The Truth About Money & Happiness

Let’s talk about money & happiness.

Did you know that a majority of Americans are just not happy?

According to a 2013 poll by the Huffington Post, 67% of Americans stated they are not happy with their lives.

If a majority of people are not happy, then what do they really want in their lives?  What would make them happy?

Ask 100 people what they want most in their lives, and most will say it’s more money.   Money issues are frequently listed as the most stressful thing in people’s lives.

Why is that?

Could it be that we spend 40+ hours a week working to obtain it?  And that we spend more quality time with co-workers, clients, and customers than we do with loved ones at home?

Think about it – for a 9-5 worker, 7:00-8:30 a.m. is about getting ready for work and having a quick breakfast.  Once they get home at around 5:30 or 6:00 p.m., they only have 4 hours or so to be with family or friends before bedtime.  And two hours of this time is usually taken with dinner preparation, dishes, kid’s homework, bills, etc.

A working person is lucky to have a couple of hours left to relax or spend quality time with friends and family each day.

No wonder people are not very happy.

Since having more money is usually at the top of the list of what people say would increase their happiness, let’s now explore the relationship of money and happiness and see what really goes into a rich and fulfilling life.

What Is Money?

Let’s start with the basics:

What is money?

The literal meaning is a means of exchange or value for goods and services.

But beyond that, money is simply a tool that can allow you to change your life, for better or worse, depending on how you use it.

Though we use money every day, few people really understand it.

Even fewer learn how to enjoy the money they make, create abundance with it, or use it toward a greater good.

What Do People Really Want?

People think that having more money will make everything better.  In some ways it will, in terms of making living easier to manage.

But people don’t really want money….

What they really want is more choices … and the feelings or experiences that money can provide.

They want less stress.

They want to do fulfilling work, and they want to feel significant in what they do.

They want to travel and experience different people, foods, and cultures.

They want connection and a sense of belonging.

They want to feel loved.

How Do Most People Look For Happiness?

Besides sharing a meal with others, one of the most common ways people seek out connection, significance, and happiness is with the great American pastime – shopping!

There is actually a chemical release in the brain of dopamine and endorphins when people shop.  It makes people feel good, and because it feels good, they continue to do it!

And of course, advertisers play upon this by subliminally making consumers feel like the only way to happiness, love, and the solution to their problems is with the latest car, shampoo, or gadget.

Happiness and Buying Stuff

Because we’re conditioned to want the latest and greatest things, people equate having lots of new stuff with happiness.  “If only I had that new car”, they reason, then they would feel happy.

For a man, the classic midlife crisis comes from a feeling of unhappiness with where he finds himself once he reaches age 50.  He mistakenly feels that buying a new sports car or trading in his wife for a younger model will make him happy.

But what is really going on?

Neither “solution” is going to make him happy.  Buying stuff is just treating the symptom.

The actual problem is not leading a life that was fulfilling in the first place.

It is not how much we have, but how much we enjoy, that makes happiness.

– Charles Spurgeon

So, if buying more stuff doesn’t work to increase happiness, then what does?

Let’s take a look into psychology to answer that question.

Maslow’s Hierarchy of Needs

Psychologist Abraham Maslow created a theory now known as Maslow’s Hierarchy of Needs.  It outlines the 5 stages of growth that people must move through in order to live a rich life.

The way the pyramid works is that you start at the bottom with basic physiological needs and move up the pyramid throughout life.

It’s important to realize that you can move up to the next level only once you have your needs met on the level you’re on.

First Two Levels – Basic Needs

The first two level deal with basic needs of food, shelter, security, and safety.

Unless you are very poor, most people will get all their basic needs met.  But people who remain on these two lowest rungs of the ladder rarely find happiness in life.

Next Two Levels – Psychological Needs

After basic needs are met, the next two levels are the psychological needs.  It is here that we strive to connect with others, find a mate, and work towards personal and career goals.

Some of the most powerful feelings that drive people in this stage are:

  • Security
  • Freedom
  • Significance

Significance is an especially powerful force that drives behaviors both positive and negative.

On the positive side, it drives us to feel important and special.  The quest for significance can be a major theme in someone’s life – driving them to get a college degree, make a difference in other people’s lives, or become a billionaire.

It can also be reflected in smaller things like acting in a play or dying your hair brink pink to express your individuality.

On the negative side, a lack of significance can drive people into violence and destructive behaviors like bullying, lying, or stealing.  It can also manifest in control issues or infidelity. The midlife crisis is a crisis of significance.

So, trying to find significance through purchasing it will ultimately bring you unhappiness.  Why?  You are trying to find happiness in things external to yourself – cars, clothes, stuff, etc. – that are not part of yourself.  It’s your internal state that determines your happiness.  This is a crucial distinction.

As the drive for significance forms a large part of most people’s behaviors, you should realize that money can buy significance but only when it is used to give and contribute to others.

Top Level: Self-Fulfillment Needs

At the top level is the need to express oneself through creative endeavors and through contribution. This is the journey to become self-actualized, which means you strive to reach your full potential.

Unfortunately, most people never reach the top level of the pyramid.  People get stuck in the psychological needs levels and never rise above ithem.

The Meaning

The point of all this is that the higher up the ladder you go, the happier you will likely feel!

Happiness, it turns out, is a state of mind that doesn’t rely on money. It is created by creating a life that is fulfilling, with a balance of work and play.  This life will automatically lead you up the pyramid.

Money will just make your life easier, more comfortable, less stressful, and provide you with more choices.  But having money will not make you happier.

“Most folks are as happy as they make up their minds to be”.

– Abraham Lincoln

How To Be Happy

If you are not currently happy with your life, you’re going to need to change some things.

The first step is to choose a vocation or cause that you love and are passionate about.  It should ideally be something that you would do for free anyways if you weren’t being paid for it.

“The real joy in life comes from finding your true purpose and aligning it with what you do every single day.”   Marc Benioff

Artists and musicians pursue their passions because they love doing it.   Actors work on their craft despite low pay and long hours because they love acting.

Second, you should ideally choose something that provides you with a sense of accomplishment and satisfaction.

The fastest way to accomplish this is to choose to do something that helps other people while benefitting you at the same time.

In the end, most wealthy people find that the journey to peace of mind and happiness – the top of the pyramid – is not complete until they start to contribute to others.  It’s almost like a karma thing; those who arrive at the end of the journey find satisfaction in helping those who are just starting out.

Nothing feels better than helping someone solve a problem, improve the quality of their life, their relationships, their finances, or their physical or mental health or well-being.

Now, some people feel that they need to take care of themselves and their loved ones first before they give to others.  Others feel like they need to give along the way, no matter how large or how small their monetary resources are at any given time.

There really isn’t a right or wrong answer.  What’s more important is that giving becomes part of the journey, whether it’s giving of money, time, advice, or anything.

Strive For A Balance

Most people find that happiness comes from a balance of work and play.

If you suddenly make enough money to never have to work again and decide to retire to a life predominantly filled with leisure, eventually you will get bored.  And eventually this will result in unhappiness.

The things that cause you to grow – challenges, meaningful work, or a purpose – go away when your life is a permanent vacation.  You stop growing and you eventually start dying.

So, a balance of work and relaxation gives you the best of both worlds – a chance to grow and learn and a starting point for making a difference in your lifestyle.

It’s better to build a life that is satisfying so that you really don’t want to retire from it.

Financial Freedom = Unhappiness?

What’s interesting about the money/happiness equation is when someone achieves financial freedom (meaning they don’t have to work anymore), they sometimes initially become less happy.

Why would that happen?

The reason is that most people’s lives are scheduled with things they have to do each day to make money.  For example, Monday through Friday they get up at a 6:30 get ready for work, and come home at 5:30 p.m. each day.

Being busy all the time gives people an excuse to not pursue happiness – after all, they hardly have time to take care of life’s demands, much less undergo any personal improvement.

But once you no longer have to go to an office or work on a predetermined schedule, you no longer have an excuse for not making your life as you want it.

You can’t blame your boss or your co-workers for anything.  You don’t have the excuse of days filled with so many meetings and deadlines that you don’t have time to think about much beyond eating and sleeping.

You now have the time to make your life what you want it to be, and this change can be frightening.

“The Constitution only gives people the right to pursue happiness. You have to catch it yourself.”

– Benjamin Franklin

Financial Freedom Leads To Personal Freedom

So, it’s important to realize that achieving financial freedom is really not your ultimate goal. Your ultimate goal is personal freedom. 

Why do you want to make money and hopefully one day exit the rat race?  It is so you can live life on your own terms.  That is the definition of personal freedom.

And personal freedom leads to happiness.

The lesson in all of this is to pursue financial freedom so that you can achieve personal freedom, not just lots of money.  Financial freedom is of course very important, but it’s personal freedom that will make you happy.

Final Thoughts

So, as it turns out, you don’t need millions of dollars to live a happy life.

What you really want is the lifestyle and freedom that you think money will buy you.

A lack of money is not the cause of people’s unhappiness with their lives; that is usually the result of living a life that is not rewarding emotionally and spiritually.

Happiness comes from your thoughts, not your circumstances.  It comes from creating a life that excites and challenges you, a life where you enjoy the journey, not just getting to your destination.

You can have happiness right now if you choose.

Are you going to make the choice?