However, what I think is most interesting about this study is that it found that if you exceed these thresholds, your life satisfaction and emotional well-being actually start to decline. Once you hit your ceiling, you start to focus on things like social comparison (i.e., how you compare to others) and getting more material gains (i.e., more money, more stuff). In other words, you are driven by the belief that others are doing it better than you, so you have to work harder to keep up, making your life less satisfying.

What is the connection between finances and happiness?

In a related 2023 study by psychologists Daniel Kahneman and Matthew Killingsworth, they pitted their opposing theories against each other in an adversarial collaboration. Opposite to see whether happiness does indeed level off at a certain level of income.

In 2010, Kahneman famously theorized that emotional well-being did not increase above annual income of $75,000, and a decade later, Killingsworth argued that it did. After surveying a new group of participants, they ultimately discovered together that while happiness can increase with money, there is a limit to how much happiness can be protected against it. United Nationshappiness.

If you’re already unhappy because of heartbreak, bereavement, clinical depression, or “other pain” (such as trauma or experiencing discrimination), money can only relieve your pain by up to $100,000 a year, but nothing more. There won’t be too much outside.

As Killingsworth shared these findings, “This suggests that for most people, higher income is associated with higher happiness…” . . [but the] The exceptions are those who are financially well off but unhappy.

For example, if you are rich but miserable, no amount of money will help. For others, more money is associated with greater happiness to varying degrees.

What do all these studies on money, happiness, and stress conclude?

What all this research tells me is this: First, if you don’t have enough money to meet your basic needs anyway, more money is definitely the way to go. This always reminds me of a classic friends Ross says, “I’ve never thought money was an issue,” to which Rachel angrily responds, “That’s because you have it.”

When you have enough money, everything is no longer a problem. However, it can shift the focus to your other problems. As Vertug says in his book, “Money can solve money problems; this Solve life problems.

As I said at the beginning of the book, there is a reason there are so many miserable millionaires and billionaires in the world. I meet many people in the FIRE community who have successfully amassed seven figures in savings, only to find that they are still unhappy in early retirement, and for good reason.