Some see money not just as the path to nicer, more luxurious things, but as the ultimate psychological fix. Unfortunately, when they “arrive” they often realize the destination looks nothing like it did in the brochure, that the grass isn’t greener.
Julie worked relentlessly. She put in twice the effort of everyone around her, sacrificing hours that could’ve been spent with friends or family to climb the ladder and secure yet another higher salary. This Thursday, she will finally be looking out the window of that coveted corner office.
On paper, Julie has it all. Her resume is impeccable. She’s nearly financially independent, and has the ability to buy the highest-quality, spare-no-expense version of everything, every time.
But it’s cold and lonely at the top, and it turns out that Julie has a fear of heights. She has all of the toys, but very little fulfillment. Her Roth is maxed, but her relationships feel shallow, the days long, and her life empty. Julie has traded her most precious resources for a view she’s frequently too tired to enjoy.
Can money provide a happier, healthier, and more fulfilling life? It often depends on how you spend it:
It’s Complicated
Money and happiness are certainly intertwined, but the relationship is more complex than we might originally assume. Once our basic needs are met, and we reach a certain level of comfort and security, we get more enjoyment from what we buy when it’s personalized. What fulfills one person won’t fulfill everyone. While some find more joy in traveling to exotic destinations, others prefer staycations, or visiting loved ones. It may seem obvious, but it’s worth stating outright: to be happy, we have to understand what we value, enjoy, and want in our lives (ranked by priority).
Shattering the Satisfaction Ceiling
In 2010, Nobel laureates Daniel Kahneman and Angus Deaton conducted a groundbreaking study that explored the relationship between money and life satisfaction. It measured two key variables: life evaluation (how satisfied participants felt with their overall circumstances) and emotional wellbeing (their daily mood).
The data showed that while people’s sense of success grew alongside earnings, daily mood (how much they laughed, felt stressed, or experienced joy) leveled off once household income reached $75k. The biggest takeaway was that although financial stability may have brought fulfillment, affluence did not. This $75k happiness benchmark was widely accepted for over a decade (I’ve always wondered why it was never adjusted for inflation).
That study remained the standard until 2021, when Matthew Killingsworth’s research, which used real-time smartphone tracking data, yielded a seemingly contradictory finding. He was able to capture how people felt in exact moments, as they were experiencing them, and found no plateau. In his findings, happiness continued to rise alongside income, even well past $200k.
Kahneman and Killingsworth teamed up in 2023 to dig deeper, hoping to shed light on why their studies produced different results. After conducting a much larger and more comprehensive study, they discovered a previously hidden but crucial factor in this relationship: our internal baseline.
- Those Who Plateau: For the least content 20% of the population, happiness improves as income rises, but only to a point. The benefit fizzles out at about $100k, which is essentially the original “basic needs” figure of $75k (finally adjusted for inflation). Beyond this threshold, more money didn’t alleviate discontentment.
- Those Who Don’t: For the majority of people, who were already generally content, wealth influence on happiness had no limit. In fact, satisfaction increased faster after they crossed the six-figure threshold.
Ultimately, this body of research suggests that a higher net worth isn’t a guaranteed ticket to joy, but rather a tool that interacts with our mindset. This echoes Morgan Housel’s observation that:
“All happiness in life is just the gap between expectations and circumstances. The person who has everything but wants even more feels poorer than the person who has little but wants nothing else. How could it be any different?”
Money can certainly change our circumstances or shield us from certain types of stress, up to a point. When someone already has a sense of what fulfills them, money is a catalyst for joy. But for those whose expectation has no limit, wealth’s ability to increase satisfaction was stifled.
Happiness Inhibiting Habits
The way we perceive material wealth can enhance or become a barrier to our happiness. For instance, working endlessly in an attempt to achieve a desired level of wealth might result in neglecting physical health, relationships, or leisure activities, which are all important factors for life satisfaction.
People can also fall into the habit of, consciously or not, putting off the things that bring them joy when other priorities get in the way.
“When I get a promotion, I’ll have time to ________.”
“Once I’ve fully funded my children’s education, I’ll ________.”
The problem is, for many, every time a goal is reached a new one is put into place, and that blissful tomorrow never comes.
Spending too much can hurt happiness in a few key ways. It turns out making more money does not change our spending habits on its own. People who spend beyond their means or scrape by, living paycheck to paycheck, are often surprised when having a higher income doesn’t lead to greater savings. It may also lead to clutter and disorganization at home, turning what should be a calm and relaxing environment into a source of stress.
Underspending is another barrier to contentment. Fulfillment, to some degree, stems from balancing what we save, spend on others, and spend on ourselves. Extreme frugality, where money is held at the expense of nutrition, preventative medical care, or other forms of personal neglect has a high long-term cost to both health and happiness.
Spending for Fulfillment & Fulfilling Spending
Since impulsive buying can bury us in debt and extreme frugality can lead to neglect, the key isn’t how much money we have, but how intentionally we spend it. The way we allocate money has as much influence on happiness and contentment as how we earn it.
Once we’ve moved past the habits that inhibit our happiness, it helps to stop viewing money as something to spend and start seeing it as something to deploy.
There’s considerable evidence that a few specific types of purchases bring more meaning to our lives:
Embrace Anticipation
In an era of quick checkout and overnight delivery, we’ve largely eliminated the need to wait even for products traveling great distances. Modern spending has become the equivalent of a series of “sugar spikes” followed by an inevitable crash. By intentionally slowing the process, we move beyond the endless scroll-buy cycle to reclaim one of the most valuable dividends of consumption: anticipation.
Adding an intentional delay back into your purchases provides two important benefits upfront and two financial benefits on the back end. Upfront, it offers an escape from the drudgeries of the moment into a rosy, impossibly perfect image of the future—one that doesn’t include delayed flights, lost luggage, or rained-out excursions.
On the back end, it offers a practical financial benefit by decoupling the cost from the experience. When you pay for a trip months in advance, the money is long gone by the time you head to the airport. If the reality of the trip hits a snag, you can focus on the issue without tacking on additional frustration over the price tag.
Read more about Savoring the Wait: The Psychology of Intentional Delay
For Big Returns, Go Small
When we come into money, receive a refund or bonus, our instinct is often to splurge on a luxury we wouldn’t typically buy, like the latest technology or new furniture. Unfortunately, we’re wired to regress to the mean. In practice, it means our new belongings, especially those we use every day, quickly lose their luster and are taken for granted. Perhaps we subconsciously know this is coming, otherwise why would so many people declare, pre-purchase, that they’re off to ‘blow their money’ on a new big-screen TV?
We can often bypass this response by choosing frequency over intensity, opting to create a cozy ritual instead of a single large purchase. Spending a little extra for better coffee beans and a few tools, like a pour-over or press, can transform an ordinary morning routine into something truly special. By saving some things to use intermittently or seasonally, we can keep experiences fresh.
Beyond adding a touch of luxury here and there, a small(er) purchase strategy can be used to invest in yourself and propel you toward your top goals. Just a few dollars spent on a Taylor Swift track might be enough to put the pop back in your step, transforming your morning run from ordinary to extraordinary (ensuring you kick your day off on a high note). Breaking large sums up to fund these types of purchases will increase what Manisha Thakor calls “joy per dollar” in her book MoneyZen. This tactic for buying happiness holds psychological depreciation at bay while keeping the spark alive, so that you can focus on your next ritualized, varied, or incremental micro-investment.
Buy Experiences, Not Things
In general, spending money on experiences, going new places and trying new things, offers more satisfaction than owning material possessions. We’ve all experienced the adult version of the child who sets aside the expensive new toy they were dying to have to play with the box.
Beyond that, material goods tug at our instinct to measure our worth against others, to try to keep up with those who appear to be ahead of us. Experiences, on the other hand, are uniquely ours. They create memories that we’ll be able to revisit for the rest of our lives.
Unlike physical goods that depreciate and become clutter, shared experiences become part of our history and our identity. They’re opportunities to deepen our connections. And, even if they aren’t all they were cracked up to be, they become funny stories we can tell for years.
Read more about Prioritize Experience: Invest in Wonder
Health is the New Happiness
Health is often invisible—until it fails. Many people ignore their physical needs to focus on building a higher net worth. They don’t realize how much harder it will be to maintain or recover their strength and energy as they age. Wealth is only valuable if we are able to enjoy it. When we’re exhausted, distracted, stiff, or sore, money quickly becomes secondary to discomfort. Although people are living longer, health has not kept pace, creating a growing divide between lifespan and healthspan that money alone won’t close. Bridging that gap requires a commitment to fitness, nutrition, and sleep. Because our culture often discourages these pursuits, it takes a willingness to constantly and consistently swim upstream to maintain them.
Wellness is foundational to fulfillment, now and in the years ahead. Physical activity and restorative sleep regulate the neurotransmitters and endocrine responses responsible for mood, focus, and emotional resilience. Skeletal muscle mass and cardiovascular health are leading indicators of functional independence—the difference between a life of continued engagement with the world and being prematurely sidelined.
Since the way we feel stems directly from our biology, and these three areas influence our internal chemistry, spending on them is potentially the most direct path to purchasing a better life. Incidental purchases like a kitchen scale, yoga mat, or eye mask can lead to dramatic shifts. As can investing in personal training, a healthy meal delivery service, or a new mattress. How much you spend, and on what, matters far less than whether what you’re getting reinforces your identity—who you are and who you’re becoming. This means utilizing tools that support your unique priorities, whether that involves training for a triathlon or maintaining strength and flexibility as you age. Our purchases in this area enhance wellness, while helping us create sustainable systems to discover joy in the journey, the results, and the daily experience.
FUND CLOSE CONNECTIONS
Happiness won’t be found on a spreadsheet or in a budgeting app. It’s found in our deepest conversations and at our kitchen islands. We occasionally spend so much time and energy optimizing our savings rate that we miss opportunities to optimize our life. You already have the blueprint, and you understand the strategy. It’s time to cash in that dividend and start focusing on the actual, messy, wonderful returns of a life brimming with love. The relationships we cherish nourish us, ground us, challenge us, and evolve alongside us. When we spend money to facilitate time with those we care about, we aren’t just funding the flight or picking up the tab. We’re turning cash into memories that deepen our bonds, build shared history, and define who we are. It’s the ultimate trade: converting cold cash into warm, vibrant connection.
Emily Dickinson hit the nail on the head when she described the people closest to us as our “true estate”, recognizing their roles as both anchor and mirror. We often try to define ourselves in isolation, but that perspective is inherently limited. We’re largely blind to our own habits, quirks, and patterns until they’re reflected in the eyes of those who know us best. They act as our personal editors, pointing out that we may be drifting off course and helping us claim the parts of ourselves we’re unable to see. These dynamics are a data-driven reality backed by eighty-four years of research. Robert Waldinger and Marc Schulz, who led the Harvard Study, put it plainly: “Good relationships keep us healthier and happier. Period.” When we feel truly loved, accepted, and supported, we aren’t just more fulfilled—we’re resilient, ready to weather the inevitable storms of life.
Our social interactions are crucial and funding them is one way to foster intimacy. While money cannot buy connection directly, it can produce environments where it takes root—the swing set in the backyard, a cozy spot to cuddle up in front of the fireplace, or the pool table that’s always in use during holiday gatherings. It affords priceless moments, like revisiting the ice-skating rink where you had your first kiss on your tenth anniversary, or buying concert tickets so that you and your best friend can reminisce about the songs that defined your teenage years. We tend to focus on tangibles from our past (the photos, the gifts, the trips) but what we bought often becomes clutter, gathers dust, or depreciates. Our time spent with friends and family, on the other hand, is an investment that compounds in ways a portfolio never could. While money gains value, our relationships gain meaning. I’m all for reaching financial independence and achieving autonomy, but it begs the questions: What is money ultimately for? Are you amassing an estate, or are you forging a legacy?
Trade Your Money for Time
True wealth is measured by the ability to reclaim the one resource we cannot replenish. Provided we’ve been investing, there will be a specific tipping point when the value of the hours put in begin to eclipse the value of the money earned. Recognizing this moment is key to shifting from a life of maintenance to a designed life. By viewing spending as a skill rather than just a transaction, we can shift our focus to intentionally “buying back” our own time.
One way to free up space in our schedule is to identify tasks such as mundane chores, administrative logistics, or technical execution to delegate. Trading tasks you find tedious that others could easily accomplish for the time to do what only you can do, what you most want to do, and what you do best protects your primary priorities.
Arguably the best thing money can buy, in the grand scheme of things, is freedom. It has the power to support your goals, dreams, and desired lifestyle. Allocated wisely it allows us to align our daily hours with our core values. Wealth provides the opportunity to walk away, eliminate “must-dos”, and add more meaning to our days.
Read more about Trading Dollars for Days: The Art of Buying Time
Passion, Purpose, and the Pursuit of Happiness
Deepening our personal relationships, improving our health, learning new skills, traveling, or taking up new hobbies all come with financial considerations. Having time to dedicate to activities that align with our personal values and nurture our relationships gives us a greater sense of purpose. Regardless of our means, when we allocate our finances in ways that build security, we can buy more time (our most precious resource). We are free to invest in those habits which contribute the most to our happiness and wellbeing.
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What to Read Next
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When Financial Progress Hasn’t Brought Fulfillment
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