What If Money CAN Buy Happiness?

Money can’t buy happiness…but it CAN buy cows, right? And cows produce milk, and milk makes ice cream, and ice cream makes you happy.

This is the type of stuff I think about when my brain is in “relaxation” mode while eating Huckleberry ice cream at my favorite Montana resort, Paws Up.

Whether you realize it or not, happiness really is a BIG deal.

Even our United States founding fathers thought enough of it to make it one of the inalienable rights:

  • life
  • liberty
  • the pursuit of happiness

Now whenever we say something like, “Money can’t buy happiness,” we understand it to mean, “and other forms of wealth can’t buy happiness either.”

This would explain why a billionaire is miserable in his 30,000 square foot mountain chalet.

However, as the humorist Leo Rosten once observed, even though money may NOT be able to buy happiness, “neither can poverty.

But is money really that important to make happy people?

Related article: 117 Inspirational Quotes About Money And Happiness

Let’s take a look at what the new research says…

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How Much Money Makes Us Happy?

There’s plenty of studies that’s been performed in order to find out how much money it takes to make us happy.

Actually, money is important to bring us happiness, but only to a certain point.

In 2010, Nobel prize winner psychologist Daniel Kahneman and economist Angus Deaton (both from Princeton University) released “the” original study demonstrating that happiness increases in individuals as their annual income went up.

But only up to $75,000 as it seems this is the ideal income.

Incomes ABOVE that amount, the study found, were able to buy “satisfaction” but NOT real happiness. 

Isn’t it strange that we’re led to believe that as our salary increases, we’ll be happier?

Why is that?

The study concluded that once you have enough money to meet your basic survival needs (food, shelter, etc.), then you can start satisfying higher needs such as security and self-esteem.

“Financial peace isn’t the acquisition of stuff. It’s learning to live on less than you make, so you can give money back and have money to invest. You can’t win until you do this.” – Dave Ramsey

If you don’t have enough food to eat, then it’s going to be hard to think of self-development while everyone around you is living the good life.

But once we’re past meeting the basic needs, how much higher incomes do we require, to find greater happiness levels and fulfillment?

Maybe the connection between financial wellbeing and emotional state-of-mind is best illustrated by an old story about a poor Mexican fisherman and a wealthy American tourist.

The Mexican Fisherman

Here’s a shortened version of The Mexican Fisherman story….

The fisherman described his rather simple life like this: “Every day I sleep late, fish a little, play with my children, take a siesta with my wife, stroll into the village each evening where I sip wine and play guitar with my amigos. I have a full and busy fulfilling life.”

The American frowned,  “I have a Harvard MBA and could help you have a better life. You should spend more time fishing and with the proceeds you buy a bigger boat, and with the proceeds from the bigger boat you could buy several boats, eventually you would have a fleet of fishing boats! Instead of selling your catch to a middleman you would sell directly to the consumers, eventually opening your own can factory. You would control the product, processing and distribution. You would need to leave this small coastal fishing village and move to Mexico City, then Los Angeles and eventually New York City where you will run your expanding enterprise.”

The fisherman asked, “How long will this all take?”

To which the American replied, “About 15-20 years.”

“Then what?”

The American said slowly, “Then you would retire. Move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take a siesta with your wife, stroll to the village in the evenings where you could sip wine and play your guitar with your amigos…


Happiness and Income

So now what conclusions can we draw about money, happiness and our emotional wellbeing?

#1. Happiness is a BIG deal in life. Though we may define it differently, the pursuit of it is what drives most of us.

#2. Some “ice cream” can make you happy and bring greater life satisfaction. (It does me) But too much can also make you sick.

#3. Ultimately, it isn’t money that brings greater happiness. It’s the cows. (By “cows,” I’m referring to the material assets, opportunities and experiences that require money for us to be able to enjoy.)

Get clear on what the “cows” are in your life…the things that contribute to your deep happiness.

Once you’re clear about this, you can steer your money in the right direction.

I spoke to a new Passive Investors Circle member (last night) that was a year behind me in dental school at LSU.

He told me that he loved what he did, made plenty of money, was living a great life but….he realized now, after basically having it “all,” the most important thing he valued most was TIME.

Related video:

Let’s shed a little light on how you can use “cows” to bring you more happiness.

Die With Zero

Die With Zero

Last year I read the book, Die With Zero written by a former hedge fund manager.

His overarching question was this:

Are we going to keep working long hours in order to put away money that we’ll NEVER get to spend because we’re ALWAYS working?”

The main point the book is trying to get across is that we should start focusing on creating lifelong memorable experiences once we’ve saved enough to fund retirement. 

If we stay focused on always striving for salary increases, you’ll NEVER get around to enjoying life. 

The book’s philosophy is centered around 9 rules with one of the more important ones:

Rule #1: Maximize positive life experiences

The author states that people don’t realize when they’re running a race they can’t win, ( rat race) their main focus is on making money to buy stuff that has little to no value.

And instead, we should focus on experiences.


Because earlier research shows that most people agree that it’s NOT money that makes them happy but it’s experiences shared with others that do. It’s these relationships with people that have more importance than material things (NOT higher income levels). 

It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.” – Robert Kiyosaki

Money Is Everything

The Physician on Fire (Pof) teaches us that there’s a possibility that Money is Everything. He notes that people do seem to care about money (most want more of it).

Yet, he doesn’t see many people making the wise and sometimes difficult choices that’ll help them achieve financial independence.

You should care about money

PoF also recommends that we should care about money especially if we have kids. We have two teenage boys and want them to be smart with money and agree with PoF in that avoiding the topic is not going to get the job done.

If more people cared about money, then they’d have a surplus which allows them to afford to be more charitable. They can do this without damaging their ability to live the life on their own terms.

How to care about money

It’s hard to care about anything unless you first understand it better.

Why do you think there’s infomercials showing us children starving in Africa? They know that if someone understands their poor situation better, then we’re more likely to donate to their cause.

It’s no different when it comes to money; you must first understand it better.


Learning the basics of how money really works is a start if you care at all about it. The first step I recommend those with larger incomes to take is to learn HOW they make money.

“An investment in knowledge pays the best interest.”  – Benjamin Franklin

The emphasis is on the word “HOW.”

HOW you make money instead of how much money you make.

That takes a profound mindset shift.

You maybe saying, “Jeff, I know how I make money. I’m a dentist, physician, engineer, NFL player, etc.” 

I’m not talking about that. What I want you to get is the difference between where your money is coming from….YOU!!

Related article: What’s the Difference Between Earned vs Unearned Income?

Unfortunately, most professionals NEVER never think twice about how fragile their “earned” income can be until they can’t work (injury or sickness).

Nor do they realize that there’s a BIG difference in the way it’s taxed versus other income types. 

If they realized that earned (active) income is the most highly taxed income there is, then they might think twice about buying the $90,000 suburban.

The #1 money drain for most high-earning professionals is TAXES.

With our progressive tax system, you’ll pay your fair share, but you should do what you can (legally) to pay as little as possible. 

For me, real estate is the best way to take advantage of the tax benefits the IRS gives us.

How Does Income Affect Happiness?

There’s 2 main ways that income can impact our happiness:

  • adaptation
  • social comparison


If you get a pay raise, let’s say $1,000/month, more than likely you’re going to be excited…temporarily.

Once you get “used” to this additional money, you’ll begin to want more as you’ve reached a “happiness plateau.”

When you first start making any type of money, your focus is only buying the basics to fill your daily needs.

When I was a broke resident, my wife (hygienist) worked full time. Anytime we’d go out to eat, we’d try to do it for $20 or less including the tip (ahhhh, the good ‘ole days).

“Whoever said money can’t buy happiness simply didn’t know where to shop!” – Bo Derek

Grocery shopping was no different. Our standard of living was get the generic products and then after I started my career, the products and services we bought would be better (cars, house, eating out, etc.).

One thing I’ve noticed is that people are rarely every satisfied with what they have if they see that there are better things available.

God equips us with the ability to adapt in order to survive. At birth, we’re given an evolutionary tendency to compare ourselves to other people whether we want to or not.

This initial “hard-wiring” is based on a survival level to allow us to see how we compare and where we stack up next to everybody else.

And it seems that this spills over when it comes to our wants and needs as well.

Social comparison

 One of the major problems these days are professionals that are experiencing “burn out” early in their careers.

Doctor burnout is a major issue affecting over 50% of physicians.

One of the contributing factors to this “burnout” syndrome has to do with social comparison.

This is where the “keeping up with the Joneses” mentality comes from where people evaluate their income by comparing it to others.

Essentially, how you rate yourself, whether you feel like you’re happy or not, is entirely dependent on how you see other people doing around you and what they have.

This is why we evaluate our happiness by how much more we have compared to other people.

It’s critical to know this is what’s happening for you subconsciously, so that you can override it. If not, then you’re going to always be tempted to buy things.

So no matter what type of house or car you own, you can NEVER be content by comparing yourself to others. You’ll continue to have a sense of dissatisfaction which makes you vulnerable to making financial mistakes.

For this reason you think you must ALWAYS earn more. It’s a never ending cycle. 

Is Happiness Dependent on How Much You Make? 

Think about when you first started out in your career making money. More than likely your income has increased but did it result in an increase in your level of happiness? Are you any happier now versus then?

Or is there something that you’ve been “needing” yet have never obtained it?

Whether your realize it or not, happiness is relative to each person. And it strictly depends on the meaning you give to it.

I like Halloween!

Once you understand what REALLY makes you happy, then you’ll be able to determine how to use your income to improve your overall well-being.

For most of us (myself included), it may take years of working and experiencing life before this can be accomplished.

Research shows that happiness can be divided into two subjective aspects of well-being:

  • life evaluation
  • emotional well-being

Life evaluation

Life evaluation is simply what you believe you have in life including your income. This evaluation assessment is where the belief that ‘money can buy happiness’ enters your brain. 

What you bring in (earned and sometimes passive income) allows you to purchase wants and needs.

So for this reason you begin to measure your success and happiness by what you can afford

Emotional well-being

Your emotional well-being stems from the quality of your life. This is satisfied by the things you like to d (an actual emotional experience) which give you the most emotional satisfaction.

I love to play tennis, work out, and take long walks with my wife and dog.

Doing these on a daily basis brings me as much happiness as anything I can buy. 

Even if you have a high income, it doesn’t guarantee happiness.

If you’re working all of the time and never get to spend quality time with your spouse and kids, then your emotional well-being can suffer.

Money is only a tool to help you achieve happiness such as using it for memorable trips, nice home and other activities that can enrich your life. 

Often it’s the things that money can’t buy that brings us the most happiness.

Purpose is More Important Than Money

Research shows if it’s happiness that you want, don’t chase a high salary. Instead, it’s more important that you get a job that gives you a sense of meaning or purpose.

As a personal example, I’ve found that writing and teaching others is very rewarding. Whenever I’m in the act of doing it, it really doesn’t feel like “work” to me. 

Studies show that having a purpose to pursue makes you both more productive and happier at the same time. 

A 2018 survey stated that 9 out of 10 people said they’d trade 23% of their future earnings to have a job with meaning. If that’s the case then why don’t more people switch to lower-paying yet more meaningful jobs?

Two words: Golden Handcuffs

Related article: Golden Handcuffs: The Ultimate Doctor Restraint

It’s way too easy for doctors and other high-income earners to get trapped in these so called “golden handcuffs,”  which occurs when you feel trapped in a job you hate because it’s paying a lot of money.

This is especially true for doctors. Think about it. Doctors spend years sacrificing their time which causes them to both go into serious debt and start off later in life. 

Once they start making real money, they’re trapped in a job that they sometimes begin to hate yet can’t do anything else.


What else can they do to pay off $400K of student loans? Work at Starbucks?

I don’t think so. 

The good news is that anyone can make their job more meaningful by using their own personal strengths into what they do every day. If they naturally love to help, then they can think of ways they can lend a hand to others at the office.

Bottom Line

The way in which you spend money is critical to your happiness. We learned that buying things won’t make us as happy as we’ve been led to believe. This is due to the fact that material purchases hang around, so we get used to them. 

We also learned the main things that contribute to happiness are:

  • spending money on personal growth
  • contributing to society
  • connecting with people 
  • experiences

One last area that will certainly make us happier – buy yourself time. 

This can include things such as paid for time-saving services:

  • ordering takeout
  • maid service
  • outsourcing someone to run errands

Speaking of time. There’s NO better way to buy yourself time that with the creation of horizontal (passive) income. 

If you’re ready to get started, join the Passive Investors Circle today….

Join the Passive Investors Circle