Money and Happiness: What Research Tells Us

James Lee |

As a financial planner, I work with clients who are looking to improve their financial situation in order to achieve greater happiness and well-being. However, the relationship between money and happiness is complex, and there is no one-size-fits-all answer to the question of how much money is enough. That's why we turn to research like the Harvard Study of Adult Development, which has provided valuable insights into what truly makes us happy and fulfilled.

The study, which has followed the lives of hundreds of men over a period since 1938, has identified several key factors that contribute to a happy and fulfilling life. Here are some of the key takeaways:

1. Social Connections Matter: The study has found that people who have strong relationships with family, friends, and community are generally happier and healthier than those who are more isolated. I often urge my clients build and maintain social connections by encouraging them to participate in community activities and to prioritize time with loved ones.

2. Purpose and Meaning are Key: The study has also highlighted the importance of finding a sense of purpose and meaning in life. People who have a clear sense of purpose and who feel that their lives have meaning are generally more fulfilled and happier than those who do not. During the financial planning process, I help clients identify their values and priorities, and work with them to create financial plans that align with their goals and sense of purpose.

3. Financial Stability and Security Matter: While money does not necessarily lead to greater happiness, the study has suggested that financial stability and security are important for overall well-being. People who have enough money to meet their basic needs and to feel secure tend to be happier than those who do not.  A financial plan allows clients to feel secure and in control of their financial future.

4. Avoid the Pursuit of Wealth for its Own Sake: Finally, the study has shown that the pursuit of wealth and material possessions can actually detract from happiness, as it can lead to stress, anxiety, and a lack of social connection. I strive to help clients develop a healthy relationship with money, and work with them to create a financial plan that aligns with their values and goals, rather than simply chasing after more money for its own sake.

It's important to remember that money is just one piece of the puzzle when it comes to happiness and well-being. By focusing on building social connections, finding purpose and meaning, achieving financial stability and security, and avoiding the pursuit of wealth for its own sake, we can help our clients create a fulfilling and happy life that goes beyond their bank account balance.