Does Money = Happiness?

Any new year is often a time to reflect on what’s important to you. Financial and investment planning is obviously money-focused. But I’ve been thinking about my client conversations over the years and how the focus of those conversations really are about the things that bring you happiness. Is it the money that does it? Or is it what that money affords us? And at what points do we have enough?



Eighteenth-century Swiss philosopher Jean-Jacques Rousseau said, “The money you have gives you freedom; the money you pursue enslaves you.” He clearly believed that money alone can’t guarantee our happiness, and many other philosophers, business moguls, and philanthropists both before and after his time would agree.


Sure, we all know that wealth provides a certain level of wellbeing. It’s also true that, after a point, the happiness money offers can be more fleeting. This concept has spurred on many psychological and financial studies to determine whether an increase in wealth – beyond satisfying your essential needs – will result in a similar increase in happiness.


For instance, a 2010 study conducted by Nobel Prize-winning economists Daniel Kahneman and Angus Deaton claimed that the relationship between annual income and happiness was highly correlated up to $75,000 a year but then lost significance above that threshold. A more recent addition to the literature, a 2021 study from Matthew Killingsworth, shows wealth does continue providing more happiness above that $75,000 income level – but at a diminishing rate. The takeaway for us is that there’s an inflection point. The psychological cost of generating additional wealth may come to outweigh any temporary happiness gained from it.


So, the question remains – what should you do with the money you do have?


Some of the benefits of having money is that it can buy flexibility. When spent wisely, a certain level of wealth can afford you the opportunity to do things that you want to do, when you want to do them, and with those people you’d like to do them with. It can buy you more time with friends and family. It can allow you to quit your job tomorrow and pursue a truer passion. It gives you freedom to do the things that make you happiest. And you don’t need an immeasurable amount of wealth to do these things as long as you prioritize what truly matters to you, such as charitable giving, family vacations, or planning for the next generation. Following this framework could make you feel wealthier than any amount of money ever could.


This is where the importance of your long-term financial plan comes into play, as it is a powerful mechanism to help translate your money into happiness. It involves in-depth, regular, and meaningful conversations with your advisor so that instead of being focused solely on accumulating wealth or chasing higher investment returns, you can experience how your financial wealth can deliver freedom, flexibility, and even greater happiness.


If there is anything we can do to help you get more on track with your own retirement and financial plan, please don’t hesitate to let us know!


Waypoint Wealth Management

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Waypoint Wealth Management