How money can, in fact, buy you happiness

If you make more money, will you be happier because you will be able to afford more things? Research shows this isn’t true. A study conducted by Daniel Kahneman and Angus Deaton analyzed data from more than 450,000 responses to the Gallup-Healthways Well-Being Index. They studied the happiness of people at different income levels.

At around $75,000 per year in income, the level of happiness that a person experiences levels off. Once you start earning more than $75,000 per year, there is no significant increase in a person’s daily happiness. This means that a person making $1 million per year isn’t going to be much happier than someone making $175,000 per year.

One theory is that material things aren’t what makes you happy. Even as you increase your ability to buy more material things, it doesn’t have a measurable impact on your overall happiness.

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The farther below $75,000 in income, you start to see a decrease in happiness and an exponential rise in misery. The researchers speculate that this is because your stress levels increase when you are worried about things such as shelter, food, water, etc. You are worried about meeting your basic needs.

The conclusion of this study is that more money allows you to comfortably afford all of your basic survival needs, alleviating those types of stresses from your life. After you’ve accomplished this, you’ll be left with trying to find fulfillment. Attempting to find fulfillment by purchasing materialistic things isn’t going to work and it certainly won’t make you happy.

So how can you use your spending to increase your happiness? There are two main ways research shows that you can do this. The first is by spending your money on experiences and the second is spending it on other people.

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