Does money = happiness ?

22nd March 2007

Whether or not you believe that the love of money – or the lack of it – is the root of all evil, chances are you have an opinion about what money means. To some, it represents success or fame. To others, it represents power acceptance, material goods and status.

Many women, though, use money to fill an emotional hole. When Mei Lin, 28, moved to Los Angeles for graduate studies, she found herself far from family and friends for the first time in her life. She was homesick and lonely, and went on shopping binges to fill the void.

“If I was sitting at home, I would get up and go to the mall,” she says. “If I was on my way home, I would go to the mall.” She would walk into a store and spend indiscriminately, rationalising to herself that the purchases were on sale. She spent money on shoes, clothes, make-up and accessories that at the the time made her feel pretty and better about herself. But these buying binges left her unable to pay her bills, and her credit card debt rocketted to S$13,000.

There are many of us who feel we can improve our emotional well-being with money, either by acquiring more of it or spending it lavishly. Certainly, when you don’t have enough money to provide your basic needs – food, shelter, clothing, medical care – money is crucial to your sense of well-being. But once you’re above the poverty level, experts believe money loses its ability to boost your happiness quotient.

“You get happier at a diminishing rate,” says Andrew Oswald, PhD, a professor of economics at the university of Warwick in Coventry, England. “The first $13,000 is a lot more valuable than the 12^th.”

Like most psychologists,Richard Ryan, PhD, a professor of psychology and psychiatry at the University of Rochester in New York, believes that money is not the way to pursue happiness because the link between the tangible(money) and the intangible(happiness) is too weak. They suggest that people focus on maintaining in their lives instead. Research shows that if these are unfulfilled, there will be big drops in happiness.

Ryan’s research has also shown that those who put a lot of value on external goals such as money, fame or status are less happy and well-adjusted. Even materialists will say that relationships are the most important things in their lives.

But unlike non-materialists, they will put money as a close second. The time you put into pursuing financial wealth might take you away from the things that could bring you joy. Here are three healthy ways to take a new look at money. Once you’ve re-thought a few of these finacial facts, you may realise there are other things that can bring hapiness. You may even discover that you already have them.

Ask, “What is success?”

For some, the size of their bank account determines what they’re worth as people. If they could just “make a certain amount of money”, “buy a big house”, or “live in a ritzy neighbourhood”, then they’ll have “made it”.

“Materialistic people are usually insecure,” Ryan says. “They got hooked because they have to convince others they’re worthy by having cool jewellery or hot cars. The problem is, it will never be enough.” And if you ask most people how much money they would need to be happy, they will name a figure that’s about 20 percent higher than their current income, Ryan says. And if they get it? “They still think the next percent will do it.”

Let’s say with your higher income you move into a nicer neighbourhood. Will you feel successful then? Probably not, because you’re not comparing your house to the ones in your old neighbourhood, but to those in your new, wealthier environment. “Human beings seem to have to look over their shoulders before they can decide how successful they really are,” Oswald says. In other words, if you get richer and everyone else stays the same, you feel the benefits. But if everyone around you has more money too, the extra income has no effect. This may explain why a nation that grows wealthier does not necessarily have happier citizens. Generally, human beings are never content with what they have.

If you find yourself getting caught in the rat race, ask yourself what you truly think it means to live a successful life. Imagine you’re on your deathbed and what are your regrets would be, and then live your life so that you won’t have them. “no one ever says, ‘I wish I’d made more money’ or ‘I wish I’d lived in a bigger bungalow,’”Oswald says. “It probably feels great to get into that BMW, but if it cost you an extra year of overtime, was it worth it in what you gave up with your family and friends?”

Consider if money can buy what you really want

You may think that you’d be more satisfied if you only had a sports car or a vacation home. But would you really be content if you got these things? Yes, but only if the wish is one that you can realistically hope to fulfill.

A 2002 study from the University of Illinois published in the Journal of Personality And Social Psychology found that people were happy when they could expect to obtain the things they desired. For instance, a woman earning minimum wage who wants a portable stereo and can afford it will be more satisfied than, say, a miliionaire who wants to have a Caribbean island or private jet that’s out of his price range. If there’s a big gap between what you want and what you can afford, you need to find more realistic goals in order to live a happier life.

Change the “value” of money

Three years after incurring a monstrous debt from her self-prescibed shopping theraphy, Mei Lin has learned to control her compulsion to spend. She says she changed her behaviour through a “slow weaning proceess”.

First,she began shopping within her means by paying in cash for the things she bought. She also made it a point to turn to familiy and friends when she felt the urge to shop.

Putting money in its proper place will help you live a happier life. “Part of the modern life dream is that money builds happiness, and we know that’s not true,” says Alan manevitz, MD, a professor of psychiatry in New York. “If money and material things are very important to you, what you want ot do is find out why.”

For example, you may think you want a large house, but the desire behind it may be about your need for security. It’s okay to have material goals, but you should enjoy yourself while you pursue them. “Make sure you have a balanced life,” he says. “If you’re becoming depressed or compulsive while seeking money, it’s not worth it.

By Linda Liu.