Each individual life is beautifully complex, and, like the diversity of each snowflake found in our ever increasing snowfall, each of a billion lives out there are incomparable. However, at our very core each of our lives are threaded together by a common goal. At the end our lives here on Earth we want to know that this has been a happy life. Simple enough.
Where many of us go wrong, unfortunately, is in understanding the true source of happiness. We seem to believe that an unlimited amount of stuff will ensure our happiness. When we lack the funds to procure the lifestyle we think will bring happiness we still give our money away to buy things that will at least fool others into believing that we have safely made it to happily ever after.
The thing is we are making this happiness quest a lot more challenging than it ought to be. The answer, in the end, is that money can buy happiness…but only if you buy the right things.
Money and the Roots of Happiness
The question of whether money can buy happiness has been long debated. I think we would all like to believe that it does not. After all, happiness is found in things much more profound such as achieving goals, the smiles of our children, and tapping in to our true consciousness. However, try to think about any aspect of your life that is not impacted in some way, shape, or form by money. You would be hard pressed to find it. Fortunately, this is an issue that has been well researched, and science can provide us with the truth here. Daniel Gilbert, psychology professor at Harvard and author of “Stumbling on Happiness”, found through research that money only has the ability to buy happiness up to a household income of approximately $50,000 (that would mean a combined household pre-tax salary of $65,500 assuming the average 31% tax rate). As I pointed out in “Where does happiness come from?” the reason that this $50,000 is key is that it provides us with what we need to meet our needs as well as a set of important wants. Above that and money really does not give us any additional happiness. Studies have shown that a sudden windfall, like winning the lottery, gives us about two months of happiness before we go back towards our previous pre-lottery baseline.
Why is this the case, though? Let’s figure out what this $50,000 is buying that has the ability to take us to the pinnacle of happiness possibilities.
Investing in Happiness
A “need” is traditionally defined as something that you have to have for physical survival. That’s not a bad definition, and I think not enough of us consider it when putting our budgets together. However, I like to place another level on “need” that also considers what we have to have for emotional survival. To compile this list of needs, I consulted the Needs Inventory from the Center for Nonviolent Communication. Their list is an interesting one because it gives a wider lens on life’s true needs. You quickly realize how few of these needs have a first degree relationship with money, but pretty much all of them have at least a fifth degree relationship with money. It might be an interesting exercise to go from need to need and figure out the lowest price needed to fulfill each. Go ahead and compare your monthly budget against these needs. We are also going to use data on how the average U.S. consumer spends their paychecks as we go along.
Shelter: On average we spend $17,148 (or $1,429 per month) on housing. That sum seems very high from my Midwestern perspective, but many people live in more expensive places that I do for a job or family ties. I do think that we should all consider, though, that there are degrees within each need item that makes that need a want. No one will ever be able to convince me that a McMansion is a need. What I hope for everyone is a shelter that anchors them to Earth. I hope for everyone a safe, soft place where they land at the end of each day. I hope for you a shelter that provides your body and mind safe harbor.
Nutrition: Oftentimes we find “food” on the list of needs. Yes, but not every food is a need. Ultimately, your body simply needs a certain number of calories to maintain your ideal weight and then you need 55% carbohydrates, 30% fats, and 15% protein. You can then choose to get that protein from quinoa or from ice cream. You can choose to buy that protein at a high end grocer or from Aldi. The same level of happiness is possible on various food budgets. On average we spend $6,602 per year ($550 per month) on food. Of this $3,977 ($331.42 per month) of this amount is spent on food ate at home and $2,625 ($218.75 per month) of this amount is spent on food away from home.
Exercise: Anyone up for a good happy dance? Physical movement is the stuff bliss is made from. Like many people I hated exercise until I did it. Then I find it terribly difficult when my travel schedule interrupts my exercise schedule because my body’s constant fight for homeostasis finds it difficult to get back on my running schedule. I can’t find U.S. average spends for exercise, but I can tell you how to “Getting in Great Shape using 4 Apps and $3“.
Water: Here we list the life giving elixir that is core to our very being. As a self-proclaimed sommelier of water, I can attest that the best straight from the tap water comes from New York City, Chicago, and San Francisco (in that order). We are a fortunate bunch in our country as we spend relatively little for high quality water. Not everyone is so lucky. Since I’ve mentioned that money has karma, you may considering contributing towards giving every human life access to healthy water by contributing to In addition to your budget, you can give a little bit by contributing to Charity: Water or Water.Org.
Health: I think good health is a human right. In fact, one of my happiest recent moments was creating the patient engagement strategy for the most unhealthy patient population in the country (Southern Mississippi). One of the most important aspects of our health is the one that we ignore and stigmatize, which is our mental health. Brain health is not only tremendously important in our pursuit of happiness but also presents tremendous costs on both a human and societal level. Good sleep is also a crucial ingredient of happiness as was mentioned in “that post”. On average we spend $3,631 per year ($302.58 per month) on healthcare.
Education: Included on the Needs Inventory were things like “learning” and “growth”. We can certainly meet these need with little to no money, but I personally would still be living in poverty were it not for formal education that came with a price tag attached to it. Like any investment, paying for your education should come along with a balance of risk and reward. The average student loan debt sits at $30,000. That would be a $345.24 monthly payment if paid over the course of 10 years.
Companionship: At our core we are social beings and we need human interaction for a truly happy life. I would be lying if I said that one of the main reasons I chose not to have children was because of the costs involved. However, children are just one example of how you can use your money to invest in your human relationships. I’ve already written about “How to Build a Marriage That’s Good for Your Money“. Stay tuned in the future when I plan to write about about how to build friendships that are good for your money as well.
Clothing: This one isn’t explicitly on the Needs Inventory, but I feel pretty certain that survival, in our society, would be uncertain without clothing. On average we spend $1,604 per year ($133.67 per month) on clothing and clothing services per year. Want to save a ton on clothes with the help of a little pre-planning? Check out “Drastically Reduce Your Clothing Budget (without reducing your fabulousness)“.
Your Future: Core to our needs for safety and security is knowing that regardless of the unknown that tomorrow may offer, we are prepared. There are two ways to prepare for the future. You can either invest your money in “income generating assets” or you can bring down your monthly cost of living. I recommend that you do both. On average we are stocking away $5424 per year ($452 per month) in our retirement savings.
The True Root of Happiness
In the end, money is not the root of happiness. It is simply an enabler. By having a healthy relationship with money we can then use our money skills to invest in a happy life. Ultimately, your happiness is dependent not upon how much money you have but in how you spend it.