Can money buy happiness?
There are so many arguments going around for decades regarding this topic. It is a pretty old question by the way.
Many people argue that money doesn’t buy happiness. I thought about it and came up with a few points that money can buy you happiness up to a certain point.
My recent travel
A few days ago, we went to the Mont-Tremblant in Quebec for a short vacation, stayed in a hotel for two days and enjoyed almost all the activities there.
It is one of the amazing locations in Canada to relax and spend time with your family and loved ones.
We really wanted to stay there for few more days, but we had to return as we had no choice because of the cost associated with the extended stay, and also I had to return back to my work because I am still an employee and still trading my time for money.
While I was driving back to Toronto, I had a weird feeling in my mind and was thinking about money and life. Even though we had a great time there with my tiny family, I felt like we should have stayed there for a few days.
If I was financial independence and was able to generate enough passive income to cover all my expenses, then I would have stayed there for few more days or until I get bored because I didn’t want to return back to work or worrying about money.
Even though money doesn’t alone bring happiness in our life, in these types of scenarios, I really feel like it can buy happiness.
According to a study, household income has significant influence in a family happiness. Therefore, more income (up to $75 000 according to a research report) means fewer worries about money, which translates more happiness.
Now let’s see how money can buy happiness.
There are 5 possible ways money can buy happiness (at least for me).
1. Money let us live the life we want and gives us a freedom to do what we love to do
Money can give you freedom and let you live the lifestyle you want – whether you want to travel the world or take big vacations, whenever and wherever you wish. And, you can go out with your friends for dinners or buy things that bring happiness into your life.
For example, I love to do lot things in my life such as traveling, spend time with family & friends, etc, but, due to my day job and limited available time, I couldn’t do them all.
In other words, our freedom is limited and we have limited options.
If we have enough money, then we will have so many options with greater freedom to choose. So, we can choose the options that bring happiness to our life.
Therefore, money can bring us a freedom and let us live the life we want.
2. Money can buy experiences
Money allows us to experience the things that we dream of doing. We all love to experience lots of things in our life.
Without enough money, many of us wouldn’t able to experience the things that we can’t afford to pay.
Also, money can help us to enjoy all the stages in our life. Many people postpone their dream life until they get retired because of their job, limited time and money.
3. Money lets you give back to others
Giving back to others also brings happiness to our lives.
When you have enough money, then you can buy freedom.
And when you have freedom then you have the ability to help people by giving your money and time. This directly brings us happiness in our life.
4. Money helps reduce stress in our life
When we get to a healthy financial stage, then we can completely eliminate the stresses from our day job, including commute stress, work-related stress, etc.
Plus, we live with far less financial anxiety about a job loss or unforeseen expenses.
Therefore, money can buy safeguards against the unexpected and gives us joy instead of stress.
5. Money allows you to help your family, friends and those who need help
Family members and good friends are the ones who come first when we get into a trouble or if we need help. They are the one who deeply cares about us.
Occasionally, they may also get into relatively small financial troubles which may cause them greater stress in their life.
When we have enough money, then we may able to help them and ease their short-term financial stress. It will give an amazing feeling and bring joy and happiness to our lives.
There are a few more ways money can bring happiness, and I thought these five are more important.
But!
Money alone doesn’t bring happiness
Having the excess amount of money alone doesn’t provide any guarantee for the happiest life. There are so many other factors involved in human’s happiness, such as health, behaviors, habits, surround with good people, etc.
Because many studies show that people in North America are not happier today than 50 years ago. And this is despite the fact that the real median income (after inflation) in this period has increased a lot.
So we can safely say that money can buy happiness up to a certain point.
Thank you so much for reading and your support!
The real median income today in North America is lower than what it used to be 50 years ago despite the CPI according to which you made your calculations. Food and energy are not taken into account in the CPI at all, housing is taken into account as a much lower portion of the expenses than it really is in Canada while not taken into account at all in the US. Not only that, 50 years ago, it was possible for most households to live comfortably from one median income and raise 2 children while today two median incomes are not enough for that.
50 years ago an average house in the US cost 2.5 median annual household incomes, now it is 6 median household incomes while women’s participation in the workforce is higher than ever before.
50 years ago an average new car cost about 2 median monthly household incomes, now it’s 5 median monthly household incomes.
50 years ago it was extremely rare for people in their 30’s to have any student’s loan debt, now almost everyone in their 30’s does.
Don’t fall into the illusions policy setters want you to fall into, check for yourself. the real inflation is significantly higher than the numbers showed by the CPI, don’t believe anything you read.
Thank you Alan for your inputs.
We all need to rely on the data made available for public. I picked the numbers from stats Can and other reliable sources. If I put my own numbers, then more than 100s of people disagree with me 🙂
50 years ago, family with adults kids lived together in a small home and they had much less expenses. Now having bigger home in an expensive city is fashion, and just 2 or 3 people living in 3000 square feet homes.
Another Good example, one phone line was enough for more than 6 to 8 people a decade ago. Now, every one of us having a cellphone with expensive packages. Money is bleeding there.
People are now taking expensive to route to find their happiness. But actual happiness is around us. It is not in the expensive homes or cars or cellphone packages.
Best Regards,
I stumbled across your site today searching for information on self-investing. I’ve now been on your site for nearly 2 hours steady sifting through your historical data on how you invested. I’m impressed that you are still maintaining this site and tracking towards your goals 5 years later. Great job!
My journey is just about to start as I wait for my money to be transferred from my (former) financial advisor to my questrade account. The struggle I’m facing is how do I dissect my funds into sectors, USD/CAD stocks, EFT, etc. In reviewing your profile it seems you are mostly invested in CAD stocks, followed by USD stocks and then ETFs (50% USD and 50% CAD?). I can’t tell your diversification for certain without doing a lot of math. Simply put, could you tell me how you determined to split your pot? What percentage do you put into CAD stock, USD stock, CAD ETF, USD ETF, INT ETF, OTHER? I was thinking 40% CAD stock, 35% USD stock, 10% CAD ETF, 10% USD ETF and 5% INT ETF.
Lastly, in one of your posts you mention that you buy stocks when the price point is good. How do you know. Are you basing that on historical data? Are you performing the calculations your self to determine fair stock price (value)?
Thanks for your input. I’m pretty “green” but investing my time in to become a well rounded investor.
I prefer my notes and comments remain private. Could we exchange email addresses?
Hello (name changed due to the reader request)…
I’m posting your comments here without name so it could help other readers..
To be honest, my portfolio is bit of poorly diversified because I am still in accumulating stage I buy stocks whenever they trade at attractive price.
Here is my ideal allocation target in a long-run:
Geographical Diversification
==
My sector allocation target:
–
Also, when I buy a stock I consider so many factors, including (not limited) company’s fundamentals, sector, free cash-flow growth, dividend yield, dividend growth, book value growth, etc. Once I happy with all of them, then I add it in my watch list and monitor closely. If the company share price drops for no valid reasons, then I consider buy a small position. If it drops further down, then I average down.
I am a long-term buy and hold investor, and in buying stage. So, I consider short-term price movements as buying opportunities.
Diversification is the key to minimize risks. So, you should consider create your own diversification strategy and portfolio strategy based on your financial situation, risk-tolerance, and long-term goals.
I hope this helps you… Please feel free to contact me if you need more details…
Please note—I’ve changed your name as per your request..
Wish you all the best in your success 🙂
Best Regards,
Great article Finance Journey. I was happy to read your conclusion. Because money itself does not buy you happiness. But it can definitely help reduce some stress and allow you to do some things that you wouldn’t be able to without money. I’m always looking for the perfect balance between money/time. You don’t need endless amounts of money to enjoy life, and I think that get’s lost in the shuffle as you are told to progress in your career and fight your way up the corporate ladder to earn more. Glad you enjoyed your trip!
Bert
Thank you DD for stopping by,
Glad that you like to article, If money can buy happiness then all the wealthiest people will be happy and there will be no problem at all… In reality, it is opposite. People in third world county are having much happier and less stressful life than people in developed countries.
My Mont-Tremblant visit was amazing. I will go again next year with much plan .
Cheers,
Money is needed for happiness. But, money is not happiness 🙂
Well said Dividend Greek 🙂
Cheers,