3. Does More Money Really Bring More Happiness?

Does More Money Really Bring More Happiness?

We’ve all heard the phrase, “Money can’t buy happiness.” And for a long time, that seemed to be backed by science. If you’ve spent much time reading about happiness, you’ve probably heard that happiness increases with income up to about $75,000 a year, but after that, more money doesn’t make a difference.

But what if that isn’t the whole story?

In recent years, updated research has challenged that long-standing belief. It turns out, more money can bring more happiness, but with a few important caveats.

The Real Story Behind Income and Happiness

In 2010, researchers Daniel Kahneman and Angus Deaton published a study that made headlines. They analyzed data from hundreds of thousands of Americans and concluded that emotional well-being improved with income, up to a point. After that, they said, happiness plateaued.

But in 2023, Kahneman teamed up with Matthew Killingsworth and Barbara Mellers to revisit the data. This time, they corrected a previous measurement issue. The original study unknowingly focused on the absence of unhappiness rather than the presence of happiness, two very different things.

Their updated findings were surprising, for most people, happiness continues to rise with income, and for the happiest individuals, it even accelerates as income increases. Only the least happy 20% experienced the plateau that was found in the earlier study.

So, does more money guarantee happiness?

Not exactly. Before you assume that a six-figure salary is the key to happiness, let’s put things into perspective. Even though happiness does rise with income, the actual increase is relatively small. The research also showed that the returns are diminishing. In other words, the higher the income, the more it takes to get the same level of happiness.

Think of it like this: If you're earning $30,000 a year and your income doubles to $60,000, you’re likely to experience a significant happiness boost. Double it again to $120,000, and you'll still get happier, but the increase won't be as dramatic as the first jump.

Studies indicate that those with lower income felt greater happiness with an income boost than those with higher income. This pattern continues as income rises; each additional dollar brings less additional happiness than the one before.

So, what is it about money that can increase happiness? The answer isn’t about buying more stuff, it’s really about security and freedom.

Buying stuff is fun, but once you get used to having around, you mostly just forget about it, it just becomes a part of your life. There are things that you buy that improve your life. For instance, if you have a car that’s always breaking down, leaving you stranded and costing you money that you can’t afford, then yes, buying a new car is probably going to improve your happiness level longer term. Not the initial excitement of something new and shiny, that will wear off, but in the increased security it brings you and the lower overall stress in your life.

When your basic needs are met you can shift your focus toward more meaningful things, like relationships, creativity, and personal growth. The things that you want to do vs the things that you have to do to survive.

Financial security reduces stress and opens doors.

Money reduces stress when it reliably covers the basics. When we know we have access to dependable transportation, a safe home, healthy food, and access to healthcare we don’t suffer from the debilitating stress that not having them brings.

When we don’t have to worry about those things, we then have choices like more time with our family and friends, the ability to say no when we want and to pursue goals that matter to us. We have the freedom to live the life we want.

In short, money doesn’t buy happiness, but it can buy less stress, and that’s a powerful form of happiness.

Think about Maslow's hierarchy of needs, which describes different levels of human needs from survival to self-fulfillment:

At the bottom, you have essentials: food, water, shelter, safety. Once those are covered, you move up to things like friendships, self-esteem, and personal growth and at the very top is self-actualization, or, living up to your full potential.

Money doesn't automatically push you up this pyramid, but it does remove obstacles that might keep you stuck at the bottom levels.

True happiness, the kind that lasts, comes from the internal work: building strong relationships, practicing gratitude, cultivating resilience, and creating meaning in your life.

Why Internal Work Still Matters Most

But here’s where it gets tricky. More money can lead to more dissatisfaction, if you’re not careful. If money becomes the only goal, and if you believe happiness will come from the next raise, the next house, or the next vacation, you risk falling into a trap. The thrill of a new purchase fades quickly. And without developing emotional resilience and a sense of purpose even a full bank account can still leave you feeling unfulfilled.

It's not money itself that brings lasting happiness; it's how you use it to create a fulfilling life. If you haven't built purpose and fulfillment within yourself, more money won't automatically create it.

It’s clear that financial stability matters. It’s hard to focus on happiness when you’re worried about paying rent or buying food. But once you have that stability, the real work begins.

It’s the internal growth that sustains your happiness, good mental health, practicing gratitude, and building strong relationships. In fact, these are things that have been shown to increase happiness at greater levels than income. So, someone with moderate income but strong internal well-being can often feel more fulfilled than someone with high income and little personal growth.

It’s not an either-or scenario. The sweet spot is financial security and emotional well-being. But if you have to choose one to start with, start within. That’s something you can do right now, you have complete control over, and according to research has greater returns on your happiness.

This Week’s Happiness Challenge: What’s Your Happiness Worth?

1. Make a list of what matters most
   Write down the top 5–10 things that bring the most meaning and fulfillment to your life. These could be relationships, experiences, personal growth, passions, anything that makes your life rich and joyful.
2. Put a price on losing them
   For each item, ask yourself: If someone offered me money to give this up forever, what would that price be?
   Would you give up your best friend for $1 million? Would you trade your health for unlimited wealth?
3. Reflect on the results
   How many things on your list feel priceless?
   How many are things money simply can’t buy?
4. Act
   Now that you see what really matters, ask yourself:
   Am I prioritizing what I say is priceless, or am I spending more time chasing what matters less?
   Make one small shift this week to invest in what truly brings you happiness.

Want help diving deeper into this challenge? I’ve created a FREE downloadable worksheet in the Resource Hub to help you get clear on what's really most important to you.

Subscribe to the FREE Resource Hub Now to access the hub and get instant access to this week’s Happiness Challenge worksheet, plus all future tools, templates, and exercises, and bonus content designed to help you redefine happiness from the inside out.

Until next time, remember: Money can open doors, but it’s the work you do within that truly creates happiness.

—Karen

😚🎶🪕