With the pandemic going on, people have faced significant pay cuts, bonus reduction and worst of all, unemployment. Yet in spite of these difficulties, there is one thing that never fails to make our faces light up and improve our mood–even if it’s just for a little while until reality strikes.
Have you guessed what this thing is yet?
That’s right. It’s money.
As the saying goes, ‘Money makes the world go round.’ Sure enough, the faltering economy as a result of COVID-19 had made our world flat for almost half a year. For many people, the world is still flat. Studies have revealed that people need an income to be happy and posited that spending money on things you enjoy can bring you happiness
But does this happiness last?
How much does money–money you earn–affect a person’s happiness?
The answer to this is a highly-debated one and the answer is pretty complicated.
In 2018, researchers from Purdue University and the University of Virginia analyzed data from the World Gallup Poll which includes responses from about 1.7 million people in 164 countries and cross-referenced their earnings with their life satisfaction. Although the standard of living varies from country to country, the researchers concluded that approximately $95,000 a year is needed for complete satisfaction and $60,000-$70,000 a year to maintain a decent sense of contentment. The price of happiness obviously increases if there are more mouths to feed in the family.
Another survey by the job site CareerBliss.com discovered that employees with higher salaries were happier with all aspects of their work and not just their salaries. “…As income increased, so did overall employee happiness. But what we really saw was that happiness across all factors improved. People felt they had a better sense of work-life balance, job security, and that their work environment has improved,” said CareerBliss’s CEO, Heidi Golledge.
So it’s not just much you earn, but also how you spend your money that makes salary critical to happiness.
Spending money on personal growth, connecting with people and contributing to the community contributes to overall happiness as well. Sonja Sonja Lyubomirsky, a professor of psychology at the University of California who studies happiness said “If you spend money in ways that help others, or help you connect with others, whether it’s just like a dinner with friends or travelling, even if it’s not very much or very expensive, that could make you very happy,”.
Another kind of spending that increases happiness is the buying of time–figuratively of course. The 2017 study on buying time by PNAS (Proceedings of the National Academy of Science, USA) found that when people paid for time-saving services — such as getting takeout, having their home cleaned with external help and outsourcing errands to other people — they experienced higher levels of life satisfaction than when they bought material goods.
Knowing that the world runs on money and that receiving lots of it can make you happy is just the tip of the iceberg, what’s more important is understanding the rationale behind it. Since COVID-19, it’s become clear that our habits around money and shopping need to change because what’s important to us has also changed.
So although salary does play an important role in our happiness, perhaps overall happiness and life satisfaction are more greatly affected by the spending habits we’ve developed over time.