The relationship between money and happiness has been a hot topic for centuries.
From the ancient Greeks to modern philanthropists and celebrities . . . we’ve all tried to answer the question: can humans succeed at making money and achieving happiness at the same time?
This question is close to our own hearts. We want to tell you a story about our friend Kate. She’s from a privileged background: a successful family business and the opportunity to manage the business. Security. Money. A guaranteed comfortable lifestyle. You get the picture . . .
Despite the comfort of it all, she was unhappy.
And after an almost fatal car accident at age 20, Kate believed that if she didn’t prioritize joy above all else . . . all the money in the world wouldn’t matter.
So, what happened next?
Kate left home to focus on the pursuit of happiness first (and money as an important, secondary concern). At the time, she followed a hunch that it was the right thing to do in order to realize her dream of having a happy, wealthy, healthy life.
This realization took place years before researchers, scientists, and economists produced data-backed study into how money and happiness related.
So, you may wonder, how would these new findings help an unhappy person today make an informed decision about whether to put the pursuit of money or the pursuit of happiness first, in order to find both?
Surely, that’s easy to answer. After all, we know that money doesn’t buy happiness.
Wrong! Data-backed research proves otherwise.
Are Richer People Actually Happier?
The answer, as far as all the latest research shows, is yes.
According to the United Nations World Happiness Survey, published in 2015, throughout the world, income is the #1 predictor of happiness, and the more you make, the happier you become.
While no single study has yet settled the argument once and for all, most of the new research leads us to safely conclude found that richer people tend to be happier, and poorer people experience increased happiness as they move out of poverty.
The following section contains ideas from the book NeuroWisdom: The New Brain Science of Money, Happiness, and Success, by Mark Waldman and Chris Manning, Ph.D.
So where did the belief that “money can’t buy happiness” all start?
The controversy began in 1974 when Richard Easterlin, a distinguished professor of economics at the University of Southern California, argued that there was little correlation between happiness and wealth.[iv]
Since then, a series of research studies have shown that Easterlin was wrong.
Not only do measurements of happiness rise as your income rises, so does your sense of well-being and life satisfaction.[v] The following chart was prepared by National Opinion Research Center at the University of Chicago, summarizing nearly forty years of accumulated worldwide statistics between 1972 – 2010: [vi]
According to findings, money predicts happiness. Of course, it’s not a guarantee of happiness, but it’s a clear indicator of the chances of it showing up.
Who are the happiest people in the world and how much do they earn?
- For those who earn less than $12,500, 26% are not very happy.
- With incomes above $12,500 and up to $49,999, dissatisfaction is cut in half, down to 13%.
- For those who earn between $50,000 and $150,000, unhappiness decreases to 6%, and for those who earn more than $150,000, only 2% say they are dissatisfied with their lives.
Research at the Wharton School of Business, published in 2012, found no evidence showing a satiation point: so the more money you make, the more happiness you’ll experience.[vii]
These researchers also noted that 100% of those who earned $500,000 or more a year were very happy.
In related research, Michael Finke at Texas Tech University found that retirees who had saved over $2 million dollars in non-housing wealth were some of the happiest people in the world.[viii]
According to Cornell University economics professor Robert Frank, increased yearly income is the most significant way to increase happiness.[ix]
Richard Layard, the founder of the Centre for Economic Performance in London, concurs: in nearly every country studied, “the rich are always happier than the poor.”[x] Material prosperity predicts life satisfaction,[xi] and the more economic status you achieve, the more you’ll feel satisfied with your life.[xii]
So where does the pursuit of happiness fit into the picture?
You might think it’s safe to assume that happier people earn more money.
According to the latest research, when the brain is “happy” it turns off the motivation centers and goes to sleep, so we are unlikely to be driven to earn more money when we are in a state of “happiness.”
The solution? The good news for happy people is that if you combine your happiness with your long-term goals – you have greater chances of being both happy and rich.
(EDITOR’S NOTE: Ready to win the money game by first learning how to release your limiting beliefs and disempowering thoughts, emotions, and habits? Click the button below to sign-up for the free Winning the Game of Money online training event!)
Having a long-term vision of a great goal and desire appears to bring the greatest sense of satisfaction, along with our willingness to pursue that ‘big dream’ or ‘goal.’
Mark Waldman, leading neuroscience researcher
This is what positive psychologists refer to as “grit.”
“Being happy” is a goal for many of us, so what does it actually get us if we pursue it?
Neuroscience and insights into the workings of the brain show us that the pursuit of happiness alone can make us depressed. Of course, it depends on what we understand as “happiness.”
Consider this . . .
When Kate left home in pursuit of happiness, she was actually looking for a way to end the emotional pain. Being pain-free was her idea of bliss.
At the time, it was more important than the pursuit of fame, or money . . . but her personal search for happiness was also firmly linked to very meaningful ambitions and professional goals, which she relentlessly strived toward. Kate’s goals included:
- become an award-winning film actress;
- produce an international award-winning feature film;
- be a mom able to give unconditional love; and
- publish a novel.
Kate had the common sense to tightly link her pursuit of happiness with goals that had deep personal, and professional meaning to her. According to all the latest research, this “linking” brings us closer to our dream of having both happiness and money in the long-term.
Here’s another Winning the Gam of Money Success Story we published on the blog recently.
(EDITOR’S NOTE: If you’d like to know about the different studies on money and happiness in more depth you’ll find a good article here.)
So, should we focus on income first and happiness after?
So far, we might be inclined to hedge our bets in favor of focusing on increasing our income first . . . believing that happiness will follow.
Evidence points to a strong correlation between happiness and money but it appears to be more of a chicken and egg thing. It’s a money and happiness dance between two powerful, highly charged partners of equal importance.
Let’s start with happiness!
While income appears to be the most important indicator of happiness, it isn’t the only criteria.
The Six Qualities of Happiness
According to the World Happiness Report, published by the United Nations in 2015, the six most powerful indicators for happiness (in descending order of importance) are:[xiii]
- Spending power (economic capital)
- Friends, family, and community support (social capital)
- Healthy life expectancy
- Freedom to make life decisions
- Financial generosity to others
- Absence of corruption in business and government
The World Happiness Report identified another essential quality of happiness: well-being.
Well-being is defined as a life that is filled with enjoyment and feelings of safety, coupled with the absence of anger, worry, sadness, depression, stress, and pain.
As reported in a 2015 issue of the Lancet, having an ongoing sense of well-being lowers your risk of physical and emotional disease, tripling your survival rate and extending your life.[xiv]
The World Happiness Report also found that those who make more money are happier, and those who are happier live longer.
Clearly, the evidence points to a very close correlation between money and happiness.
How’s your happiness score?
We invite you, as an exercise, to go through the above checklist to see how you’re doing. Give yourself a score between 1 and 10 on each of the top Happiness indicators.
The absence of corruption in business and government might be hard for us to score . . . but for the others, this is an easy and powerful exercise to do.
Doing this exercise, we have realized something important about going through the NeuroGym programs. They have supported us in focusing on each of the items (1-5) on that list to improve our lives in more ways than just financially.
The exercises or Innercises® provided by NeuroGym have been tailored to help us eliminate any negative mental states toward money, toward ourselves, and toward life in general . . . as we progressively build greater confidence, serenity, and focus. This combination enables you to move toward goals and desires as we prime your brain for success and happiness.
Do Happier People Have Higher Incomes?
The research that has been done on this would suggest so.
While there have been many studies into how money impacts our happiness level, little has been done on whether happier people actually make more money in the first place.
One study by Jan-Emmanuel De Neve and Andrew J. Oswald followed over 10,000 US adolescents and young adults over a decade and found that happiness during teenage years and young adulthood was directly linked with income at age 29.
The researchers make it clear that their goal is to show that the relationship between income and happiness is dynamic.
While their findings complement existing research on the effect of income on well-being, which points to a strong correlation between income and happiness; they also add strong evidence to the argument that happier people do earn a higher income.
Their results show that students describing themselves as happier at ages 16 and 18, felt happier with their lives at age 22 and earned more income at age 28.
The study also found that those reporting a “very happy” adolescence earned an income about 10% above the average, while those who experienced a “profoundly unhappy” adolescence made about 30% less than the average income.
In their analysis, the researchers actually suggest that happiness isn’t something that’s linked to higher income, but it is actually helping to generate it.
Researcher Andrew Oswald, a professor of economics at the University of Warwick in England, noted:
Happiness is a good predictor of income, even after factors such as gender, IQ, physical health, and height are taken into account. If you’re happy, you have fewer worries and distractions and stress that probably divert you away from the things that are important for work and getting promotion . . . People who worry less can concentrate on being better employees.
We can conclude that being happy makes it easier to pursue monetary rewards.
Let’s check back in with our unhappy young person . . .
What advice can we now offer to help her decide whether to pursue money or happiness first in order to achieve both?
Evidence would suggest that beginning with a foundation of “unhappiness” is a clear disadvantage. However, the latest research shows a strong correlation between income and happiness. Setting out to achieve your goals for greater income and increased happiness at the same time appears to increase the chances of achieving both.
So, while our unhappy young person may be less successful at first if her only concern is the pursuit of happiness, all is not lost if she focuses on increasing her income and her happiness together.
So, what steps can we suggest to increase her chances of making more money and having more happiness at the same time?
Here are some key takeaways to consider.
1. Get into a positive state of mind!
Harvard psychologist Shawn Anchor, author of The Happiness Advantage is a world-leading expert on the connection between happiness and success.
Achor’s research discovered that teaching positive habits creates a buffer against negativity and stress. He presents evidence that “our brains work better when they are positive than they do at negative neutral or stressed.”
In a very entertaining presentation at the UP experience 2010, Professor Achor talks about his findings:
If I know all the things in your external world; if I know what cars you drive, what’s going on in the economy, the weather, I can only predict 10% of your long-term happiness. 90% of your long-term happiness is not about the external world but about how your brain processes the external world, which is why at Harvard we can have students that thrive there and other students that see only the competition, the challenges, and turn what could be a heaven into a hell.
These findings are well worth considering.
Achor’s research supports many scientific studies showing that our brains work significantly more successfully and more intelligently in a positive state.
Dr. Anchor goes on to say that if we could find a way to be happier in the present, then we will raise our success rates because we are able to work harder, faster, and more intelligently when we are in a positive frame of mind.
So, based on Achor’s research, it makes sense to strive to process the world from a positive perspective while working on achieving goals at the same time.
This combination will increase our chances of success, our levels of productivity and our earning potential for the long-term.
2. Know your enemies . . . especially when the one living in your head!
If happiness is one of the best investments we can make in our immediate and long-term abilities to increase our wealth; where do we find it . . . without wasting another second on being miserable?
Welcome to the brave new world where scientific research, data, and technology meet the primitive brain.
Using the latest brain scanning technology, neuroscientists and psychologists are revealing previously unknown facts about the workings of the human brain and mind.
Insights into the workings of our brain show that we tend to build more fearful memories than positive ones, and these habituated memories can interfere with our happiness and desire to pursue goals . . . especially when faced with new ideas even if we know they could be good for us.
Neuroscientists and psychologists are able to identify strategies to change habitual behaviors encoded on our neural circuits that can help reduce feelings of unhappiness, stress, and anxiety . . . and replace them with positive, happier thoughts, behaviors, and outcomes.
We can use our brains to create a happy life. Your brain has the power to be a factory for misery or one for happiness. It’s up to you to decide.
All you need to do is to learn how to use your minds consciously instead of letting it use you unconsciously. Makes sense, right?
3. Get your brain working for you.
So, now we know that our brains have the power to make us happier . . . what next?
A clear formula is emerging from the combined disciplines of neuroscience, psychology, and behavioral economics to show that the way to happiness is centered on how our brain works.
We just have to exercise the fabulous organ between our ears!
This is where our connection with NeuroGym comes in. Within a matter of days of starting NeuroGym’s brain retraining “Winning the game of Money” Kate experienced more awareness about her current relationship with money.
By the end of the 3-month program, the changes in her thinking around money were having positive beneficial effects on my money management skills and money mindset.
Kate also found that she was more positive in general when dealing with stressful issues, so her happiness levels also increased.
Dr. Srini Pillay, award-winning author and assistant clinical professor of psychiatry at Harvard, talks about the benefits of NeuroGym’s brain retraining technology:
What I love about the (NeuroGym) program is that it gives you this daily reminder that it is possible to change your financial life . . . and we’re seeing evidence of this today.
Dr. Pillay goes on to discuss Brain Plasticity, which is one of the brilliant skills our brains have to assist us with changing habits that don’t serve us and replacing them with new ones that do: “For me, one of the greatest miracles of this century is brain plasticity.”
It’s really important to know that you can change your brain with even 15 minutes of brain training. If you do that for 5 days a week for 4 weeks, you can train your brain . . . so brain training is real.
It’s possible and with the right kind of guidance that is science-based, you can make the right kind of changes in your life.
And we now know that our brains are primed for skepticism about any new information we give it that challenges its world-view. But at the same time, we know the brain is also highly flexible and responsive to change once we consciously decide to retrain it with intention.
We simply have to feed it our new positive thoughts regularly, which work to correct any negative thought-patterns.
Focused on helping us retrain our brains for positivity, Innercises® actually reduce the fear centered triggers that fire off in our brain when we want to take new steps toward our financial goals.
At the same time—due to reducing our anxiety levels and fear-centred reactions—we’re able to experience more happiness and positivity as we make changes
4. Find a system that helps us to achieve more money and more happiness . . . at the same time?
Does this even exist?
Incredible as it sounds . . . the answer is YES!
Combining the latest findings in neuroscience and cutting-edge technology, NeuroGym’s brain retraining results in beneficial outcomes as we start to experience new thoughts about money, and take different, more positive actions in our lives based on our new thinking. We start to see the world through a happier perspective, while we reach our money goals at the same time.
So what’s next?
Research tells us that putting ourselves in a positive mindset, while we focus on our goals produces positive results.
But there’s a problem: this is easier said than done.
Humans easily fall into old habits. It’s how our brains are wired. We need help to keep us on track.
Here are some super helpful starting points for taking control of your financial life.
In a recent interview with John Assaraf, Dr. Pillay talks about being prepared for cognitive dissonance where “your cognitive center will say ‘no, no, no’ when we give it new instructions.” Even ones that will improve our lives!
So how do we take back control?
First, prepare for change!
This heightening of the fear center of the brain sabotages us without us even being aware it’s happening. It disables us from making a choice that would improve our lives for the better.
To help “trick” the brain out of this habit, we need to feed it positive thoughts.
Get a pen now and write down 3 ways your life could be better if you improved your financial life.
When I improve my financial life, I will be able to _________. (Do whatever you want.)
Repeat these positive thoughts daily. Add them to your phone. Pin them to your fridge.
By reading them you are immediately activating the powerful motivational and commitment centers of the brain.
Become aware of your money story.
Become aware of any non-conscious, self-sabotaging beliefs that may be lurking around holding us back from reaching our financial goals. Become aware of our personal “money story.”
You can start now, by asking the following questions:
What story am I telling myself right now when it comes to my ability to grow income in the next 6 months? Do I feel that I deserve to be financially successful? Do I feel I’m smart enough and good enough to earn more?
Okay, if you’ve not done it before, this might be a little unusual to think about, but this is a very powerful exercise.
According to Dr. Pillay, by becoming aware of your very specific feelings around money and self-worth, you’ll start to make room for new thoughts.
Start considering your money story by reading these sentences out loud:
- Money is good.
- I love money.
- Rich people are generous.
- Money is the source of much good in the world.
- More money means more freedom.
- More money means I can do more good in the world.
Now ask yourself:
- How do I feel?
- What am I thinking?
Make a note of your responses. Did you find yourself resisting?
If so, it’s highly likely you have latent self-sabotaging beliefs around money. This is normal.
The good news is you can change this by being aware of it first, then retraining your thinking to create empowering positive thoughts around money.
Successful people earn more because they’re always improving themselves by learning more, building new skills, and remaining optimistic.
Think about it. We’re living in the midst of a highly competitive market and an ever-changing landscape, right? So by investing in yourself (and your mind) you’re up-skilling and keeping ahead of the curve.
So, keep on learning . . .
Here’s a lovely insight from NeuroGym’s resident neuroscience researcher Mark Waldman:
When you focus on past memories of achievement, your self-esteem improves.
This exercise gently trains the mind to send us loving, positive thoughts about ourselves and to switch off the toxic thoughts that often rattle on in the background and damage our self-esteem, happiness, productivity, and bank balances.
It’s simple and effective to do.
- Write down 10 good things about yourself. Include anything that you love about yourself that you’ve done or that you’ve achieved.
- Read them aloud or privately.
- Let the feelings sink in.
- Remind yourself of these regularly throughout the day.
It’s like having a shot of happiness in your back pocket . . . and it works.
But what’s brilliant is that this habit actually helps us to form new neural pathways that will keep us in a happier frame of mind throughout the day – and in the long term.
Here’s a highly effective Innercise that focuses on boosting your self-esteem.
Clear evidence shows that people who exercise and keep fit earn more money.
In a 2012 study by the Journal of Labor Research, employees who exercise regularly were found to earn 9 percent more than those who don’t.
Another study found that on average women who were ‘obese’ earned on average 18% less that those who weren’t. And those classed as “overweight” also had 25 percent less family income.
For an even bigger benefit, take your workout outside!
(EDITOR’S NOTE: For more insights on the impact of exercise on income check out this article.)
Yawn whenever you get the chance.
Not at the dinner table when the relatives are visiting . . . but when appropriate. Yawning changes the brain patterns. It lets the brain “chill” as it releases neurochemicals that help you concentrate on your goals and tasks.
With fMRI brain scans we can see the moment-to-moment activity in the brain during yawing which clearly shows how yawning and slow focused stretching reduces stress.
With this shot of clarity, our productivity increases and we can solve problems with greater ease
Waldman explains that “yawning shifts the brain out of stress and worry and into feeling calmer and focused. From here we stand a much better chance of making decisions that are good for us.”
- Set 60 seconds aside.
- Stretch as slowly as you can.
- Concentrate . . . relax into it as you slowly stretch.
- Let a yawn come.
- Yawn as much as possible!
Are you ready for something challenging?
It’s time to ask the one question we are probably terrified to know the answer to:
Does being generous with our money make us happier?
As an endnote to this fascinating topic of the relationship between money and happiness, ask yourself this question:
What should you do with your money when you arrive at being both happy and rich at the same time?
You should use it to help others to become happier and more successful!
What an irony: after working so hard to become rich and happy, it would appear that to remain rich and happy we should give our money away.
Growing evidence suggests that charitable giving makes us happier.
A study examined extensive data from over 166 countries and discovered that in almost all countries, households that gave to charity were happier. Other research found that spending money on others enhances our own happiness and can even make us healthier.
And what of the practice among some of the richest people in the world of donating large amounts of their income to help others? In some cases all?
Is this madness? Not according to the philanthropic work of Warren Buffet and Bill Gates and their famous Giving Pledge.
Recently, one millionaire hit the headlines by publicly announcing that he is giving up his $4.5 million fortune to micro finance charities in Latin America in the hopes of finding happiness in a wooden hut.
In our drive to live the dream life of having wealth and happiness at the same time, we might learn a lot from the Giving Pledge contributors . . . and others such as Ophrah Winfrey, Mark Zuckerberg, and John Assaraf who practice donating percentages of their wealth to good causes.
It makes sense. Giving is a good thing. Good things make us feel happier. Happier people get richer. Richer people get happier.
Happier, richer people give more to help others . . . and so making other happier people in the world.
What’s not to love?
We’ve often heard it said, “money doesn’t buy happiness,” but it’s not really true is it?
We have ample evidence to prove we’ve been wrong about the relationship between money and happiness.
- Money is essential to happiness.
- Material prosperity predicts life satisfaction,[xi]
- And the more economic status we achieve, the more we’ll feel satisfied with our life. [xii]
Not only do our measurements of happiness rise as our income rises, so does our sense of well-being and satisfaction with our lives.
So, by choosing to focus on money goals that motivate you, while also embedding a positive money mindset, you’ll help to achieve both increased wealth and happiness.
So, what about our friend who’s about to make a decision to leave her hometown in pursuit of happiness over money? What would we say to her as she sets off to achieve her goals and dreams?
- Figure out what’s holding you back from happiness as soon as you can, but make sure and keep your eye on your financial goals as you go. Never lose sight of that.
- Cultivate positive feelings toward money. Understand that money is energy. It’s good and necessary . . . and fun. If you don’t think these things, retrain your brain until you experience this to be true. You will be happier and richer for it.
And we’d also say to her . . .
Register for the free training and learn how to release your limiting beliefs and disempowering thoughts, emotions, and habits. (Click the button below to sign-up!)
Remember . . . and this is so important for all of us: it’s never ever too late.
We are all on a journey of realizing our financial goals, and of finding happiness. And whether or not it is clear to us, we have been working toward achieving both in the best way we know how – throughout our lives.
However, sometimes we have been working toward our goals in the dark.
Without challenging our old habits, fears and thought patterns we can be blindly driven to make unnecessary errors en route . . . but it’s not how we have to do things anymore.
Happiness and money! It’s a huge subject.
We’d love to hear from you!
Humans have been discussing and debating this topic for centuries. We’d love to hear your view on it.
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Are there any insights in the article that resonate strongly with you?