It Turns Out Money CAN Buy You Happiness

Every time I sign into Facebook I see posts about people buying something. It’s usually an image of someone standing next to a new car with a big grin on his or her face.

The question is, “How long will this grin last?”

You’ve probably heard the saying, “Money can’t buy you happiness.” But recent research is beginning to show that it actually can, if you spend it the right way.

The reason that saying exists is because long ago people realized that after the initial novelty of something new wears off you are back to your old level of happiness, whatever that may be.

As human beings, we are good at adapting to anything new in our lives. If you buy a new car, there will be the initial period of excitement, worry about scratches on your car, and a sense of pride from possessing the newest technology.

But after time goes by, you start to worry less about these things and no longer see them as novelties, just a part of your everyday life.

This phenomenon can be attributed to many things, but it is nearly universal in its application; almost everyone experiences it.


It is also thought that if you make more money, you will be happier because you will be able to afford more “things.” But research shows this isn’t true.

In a study conducted by Daniel Kahneman and Angus Deaton, they analyzed the data from over 450,000 responses to the Gallup-Healthways Well-Being Index. The two looked at the happiness of people at different income levels and what they discovered was pretty interesting.

At around $75,000 per year there is a leveling off of happiness. As you earn above $75,000/year, you don’t see any significant increase in a person’s daily happiness.

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On average, a person making $1 million per year isn’t going to be much happier than someone making $175,000 per year.

How could this be?

One theory is that material things aren’t going to provide you happiness. So, as you increase your ability to buy more materialistic things, it isn’t going to have any affect on your overall happiness.

After all of the buying stops, you are simply left with yourself. If you aren’t happy with your core principles, what you stand for, and the person you are, all of the money in the world isn’t going to change this.


There is another side to this graph, though.

As you go farther down below $75,000 in income you start to see a decrease in happiness and an exponential rise in misery.

The reason for this is thought to be because once you get to certain levels of poverty, your levels of stress increase because you are worried about things like shelter, food, water, etc. You are worried about meeting your basic needs.

The conclusion of this study is that as you earn more money you will reach levels where you can comfortably afford all of your basic survival needs, allowing you to alleviate 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.

#1: Spending on Experiences

In a study conducted by San Francisco State University they found that people enjoy greater well-being from life experiences and consider them to be a better use of money.

The benefit of spending your money on experiences is that they last forever.

It is so fun to reminisce with family and friends about the fun times you’ve had with each other. I’m sure you can think back to many events in your life that will immediately bring a smile to your face, or make you laugh out loud. But how many purchases will do the same? There may be some, but not many.

When I think back to the time I bought my car I certainly am not filled with the same joy as when I think about the times I’ve spent at Barbecues with family and friends, playing with my niece and nephew, or the amazing places I’ve visited throughout the world.

#2: Spending on Others

Spending on others is another way for you to create happiness for yourself.

When you spend money on others it has been shown to create a heightened state of joy that lasts longer than when you spend on yourself.

The reason this happens is because you are focusing your efforts on others, which has the added benefit of providing fulfillment.

Heck, you might even get a “Thank You” out of it!


The reason you see the super rich getting into philanthropy is a prime example of why this is all true.

Look no further than Bill and Melinda Gates. They have created a foundation where they are spending the vast majority of their time and money on trying to solve problems in order to help millions of people.

If they focused all of their time buying new cars, planes, or vacation homes, they wouldn’t have this grander purpose in life.

Focusing your time outward and on helping others can create a sense of purpose and fulfilment, which will provide you much more long-term happiness than any material purchase.


Everyone once in a while you see headlines pop up about some super-rich celebrity who is upset or depressed with their life.

The initial reaction people have is some form of outrage. “How could they possibly be unhappy with their life? They have all of this fame and fortune; they have nothing to worry about!”

This is true, but if you look closer at the person’s background, often times you’ll see that they are focused on all of the things we have discussed that WON’T bring you happiness.

This isn’t to say that by simply starting a charitable foundation you are going to go from being depressed to being the happiest person around. But, research has shown that partaking in these endeavours will have a positive impact on your emotional well-being.

It’s worth a try, right?!


At the end of the day, we are all looking for purpose and meaning in our lives. A lot of us find that by helping others.  This is a huge reason why I created Capable Wealth; to help others.

Every day I get to help people live better lives by providing ideas like the ones in this post.  I regularly receive messages from people telling me about the different tactics they read in my blog posts and how they are now using them.  Man, does that feel awesome to hear!

It makes perfect sense that spending your money in ways that helps others or brings joy to others would in return bring joy to you. It has a very strong karmic feeling.

So, if you find yourself feeling a little down or in a rut, maybe you can turn your attention toward helping others.

When you’re stopping for your morning cup of joe, buy the coffee for the person in front of you as well, and bask in the glow of your good deed and the bright smile you put on someone’s face. After all, you just made two people happy!

Capably Yours,

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10 Tools to Simplify Your Financial Life
10 Tools to Simplify Your Financial Life
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