FINP043 Does money bring happiness? (476 words)

This article focuses the reader on the relationship between money and happiness, instead of talking about the usual role financial planning takes, then connects the two. Although the concept applies to all ages, this article is probably more applicable to younger generations who might think financial planning is focused just on retirement.

The short answer is ‘yes’, but only up to a point. People in richer countries are, collectively, happier than people in poor countries. Within countries, people with higher incomes are generally happier than people on low incomes. Surprisingly, once basic living needs are met, the amount of happiness gained from each additional dollar of income rapidly declines.

What is ‘happiness’?

What is it about money that contributes to happiness? And what does happiness even mean? Perhaps what people are really expressing is contentment or satisfaction with their lives.

Rather than putting us into a perpetual state of bliss, money is more likely to contribute to a sense of security, better health, less stress and, perhaps above all, choice.