Can money buy happiness? It’s the freedom to reach goals that adds value to your life

Posted on

Is the common saying “money can’t buy happiness” true? Research suggests that it isn’t, and that the opportunities financial security brings can deliver happiness and improve wellbeing.

This latest study refutes often cited research, which claims money could buy happiness but only up to a point. A 2010 paper written by psychologist Daniel Kahneman and economist Angus Deaton found happiness and income were only linked up to $75,000 per year. Up to this point, life satisfaction increased in line with income, but plateaued once earnings exceeded $75,000. The paper concluded that: yes, money can improve satisfaction, but it can’t improve emotional wellbeing.

Now, however, a newly published paper is disputing this.

New research finds money can buy happiness

While the 2010 paper utilised surveys, the new one uses data collected from an iPhone app called “Track Your Happiness”. At random intervals, the app will ask users about their activities and feelings. App developer Matthew Killingsworth has based research on these findings, which are now published in the Proceedings of the National Academy of Sciences.

The title “Experienced wellbeing rises with income, even above $75,000 per year” sums up the findings.

The paper states: “Higher incomes may still have potential to improve people’s day-to-day wellbeing, rather than having already reached a plateau for many people in wealthy countries. […] There is no evidence of an income threshold at which experienced and evaluative wellbeing diverged, suggesting that higher incomes are associated with both feeling better day-to-day and being more satisfied with life overall.”

In fact, while there is a slight dip in both experienced wellbeing and life satisfaction around $100,000, there is a general upwards trend, even as annual income reaches $500,000 per year, the first figure shows. The second figure highlights that as positive feelings rise, so, too, negative feelings fall in line with income.

Source: Proceedings of the National Academy of Sciences

So, if money does buy happiness, should you focus on increasing your income and the amount in the bank?

Value of assets vs value to your life

One of the things both research papers don’t examine is why wellbeing increases as income rises.

You may get some satisfaction from watching the balance of your savings account rise, but it’s often not the number itself that improves wellbeing. Rather, it’s the security and stability it provides. Knowing that you have a safety net to fall back on, for example, can deliver a huge boost to how confident you are about the future and allow you to enjoy the present.

A rise in income can allow you to devote more of your disposable income to the things you enjoy and help you take steps towards long-term goals. However, if you need to spend more time commuting and sitting in traffic every day, so you don’t have the freedom to enjoy the additional income, would it still improve your day-to-day happiness? Some may find they feel less satisfied with life despite having more money.

While the research provides an interesting insight, focusing on what’s important to you and how your income can help you achieve this is just as important, on an individual level, as your salary.

An increase in wellbeing doesn’t have to be tied directly to your income. A five-figure sum in savings and investments can help you prepare for unexpected life events, but that doesn’t mean you can’t achieve the same sense of security without this. A financial protection product, such as life insurance or income protection, that aligns with your priorities may deliver the same sense of wellbeing.

The process of financial planning helps you understand what your goals and concerns are, and then creates a long-term financial plan that addresses them. It’s about making your assets and income work in a way that reflects your priorities, whether that’s spending more time with family, exploring the world, or taking early retirement.

Rather than solely looking at the value of your assets, looking at how they can add value to your life can help you get the most out of them.

Please get in touch if you’d like to speak to a financial planner about how you can use assets to improve your quality of life.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

We aim to keep our clients up to date on interesting and relevant financial news.

You can sign-up to receive our monthly newsletter by email, even if you’re not yet a client. Sign-up using the form below.

Client testimonials

I have always found Black Swan to be caring and understanding of my quirky lifestyle. I always feel they try to get me the best returns while respecting my current needs.

Sally Muir

A client since 2011

We would be very happy to recommend the support and service we receive.

Valerie Locks

A client since 2010

I have always been completely useless regarding finance - thankfully our financial adviser is not! I've retired with far more than I ever expected and investments continue to grow safely. So - thank you!

Bernadette Jane Warner

A client since 2000

Very happy with the professional service I have received and feel a lot happier now with my finances put in order.

Martin Field

A client since 2011

Julie Cooper was recommended to me by a work colleague. She has been very helpful, professional and has explained everything well. I would definitely recommend her services to anyone else who are interested in a financial review.

Steven Rooke

A client since 2018

…Service has been first class.

Hugh Fells

A client since 2012

My face to face meetings with Rob Young and Jessica Lyons have always been very open and understandable. My questions have been answered clearly and I have left feeling that my financial matters are in good hands.

Sandra Jack

A client since 2000

[A] safe pair of hands in a complex financial world.

Gary Middlehurst

A client since 2003

A reliable company with good communication skills and good knowledge of the financial markets.

Alan Evetts

A client since 2014

Maureen Pembridge is a long-time trusted advisor to our family. The market might fluctuate but her attention to detail is consistent.

Linda Burnard

A client since 2000

I am pleased to recommend Julie as a trustworthy financial advisor. She explains financial jargon in plain language, and always listens carefully to my particular financial needs and has helped me make the best of my savings.

Carolann Samuels

A client since 2010

I have always been satisfied with the way that Black Swan has handled my account. And I have always found the staff very helpful whenever I need to call the office.

Robert Anthony Matthews

A client since 2012

An excellent personal service from a person I know and trust.

Michael Dalton

A client since 2010

I am getting a very good services from Black Swan, they have got my investments sorted out which was in a bit of a mess.

Roy Jakens

A client since 2012

A good, efficient team providing clear ideas to shape a winning strategy.

Adrian Michael Levenstein

A client since 2011

Black Swan is a company to be trusted, with friendly staff and professional advisors.

David Brian Jennings

A client since 2017

I have been with Black Swan for many years. I have never wished to change anything. They give a good straight forward service.

Martin Barrett Brooks

A client since 2010

Andy Peters has been invaluable in firstly combining several pension pots and then giving excellent investment advice. It has given us a great deal of comfort to know that our financial affairs are in such good hands.

James Guillum Scott

A client since 2014

I find my financial advisor easy to talk to and feel that she understands my lifestyle. She is always available for help when I need her and explains in words that I can understand.

Margaret Ena Glasgow

A client since 2000

Andy is a first rate Director, excellent communicator and leader.

Ross Perry

A client since

Black Swan Financial Planning and Andrew in particular, are very clever at working out how risk averse we are, and coming up with solutions that we feel comfortable with. We are happy in the knowledge that we can continue to enjoy a comfortable retirement. Andrew Peters is a very, very friendly person who is great to chat to and easy to deal with. He explains things very clearly in layman’s terms, and if we still don’t understand, he explains it until we do!

Alan & Jane Dyer

Clients since 2012

We have always found Rob [Young] to be very approachable and knowledgeable. We have every confidence in the advice given and feel comfortable with the decisions we’ve made. There are certain opportunities that we wouldn’t have known about if Rob hadn’t brought them to light, which makes the advice good value for money as far as we’re concerned.

Peter & Pauline O’Halloran

Clients since 2013

Rob [Young] is extremely knowledgeable. I knew nothing about the different types of trusts which will not only secure my income in retirement, but also leave a legacy for my children. I’m glad that I sought his advice when I did.

Sarah Wilson

A client since 2015

I am extremely happy with the service afforded to me by the company and my adviser Julie Cooper.

Geoff Coxell

A client since 2010

My wife and myself have been dealing with Black Swan for a number of years. We have met with different representatives from the company over the years and have found all very helpful in their own way. We met with James [Anderson] a few years ago and found him very helpful and knowledgeable. He keeps in contact with us on a regular basis. We find the Company information very helpful and we feel very secure with our finances.

Andrew Kirchen

A client since 2015

I have always found my adviser to be easy to contact, very professional in his approach, yet friendly and understanding. I have a sense of an experienced company behind him, really on the ball financially and with good standards.

B McBean

A client since 2011

Partner with the most reliable and experienced team of advisers

Enter your details & we'll be in touch to discuss your needs.
Alternatively, contact us directly and speak to a member of the team.





    Subscribe to our newsletter