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  • Matthew Boersen

Money Can't Buy Happiness

“Money can’t buy happiness.”


We’ve all heard that quote or some version of it in a movie, a billboard, or social media.

“Whoever said money can’t buy happiness simply didn’t know where to go shopping.”

“People say money can’t buy happiness, but poverty isn’t going to help either!”

“There are some things money can’t buy, for everything else…”


How much truth do these sayings really have?


The fact is, you no doubt already understand that money doesn’t automatically make you happy.


So it’s not enough just to consider the question – “Can money buy happiness?”


We really need to ask...

How can you make sure your money – whether it’s a lot or a little – helps you live a happier life?


The answer to that question is so much more powerful than just being able to repeat a superficial saying like “money can’t buy happiness”.


So in this article, let’s briefly consider several different ways you can avoid money issues that lead to unhappiness and use good money habits to increase your happiness. We’ll even consider something you can “buy” that may just make you happy.


Money & Unhappiness - Where It Goes Wrong

Money doesn’t automatically bring happiness. But money problems, almost always bring unhappiness.


And the interesting thing is… this is true no matter how much money you have. Whether you’re making $2,000 or $200,000 a month, money problems will sap your happiness in a heartbeat.


Oftentimes, having more money even produces the opposite effect – high-income earners end up with more stress and anxiety over money.


More money does not equal fewer money problems and more happiness.


Dr. Jean M Twenge even said in her book Generation Me: “Research consistently finds that… after you reach a subsistence level, income is not significantly related to life satisfaction.”


So if having more money doesn’t necessarily help you avoid stress and unhappiness, what does?


Avoiding money problems.


Bad money management – whether it’s with your $700 weekly paycheck or your multi-million dollar investment portfolio – will consistently create stress that saps the joy out of almost every part of your life, even things you once loved.


So let’s look at some of the most common money issues people run into and how they can be avoided by following a few basic principles.


This will help you make sure money doesn’t rob your happiness but actually helps contribute towards it.


Don’t Let Bad Money Habits Rob Your Happiness


Money and Marriage

Money is one of the most common reasons couples fight. In fact, according to one survey, 48% of Americans say they argue with their partner over money.


Even 41% of divorced Gen Xers say they ended their marriage because of disagreements about money.


You know how the story goes...


A couple falls in love, spends all their time and money planning a lavish wedding, and starts their lives together full of joy and optimism, ready to “live happily ever after.”


But soon the reality hits.


The wife grew up in a budget-conscious family that used coupons, bought the generic brands, and only occasionally went out to eat. The husband grew up in a family that never looked at price tags, had the latest and greatest of everything, and routinely went on expensive vacations.


A month after the wedding they have an argument that started with a debate about whether to get generic or name brand cereal.


Just wait until it’s time to go into debt to buy a home, a new car, or spend a couple of thousand dollars getting the nursery ready for their baby.


Money issues can do more than just remind the couple that the honeymoon is over. They can quickly become the corrupter of their marital bliss.


-A couple dealing with mountains of debt can quickly become irritable and quick-tempered.

-Being overly preoccupied with earning more money can lead to neglected spouses and children.

-Making expensive purchases without consulting with the other breeds mistrust.


If left unchecked, smoldering money issues like these quickly lead to ruined families and troubled childhoods.


So what can you do to keep these money problems from ruining your happiness?


THE SOLUTION: Talk about money before it becomes a problem.


Discuss money openly and honestly both before and after marriage.


With your future spouse, it’s important to openly discuss things like:

  • Family history, spending habits, and your view of a balanced budget

  • Your current financial obligations and debts

  • Future plans and goals


Be ready to yield. No two people have the exact same view of money.


Work together.


It should be your goal to create a common standard you can agree on – one that’s not just “his” or “her” view of money, but “ours”.


If you do that with your future spouse, it will make discussing money after the wedding a whole lot easier!


With your current spouse, you need to regularly discuss similar issues:

  • Spending habits

  • Approved budget

  • Family goals for the future

  • Any possible frustrations


Don’t wait until money problems come up to talk about these things.


It’s like owning a car. Regular preventative maintenance is the best way to keep your car running smoothly without any major problems. If you only take your car to the garage when the engine starts smoking, it’ll be harder to fix and you’ll have bigger problems down the road.


Don’t wait until your “engine starts to smoke” to talk about money.


Work together to create the family budget. Even if one person handles most of your family’s money matters, both should still openly discuss and be aware of the family’s finances without having to micromanage everything.


Try to afford each other a certain level of freedom, such as an agreed-upon amount each one can spend without having to consult with the other.


But what if it still seems like you’re always fighting about money?


Get help.


If you just can’t seem to reconcile your differences, why not get help from an experienced financial planner or counselor? They can help evaluate your financial situation, create a sustainable budget, and set reasonable goals that you both can get behind.


Money and Business Partners

Good money management can also help avoid unhappiness in a different kind of partnership – a business partnership.


Far too many people enter into business relationships without ever agreeing on how their business would be run. Although dissolving a business partnership may not be as traumatic as dissolving a marriage, it inevitably leads to extra stress and anxiety brought on by legal fees, lost jobs, and ruined reputations.


So what can you do to avoid those issues?


THE SOLUTION: Talk about money before it becomes a problem.


Interestingly, many of the same principles that apply to managing money as a married couple also apply to managing money as business partners.


Both before and after entering a business relationship, openly discuss things like:

  • Specifics on how finances will be handled

  • The decision-making process

  • Views on reasonable debt financing

  • How distributions and compensation will be handled

  • Any other concerns you may have


Just like in a marriage, discuss these things before problems arise and it’ll save you a lot of pain down the road.


Money and Families

We’ve all seen a movie with a scene like this…

  1. A rich person dies

  2. Their family gathers around as a lawyer reads the will

  3. Inevitably no one is happy with what they received

  4. The “rebel” of the family who doesn’t get anything goes off on a journey of self-discovery as the rest of the family bickers over the inheritance


Sure, it makes for an interesting movie. But sadly, in real life, a situation like this can wreak havoc on family bonds, even leading to siblings not speaking to each other for decades.


So what can you and your family do to avoid this?


THE SOLUTION: Instill strong money values in your children and plan ahead.


Dr. Jean M. Twenge also wrote in her book Generation Me: “People whose primary motivations are financial are much more likely to be anxious and depressed than people who value strong relationships with others”.


Help your children value people and relationships – especially with family – more than money.


Not only will they be happier in their day to day life, but when it comes time to divide up an inheritance, they’ll be more concerned about maintaining strong family bonds than just wondering “What am I getting?”


It’s also important to plan ahead. That’s why we ALWAYS recommend good estate planning.


Don’t just assume that your children will work it all out.


Dealing with the death of a loved one is hard enough. Emotions are already running high. And when you add having to negotiate with family members, it becomes a recipe for disaster.


We recommend consulting with an experienced financial planner and clearly establishing who gets what. Provide detailed instructions and explanations if necessary.


And instead of letting all of this be a surprise for your family (like in the movies), get together and talk about it. That clear communication can go a long way towards helping your family stay united and happy.


Yes, this involves work and forethought on your part. But the long-term peace of your family is worth it, right?


So we’ve seen how good money habits can help you avoid stress. But can they also increase your happiness?


Let’s see.


Use Good Money Habits to Be Happier

So how can you manage your money – whether it’s a lot or a little – to help you and your family live a happier life?


We’ll consider three basic ways. Good money habits can…


Help bumps along the road be “not-so-bumpy”

Get ready, here comes another car comparison.


How would you feel driving on a bumpy road in a car without shocks? Every little bump is jarring to the bone. It is not a happy drive.


What happens when you hit a bump on the road of life?


Maybe your furnace suddenly stops working on a cold December morning, only to need a $5,000 fix? Whether you have an emergency fund or not, it’s not a pleasant situation.


But with no emergency fund, it is truly a “jarring” situation (like hitting a bump without shocks) that now leaves you with a money problem on top of a furnace problem. And even once you figure out how to pay for the fix, you could still be left with extra debt and stress that robs you of happiness for months to come.


However, the good habit of maintaining an emergency fund acts as a shock absorber to help smooth out unexpected bumps like that. It makes it easier to pay for unexpected repairs and emergencies with minimal stress so you can get back to enjoying life.


Good money habits also...


Help You Experience More as a Family

Not “buy more” as a family.


As we’ll talk about in a future article, being able to enjoy experiences with friends and family impacts your happiness greater than buying things as a family. And when you make balanced decisions with your money, you’ll have more flexibility to experience things as a family that you may not have been able to otherwise.


These experiences could be as simple as being able to take a week off work to go camping as a family or as elaborate as an international cruise vacation with your grandkids.


Good financial habits help you enjoy experiences like those without having to constantly worry about missing work or being in debt because of paying for the experience. That helps you enjoy the experiences more while creating lasting memories that strengthen important relationships in your life – relationships that will bring you more happiness in the future.


And last but not least, good money management can…


Help You Experience the Joy of Giving

Wise money management makes it easier for you to be generous with others. And generous people are happy people.


When you see how your generosity makes others happy, it has the same effect on you. And in the end, your generosity helps you get things that money truly can’t buy like love, respect, and closer friendships.


*Stay tuned for a future article where we’ll talk more about generosity and how it makes the giver happy and the world a better place!


So far we’ve seen that bad money habits lead to stress and unhappiness, and good money habits can contribute to overall happiness.


But is there anything you can actually “buy” that will make you happy? Let’s see.


Buy This to Be Happy

So what is it? The newest iPhone? A new car?


Buying things will not make you happy. There is no “material” thing that once bought guarantees long-term happiness to the owner.


But…


What about freedom and independence? When you “buy” a measure of freedom and independence, an interesting thing happens.


We’ve seen this happen with some of our clients.


We’ve had a number of clients who wanted to retire the day they turned 65. So, we worked together to create a plan so they could do just that. Finally, that long-awaited day arrives, and guess what?


Something funny almost always happens.


Many want to keep working because now that they don’t “have” to work, they actually enjoy their jobs! Now that they have the “freedom” and the “independence” to walk away if they want, the job becomes less stressful and more enjoyable.


We have clients that are still working (some 5+ years later) at the jobs they swore they would retire from the first day they could.


The freedom they obtained from good financial habits gave them greater independence and more enjoyment in life.


Make smart financial decisions and you too can “buy” freedom.

  • Freedom from dictatorial bosses

  • Freedom from debt

  • Freedom from punching a clock each day

  • Freedom from certain financial limitations


Even if you won’t have the complete freedom to fully retire until your in your 60s, work to “buy” smaller freedoms along the way – like the freedom to go on a week-long vacation without stressing or the freedom to take a day off work to go hiking with your kids.


Those kinds of simple freedoms lead to stress-free enriching experiences, stronger relationships, and in the end – a happier life.


What Do You Think – Can Money Buy Happiness?

Ok, one last car comparison...


The fact that you have a car doesn’t mean you drive to beautiful places. You need to maintain it. You need to drive it. You need to make the right turn when you reach a fork in the road.


Use your vehicle properly and it can take you to exciting places.


The same is true with money. Simply having money does not automatically lead to happiness. But when used and maintained properly, it will contribute to a happier life.


So remember to...

  • Make balanced decisions to avoid money problems.

  • Openly discuss money with your spouse, business partner, and family to avoid stressful issues down the road.

  • Have good money habits like maintaining an emergency fund, spending on experiences instead of things, and being generous with others.

  • Buy freedom and independence.


And finally, instead of contemplating the superficial statement – “Money can’t buy happiness.”


Let’s be driven by the fundamental truth – “Good money habits contribute to happiness”


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