CAN MONEY REALLY MAKE US HAPPY?
Someone said to me the other day that money might not buy happiness, but they would prefer to be rich and unhappy than broke and unhappy!
I tend to agree with this sentiment, but would go one step further and say that rich and happy is my preference. Whilst this is rather a flippant viewpoint, there is some truth to it, because whilst we all might like to be rich and happy, most of us would simply be content to feel in control of our finances.
Not having to worry every time a bill comes in and having enough money to fix items that need repairing or replacing those that break, would make most of us very happy indeed.
In fact, what makes us happy is a topic that was recently investigated by Australian Unity, who, in 2015 found that what we want most in life are good relationships, a sense of purpose and to be control of our finances. But how much money is enough?
How much money do we need to be happy?
The Australian Unity study found that just a modest increase in income makes most of us very happy. More specifically, for someone earning less than $30,000 per year, giving them an extra $18,750 would make a very big difference to their level of happiness!
On the other hand, someone on $200,000 a year wouldn’t do a happy dance for $18,750, but they would for an extra $147,000. Whilst this means that it takes more money to make a rich person happy than a poorer person, it doesn’t mean that rich people are greedy.
What it means it that when the extra money is enough to relieve our financial stress – we feel happy. It just takes more money for people on higher incomes to relieve their financial stress, than it does for people on lower incomes.
Measuring financial happiness
Since feeling in control of our finances makes us feel happy, ANZ decided to find out what factors actually contribute to this control. They discovered the following three factors: the ability to pay our bills, having enough money to enjoy life, and being able to deal with unexpected financial emergencies. Using these three factors they created a happiness score that reflects how we feel about our finances.
It might come as no surprise to you that the average Aussie scored only 59/100; men scored 61/100 and women scored 57/100. Paying off your mortgage increased this score to 74/100, people who were raised to take care of their finances scored 67/100, whilst those with less than $1000 in savings scored 34/100.
The ANZ study also found something that is really worth remembering, which is if you are financially savvy, you don’t need a big income to feel happy.
Tips on boosting your financial wellbeing
Not everyone is lucky enough to have a pay rise or windfall, so most of us have to look to other avenues to increase our finances. The study by ANZ Bank found that people who actively save money, as well as those that don’t borrow for everyday expenses have a bigger sense of happiness than people who don’t share these behaviours.