Does Money Buy Happiness? The Answer Is More Complicated Than You Think
We need to start by asking the right question
Everyone wants to know, can money buy happiness?
It’s a question I have dedicated an entire section of this publication to trying to answer.
Some studies say yes—money makes life easier, reduces stress, and lets you enjoy the things you value most.
Others argue no—once you make around $100,000 per year, more income won’t make a difference.
But a 2023 study, "Money and Happiness: A Consideration of History and Psychological Mechanisms," tells a more nuanced story.
The truth is that money impacts happiness in different ways depending on income level, inequality, and how that money is used.
More Money = More Happiness? It Depends On Who You Ask
This study analyzed decades of research looking at the connection between money and happiness and found that higher income generally leads to more happiness—but not in the way you might think.
Here’s what they found:
#1—If you don’t make much, more money prevents misery
For those earning less than $100,000 per year, more money directly reduces stress, anxiety, and financial insecurity.
People with higher incomes have fewer worries about rent, debt, and emergencies, which directly improves happiness.
In a past article, I covered research that suggests the best way to measure happiness to gauge what percentage of your day you feel ‘good’ and ‘bad’. For those with a lower income, making more money will reduce the amount of time you feel ‘bad’ which means you’ll be happier for having made more money.
#2—If you’re wealthy, money increases ‘peak’ happiness but doesn't reduce unhappiness
Above $100,000 per year, more income doesn’t make people less stressed or more relaxed. At this point, you’re likely making enough to where money is not one of your major causes of daily stress.
However, more money still allows people to experience to moments of maximum enjoyment—traveling more, working less, spending on experiences, and improving their quality of life.
In other words if you already make good money, making more money won’t solve all your problems—but if you have enough of it, you can create a life where you experience more moments of peak happiness.
Why The Rich Keep Getting Happier
One of the most interesting findings in this study was that the wealthiest individuals keep getting happier as their income increases.
Here’s three reasons why:
#1—Better social relationships
Wealthier individuals tend to have stronger personal relationships.
Money allows them to spend more time with family and friends instead of being trapped in financial stress.
#2—Greater freedom of how to spend their time
The study found that having control over your time is one of the biggest predictors of happiness.
Wealthy individuals may still work long hours, but they often have more flexibility and choice over how they spend their time at work.
Having more money allows people to pay to have time-consuming tasks like house cleaning an landscaping completed for them—which gives them greater freedom on how to spend their free time.
#3—More money leads to more meaningful spending
The research shows that how money is spent matters more than how much is earned.
The wealthiest individuals often spend money on experiences, giving to others, and reducing stress, all of which have been linked to higher levels of happiness .
What This Means For You
So, how should you think about money and happiness in your own life? Here are three takeaways:
1. Focus on wealth, not just income
High salaries can help, but financial security comes from wealth (investments, savings, assets), not just a big paycheck.
Avoid lifestyle inflation—higher income won’t make you happier if your spending grows just as fast.
2. Use money to buy time and experiences
The study shows that people are happier when they spend money on freeing up time (like hiring help with tasks you don’t like).
Spending on experiences over material things leads to more sustained happiness.
3. Financial independence is the ultimate happiness hack
The happiest high-income earners are those who have control over their time.
You don’t need to be ultra-rich to achieve this—even small shifts (building savings, reducing debt, working toward flexibility) can give you more control over how you live your life.
Final Thoughts
So, does money buy happiness? Yes—but not in the way most people assume.
If you’re earning less than $100,000 per year, more money will reduce stress and improve well-being.
If you’re already financially secure, how you use money matters more than how much you make.
True financial freedom isn’t about hitting an arbitrary income level—it’s about using money to create a life you enjoy.
Money can buy happiness—but only if you spend it wisely.
For more on the research between money and happiness check out my series called ‘Buying Happiness’.
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any significant financial decisions.
Lauren Sanchez seems happy