Relationship between Money and Well-Being

We have all heard or once said that ‘money does not buy happiness.’ We like to believe that it is so. In fact, if we did not agree with this statement, we could be accused of being materialistic or superficial. However, recent scientific research in the field of positive psychology indicates that the relationship between money and well-being is not so simple: our income does not define our happiness, but it does contribute significantly to it. (And perhaps now many of you are saying to yourself: ‘Obviously!’).

The Psychology of Money

Research on life satisfaction and psychological well-being reflects that the inhabitants of the most economically developed countries tend to be more satisfied with their lives and experience greater subjective well-being, while the most unhappy people tend to live in the poorest countries.

Still, the relationship between economic development and personal well-being is not direct; for example, Latin American countries, in general, have higher satisfaction and happiness rates than would be expected in relation to their gross domestic product. Obviously, everywhere we can find cases of happy and unhappy people.

There are many factors that contribute to individual well-being, such as the quality of social networks, interpersonal relationships, personal interests, the attitudes with which each person approaches life or the activities that one carries out … And yes, money is also another of the ingredients that bring happiness.

What Do We Spend On Money?

Other research indicates that in addition to how much money we have, how we spend it is important to our well-being. Michael Norton, Lara Aknin and Elizabeth Dunn, researchers at Harvard University (USA), have carried out a study that shows that, generally, spending money on ourselves does not increase our happiness.

However, the research, published in the journal Science, reveals that spending it on other people or donating it to charities does raise our mood and satisfaction. Sometimes when we feel sad or anxious, we think that we will feel better if we buy something for ourselves. Some people consider that shopping is a kind of therapy when we feel ‘half depressed’.

But shopping can backfire – there is evidence that if a person is sad, they are likely to spend more than they normally would. Therefore, it is not convenient to make financial decisions when one is in a bad mood.

Buy Items or Experiences

Researcher Tom Rath, an expert in development practices based on personal strengths, points out that research shows interesting differences between buying things and buying experiences such as a good dinner, a concert or a vacation …

Our satisfaction with material objects disappears over time; For example, ask yourself if you have the same illusion when you get into your car as the day you bought it. Instead, memories of good experiences can last for years and allow us to ‘relive them’: do you still remember that trip with your friends from school or your honeymoon?

Researchers at survey company Gallup have also found that the perception of our income is not ‘objective’ but depends on different factors.Thus, in a group of workers with the same salary and the same responsibilities at work, while some felt that their remuneration was adequate, others did not. The difference was how involved they were in their work.

Those who concentrated on their tasks and found them satisfactory also tended to be satisfied with their pay. The same thing happened with people with good interpersonal relationships: they used to be more satisfied with their salary

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