Buying Happiness with Money

What if someone told you today that you could buy happiness with money — would you buy more of it?

What if you could buy happiness for someone else — would you buy it?

What if you could do both — buying happiness for yourself and buying someone else happiness at the same time?

Billionaires (i.e., Bill Gates and His Mates) often claim that money can’t buy happiness. But that’s easy for them to say — they’re billionaires. Normal people (i.e., You and I) want more of it.

Money enables us to buy services and goods — which improves our quality of life. With money, we’ll be able to buy sparkling water. With money, we’ll be able to buy a new pair of shoes. With money, we have more purchasing power to fulfil our basic needs, treat ourselves with material goods and services, and, to buy convenience and freedom. In other words, money can buy happiness — to a certain extent.

The Catch

But we all know that’s not entirely true. Once our basic necessities are satisfied, earning and spending more money does still add happiness — having another pair of shoes and drinking sparkling water does add to our happiness. But those happiness gains decrease the more you consume.

Credits to Terje Sollie.

Imagine owning a 100 pair of shoes.

Would owning another pair of shoes spark as much joy?

This effect applies to our income as well — there is an income threshold where happiness and life satisfaction gains zeroes down. In other words, eventually, money stops buying happiness.

Source : 80,000 Hours.

So, being as rich as Bill Gates does not necessarily mean that you’ll be as happy as Bill Gates. In fact, even having a 6 figure income might not necessarily make you happy — happiness gains peaks off at around $50,000 dollars (U.S.). There seems to be an income threshold where happiness gains start levelling off.

Everyone’s threshold will be different. And that threshold will depend on what one’s conception of the ideal lifestyle.

A good baseline for finding out what your threshold is to ask yourself what your ideal life is. What do you sufficiently need material wise? What kind of relationships do you want to have? How much do you want to spend on keeping my body healthy?

Most importantly, work out what your ideal lifestyle entails in terms of financial cost.

Once you’ve decided on this threshold — aim and work towards earning that amount. Make sure stick to your ideal lifestyle and aim to keep financial costs as stable as possible. Keep in mind that as we earn more, we tend to spend more. That’s how we get trapped in the rat-race (and that’s how Johnny Depp became broke).

Assuming that you’ve achieved your ideal lifestyle — you’ll be considerably happier as where you need to be. You’ll still probably want to earn more than that as you’ll want a sense of security and build up wealth — that will buy more happiness for yourself through having a sense of security.

But sooner or later, you’ll seek novelty again as we, humans, tend to adapt our satisfaction levels. Colloquially put, we get bored and seek novelty. That’s why we decide to shop, travel and consume more than we actually need to — especially when we have the time and money. But these forms of happiness and satisfaction are short-lived and you’ll constantly be chasing after the next thing.

Instead of consuming and shopping more — why not buy more lasting and meaningful happiness for yourself?

This can be simply done by buying other people happiness.

Wait… how does one buy happiness for other people?

You guessed it — through donating your income.

If you’ve read through all the way, you can see how donating “could” buy happiness for other people — the more money you earn, the lesser the happiness gains you get per dollar. So, giving your money to someone else who needs it will make them way happier as there will be more happiness gains per dollar. This is especially true if the donation recipient is from a lower income and have a lower objective quality of life.

Happiness Gains per $ for someone who needs it more > Happiness Gains per $ for you.

You could easily donate your money by handing out food and supplies to vulnerable populations near your area or donate to charities. But, I don’t really trust charities. How can I be sure that my money is being used properly?

That’s a reasonable worry to have. After all, there have been scandals even in the charity sector (i.e., Oxfam’s many infamous scandals). However, just like investing in any companies, you could pick “winners” in the charitable sector to invest in.

  • Just like corporations generating profit — some charities are more efficient at using their resources to generate different amounts of social value.
  • Just like how corporations produce goods in different sectors — some charities generate social value in different areas of society.
  • Just like how some corporations are more transparent and have better governing guidelines — some charities have better governance and transparency.

For more information on which charities or cause you want to donate your income to, check out Give Well or Effective Altruism.

There are also other ways of utilising your resources to buy happiness for other people — for instance, Kiva issues loans and funds entrepreneurs in developing countries.

Or, you can even fund research that helps better humanity. For instance, I am personally interested in how people can find more meaningful work and choose to support 80,000 hours.

Whatever option you choose, you’re using your income to increase the quality of living of other people — in other words, buying happiness for other people. And best of all, you’re getting to choose where to put your money and get the best bang out of your buck!

But… how exactly does donating generate happiness for me?

Fortunately, Psychology have a few things to say about that.

Credits to Meo.

Here are some relevant findings on giving to others and one’s happiness :

  • Spending money on other people makes one happier.
  • Setting altruistic goals (rather than self-improvement related goals) induces higher self-esteem and lower vulnerability to mental health issues.
  • Giving induces feel-good hormones — which is great for both your mental health and physical health.

These are just a few studies on how giving affects happiness and self-esteem. For more on the benefits of giving, check out Project Happiness and University of Notre Dame’s Science of Generosity Project.

The sceptical side of you must still be thinking — does one still get those benefits if one is giving out of self interest?

Good news — even if you are donating with a self-interest intent — you still get to reap the benefits! In fact, people who give more tend to be happier. And when you’re happier, you give a lot more too — it’s a feedback loop.

In other words, altruistic tendencies and behaviours can be nurtured and grown. The tricky part is getting the loop started.

So, if you can afford it, why not start with something you can control — by giving? Just like any habit, one has to take action and works towards making it a habit.

Once you have gotten in the habit of giving, you’ll start seeing yourself as an altruistic person. This no doubt benefits humankind and reduces suffering in the world, but also helps you form a better self-image and esteem — making you much happier.

Buying happiness for other people might very well be the answer to buying happiness for yourself. If you’re not used to giving — why not start small?

It might very well be your gateway drug to giving more ;).

Credits to Atul.

Peace, Love, Profit, Repeat.

I’m publicly pledging to donate 5% of my gross income — and am planning to increase it by a percentage each time I get a raise. If you’re interested on why I’m doing this, feel free to contact me — I’d love to connect with you. Hit me up on LinkedIn or Email.

Cheeky Psychology and Philosophy graduate who spends too much time on ethical capitalism. Auditor by profession, buddhist in spirit, child at heart.