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Can Money Buy Happiness?

Updated: Sep 5, 2023

Let's get something straight from the outset. Hating money is unhealthy. Money is a tool you can use to build happiness or destruction in your life. Money is the paper provided for our labor or the labor of others. It's quantified energy and hard work.


It's incumbent upon us to build wealth and use money to create joy and happiness for ourselves and those we love the most. Our financial choices are a driving force behind our happiness, not because money buys us happiness, but because of what we can do with money that can buy us happiness... or misery.


College


An unhealthy myth of financial happiness is that buying stuff will make us happier; quite the contrary. Yet this type of thinking influences us to be tormented by the "Keeping up with the Joneses' Effect."


Multiple studies have concluded that our minds think in terms of reference points instead of absolutes. A reference point is an irrelevant standard against which all subsequent information is compared. This is one of the most complicated phenomena to avoid because our subconscious mind takes over and adapts to the reference points around us, even if they are poor reference points.


For example, I was initially heartbroken to see a post of a 21-year-old past student of mine drinking Natural Light. My first thought was to start a Go Fund Me Page and throw up some sad images of sewer beer stacked in triangles across a disheveled floor with Sarah McLachlan playing in the background so he could afford some real beer.


My reference point is good beer and top-shelf bourbon, but for them, it's cultural for college boys to drink cheap 2% beer. And this brings back memories of my college days and the need for beer bongs to get any joy out of a Bud Light. It's financially fortunate when the Joneses are frugal, but such good fortune isn't always the case in college.


When transitioning from high school to college, we tend to be exposed to a larger pool of people with various backgrounds. As we settle in, we spend time with many different people and subconsciously adapt to their ways of life. At first glance, you might think adapting to the new people around you isn't as bad as it seems. However, when taking a more reflective approach, we can see that constantly adapting drives us to feel envious of all the things we don't have when we should appreciate all that we do have.


Have you ever had a friend who seems to act differently around different groups of people, and you never understood why? The phenomenon partly explains this: Keeping up with the Joneses' effect. Now that we know our subconscious minds use reference points, we can conclude that the reference point used for comparison changes depending on your situation, surroundings, etc.


Said differently, when a person is experiencing the Keeping up with the Joneses effect, they aren't usually evaluating what or who is a good reference point because we are simply trying to keep up with whoever is in our surrounding area. This can lead to deceitful behaviors as we never feel like we can keep up with our surroundings, making us feel unworthy.


If you've ever experienced this yourself, you may believe that the lack of money is the root of all evil. Finding your tribe should not include deciding whether you can afford a friend, but that can be the reality.


Sometimes, you can be blessed to fall into friendships with folks who may have a lot more money than you, but don't put you in a position where not having any excludes you from the fun you can have together. This is hard for them to do because their reference points are from a different world, and what to them are routine expenses they would not think twice to incur can be tough to afford for others. That doesn't make them bad, just good people in different circumstances.


The same Keeping up with the Joneses challenges apply to dating, and these challenges extend from our college years through to marriage. However, the problem is less complicated than finding your social circle, where the people you hang out with could have broad capacities for spending. When you date, you're only trying to find ways to make it work with one.


Young Professionals


As shared in a previous post, "social media amplifies the false images of happy consumers wearing prized possessions, manifesting the problem of keeping up with the Joneses, to now, keeping up with the Kardashians. Compulsive consumerism and striving to buy more stuff make us worse off than we would've been at baseline." This is particularly dangerous when we spend money on "stuff" that quickly becomes worthless for others and not needed by you.

Most college graduates make a decent living after graduating. For many of us, it's the first time we've had any real money in our lives. We feel like adults, we have adult money, and many don't have kids yet. In academia, it is at this time that we have financial slack. Slack reduces cognitive cost: it requires less focus, and less vigilance. In plain language, we are more likely to overspend.

There are certain dangers we face at milestones in our lives that we must be on guard to defend ourselves. Spending thoughtlessly as young professionals because we are not accustomed to having money is one of them. Doing so because we believe it will make us happier is another.


Have you ever seen an ad for something you want and thought to yourself, 'If I just had that one thing, I would be so happy,' and then when you got that thing, you only experienced an increase in happiness for a short amount of time? This is also because our minds are wired to habituate to the environment around us.


Hedonic adaptation is the process of becoming accustomed to a positive or negative stimulus such that the emotional effects of that stimulus are attenuated over time. In other words, after buying that one thing you really want, you immediately feel instant gratification. However, over time we adapt to those same items, so they stop bringing us the happiness we expected.


Leading American social psychologist Daniel Gilbert and colleagues came up with two terms that further explain the effects of hedonic adaptation: miswanting and impact bias. Miswanting is mistaken about what and how much you will like something in the future. At the same time, impact bias is the tendency to overestimate the emotional impact of a future event both in terms of intensity and duration.


Thus, we believe that these materialistic items will bring us more happiness the moment we get them, and we think that this feeling of joy will last longer than it does. This is simply untrue. The "stuff," the tangible items we buy, will not make us happy.


Stop comparing yourself to the Joneses or the Kardashians. Please start thinking about what it is in life that makes you happy and those in your life you care about and love the most. Use your money on these experiences with these people. Using money this way will make you happy.


So like I said when people say that "Money Can't Buy Happiness?" Well, "Yea, Whatever."


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Citations


Santos, Laurie. “The Science of Well-Being.” Yale Course on Happiness. https://www.coursera.org/learn/the-science-of-well-being. Accessed 20 Aug. 2022.


Shafir , E. (n.d.). Scarcity: Why having too little means so much. FDIC. Retrieved September 12, 2022, from https://www.fdic.gov/analysis/cfr/consumer/2013/papers/scarcity-why-having-too-little-means-so-much.pdf


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