If you are unhappy, money alone cannot fix it.
However, what I thought was most interesting about this study is that if you exceed these limits, your life satisfaction and emotional well-being may begin to decline. Once you hit your ceiling, you start adjusting to things like social comparison (ie, how you stack up next to the Joneses) and material gain (ie, more money, more stuff). In other words, you are driven by the belief that others are doing better than you, so you need to earn more to keep going, making your life satisfaction less.
What is the relationship between finances and well-being?
In a related 2023 study by psychologists Daniel Kahneman and Matthew Killingsworth, they disproved their opposing views on cooperation to see that happiness does, in fact, plateau at a certain level of income.
In 2010, Kahneman expressed the belief that emotional well-being did not increase above an income of $75,000 per year, and ten years later, Killingsworth asserted that it could. After testing the new crop of participants, they eventually discovered together that while happiness could increase with more money, there was a limit to self-control. unhappiness.
If you are already unhappy because of heartache, bereavement, clinical depression or “other distress,” such as trauma or discrimination experienced, the money can only reduce your suffering up to $100,000 per year but not more.
As Killingsworth shared these findings, “this suggests that for most people higher incomes are associated with higher happiness . . . [but the] except for people who are financially well off but unhappy.
For example, if you are rich and miserable, more money will not help you. For everyone, more money was associated with higher happiness to varying degrees.”
What do we get from all these studies about money and happiness and stress?
Here’s what all these studies say: First, no matter what happens, if you don’t have enough to meet your basic needs, more money is undoubtedly the solution to that problem. This always reminds me of the old days Friends exchange where Ross says, “I never thought money was a problem,” to which Rachel angrily replies, “That’s because you have it.”
If you have enough money, it stops being a problem. It can, however, shift the focus to your other problems. As Vitug put it in his book, “money fixes money problems, but it doesn’t.” i the answer to life’s problems.”
As I said at the beginning of this book, there is a reason why there are millionaires and miserable millionaires out there. There’s also a reason why I’ve met so many people in the FIRE community who successfully accumulated a seven-figure nest egg, only to realize they weren’t happy after retiring early.
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