Does having more money make you happier?
Interestingly enough, studies show that the very wealthy may not be significantly happier than “regular folk.” I recently discussed this issue on The Goldstein on Gelt Show with Michael Norton, associate professor at Harvard Business School and the co-author of Happy Money: The Science of Smarter Spending. He provided an interesting insight into human nature:
“The problem is that when we make more money we don’t keep our lifestyle the same. We actually keep outstripping our means with our money and we end up just as in debt and just as stressed as we ever were.”
Never satisfied
Human nature is that people are never satisfied with what they have. When there is a little more money, you often end up spending it on something that you didn’t want or need until now. I have often seen this phenomenon with my clients; it’s hard to live below your means.
Interestingly, Professor Norton’s research shows that people are happier when they spend their money on someone else rather than themselves. He explained that, “One of the best ways to use your money is not to try to buy people’s love but to try to increase social connection with other people.”
(To listen to the whole interview, click here.)
The right way to use your money
All of the above indicates that it isn’t how much money you have, but what you do with it that helps increase your happiness. Do you save your money? Spend it on yourself? Others? Give to charity?
To find out how to use your money wisely, consult with your financial planner. Learn how you can use money as a tool to not only buy things, but to make sure that your resources are a source of happiness to you and others.
(The opinions expressed on The Goldstein on Gelt Show are those of the guest, and not necessarily my opinion or the opinion of Portfolio Resources Group, Inc.)
Douglas Goldstein, CFP®, is the Director of Profile Investment Service, Ltd., which specializes in helping people who live in Israel with their US dollar assets and American investment and retirement accounts. He helps olim meet their financial goals through asset allocation, financial planning, and using money managers.
Published January 14, 2015.