective when viewed as a means to an end rather than an end in itself. When people use income to build secure, fulfilling lives filled with relationships, growth, and meaningful experiences, they tend to experience higher life satisfaction than those who view income purely as a marker of success. Money, in this sense, is best seen as a tool to support happiness rather than the sole source of it.

Creating a Meaningful Legacy

Part of accruing wealth is managing it responsibly and using it to leave a meaningful legacy. By working with experts, such as an estate planning attorney, you can manage your wealth and get the most out of it. Learn how you can protect your wealth for your heirs or favorite charities by working with your estate planning attorney. Call us today at (605) 275-5665.