Money Only Buys Happiness, If You Spend It to Buy Back Time
All work and no play, leads to burnout and unhappiness
Grinding to make more money without changing your spending habits is a recipe for unhappiness.
More money won’t make you happier.
More time will.
In this article, I review:
Why more money doesn’t automatically equal more happiness and;
How ambitious career-focused people can climb the economic ladder without sacrificing happiness.
Most people overestimate the impact of income on happiness
A 2009 research paper titled “From Wealth to Well-Being? Money Matters, but Less than People Think” examined the relationship between income and happiness.
The study involved two national surveys (where Americans reported their happiness and predicted the happiness of others and themselves across different income levels.
In line with past research, the study found a positive correlation between income and happiness. But, the study suggests that people may overestimate the impact that making more money will have on happiness—especially at lower income levels.
People with a low income predicted that making a little bit more money would have a massive impact on happiness—which the data did not support.
There is a hidden cost of climbing the economic ladder
Moving from a low to high income has a lot of obvious benefits—but it also has serious costs that, if go unaddressed, can lead to burnout and unhappiness.
Based on the research I have read, here’s my one-sentence explanation of how income connects to happiness:
More money makes us happier, but beyond a certain threshold increasing income has diminishing returns on happiness.
Two things:
What that income threshold is will depend on many factors like gender, geography, and education levels
Diminishing returns does not mean zero—it means you generally keep getting happier with each dollar you make, but eventually, each new dollar has a smaller and smaller impact on your happiness. At certain super-high incomes, it might even make you less happy.
Moving from a minimum wage job to a six-figure salary requires a massive investment of your time and energy.
Ultra-high-income jobs not only come with demanding work hours but are often stressful work environments.
Time is a zero-sum game.
There are only 24 hours in a day. If you replace an extra 3 hours per day that used to be spent doing whatever you want with working in a stressful environment, you’ll be less happy.
The most important lesson anyone needs to learn if they want to be happier is that happiness is spending more of your time doing things you enjoy and less time doing things you don’t.
Happiness is in the frequency, not the intensity.
(When you’re doing this article, read this one to learn more about the research behind that statement.)
If you are working more, you better make the most of your off-time
I am not here to squash your career ambitions or that you can’t “have it all,” which I define as happiness and wealth.
I am telling you that if you are going to increase your workload, you need to use some of that money to buy back time.
Then use that time you saved to do things proven to make you happy:
Spending time in nature
Volunteering
Exercise
Finding experiences with friends and family
How do you buy back more time?
Pay people to do time-consuming tasks for you. You get 10 imaginary happiness bonus points if you pay someone to do a time-consuming task you hate doing yourself.
Filing your taxes
Cleaning your house
Shoveling the driveway
Cutting the grass
In the past, I’ve written that the easiest way to build wealth is to “treat new money like it doesn’t exist.” That means saving and investing all your pay raises and financial windfalls.
From the perspective of building wealth, that works amazingly.
But, if your goal is to “have it all,” I feel the need to add additional caveats to that philosophy. If your increased income comes with a significantly larger workload, consider spending some of that increased income to pay people to remove unpleasant and time-consuming tasks.
Yes, increase your savings, and don’t fall into the pitfall of mindless consumption—but don’t be afraid to spend more money to maximize your personal time as you level up your income.
Final thoughts
To recap:
Making more money generally makes us happier
Those gains in happiness are not always as large as we think
This is because leveling up income means more time working and less time enjoying life
If you want to “have it all,” consider spending more money to buy back time
You can build wealth and be happy; just never forget that time is a zero-sum game, and happiness is in the frequency, not the intensity.
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.
I've decided that I'm going to pay for getting my tax declaration done next year. 2024 is going to be more complex than usual in terms of taxes for me. Yes, I want that time spent on something else, while maximizing my tax return.
I found this piece really interesting from the ladder climbing pov - agreed there are tradeoffs but there are also hacks. Also, the concept of buying back time and making the most of the time when you get some back in your day resonated👏 nodded along at the hiring cleaners example because it is often a debate in our house since we can “do it ourselves” but in the time saving terms, it’s a gamechanger.