Can Money Buy Happiness?
We’ve all likely heard it before: Money doesn’t buy happiness.
Or… maybe it does up to a certain income?
Or wait… didn’t a new study say money does buy happiness?
So, what’s the truth? Would you finally be happier if only you made more money?
The short answer: Yes—and no.
Here’s why:
In 2010, a widely cited study found that happiness rises with income but levels off at around $75,000/year in the U.S. Below that point, more money clearly correlates with greater well-being. But above that, the returns seemed to plateau.
Then in 2021, another major study contradicted that finding—showing that happiness can continue to rise well beyond the $75k–$80k range, even into the six figures and above. Higher earners, on average, were indeed happier.
So which study is right?
Actually, both. The key lies in how we define happiness and in who we’re talking about.
What the research really shows:
No, money doesn’t “buy” happiness, at least not that simply.
Yes, money is correlated with happiness, but its effect diminishes after basic needs are met.
Below a certain income threshold, money reduces stress and increases day-to-day happiness.
But for people already struggling emotionally, additional income may not help as much even well into the six figures.
For many people, however, happiness continues to rise (slowly) with income, even beyond $200k.
Yes, money can boost life evaluation (enduring happiness) more than it boosts mood (fleeting happiness). In other words, it may not make your day better, but it might make your life feel more satisfying.
So how should we think about money and happiness in practical terms?
Here are a few key insights from positive psychology:
Know the “hedonic treadmill.” We adapt quickly. That new car or raise? It brings a temporary bump, but then it becomes the new normal. Worse, we often compare upward, now measuring ourselves against people with even more. I’m not saying don’t buy the car or treat yourself after a promotion, but know the emotional payoff is probably smaller and shorter than you think.
Don’t let money crowd out what matters most. Relationships, purpose, and meaningful experiences are far more predictive of well-being than income. Some of the best things for your happiness—being in nature, moving your body, spending time with people—are free.
There are ways money can support happiness:
Spend on experiences, not just things.
Spend on others, not just yourself.
Spend to buy time—for example, outsourcing chores to free up time for rest or things you love.
Spend to meet your psychological needs: autonomy, mastery, connection. That might mean taking a class, volunteering, or throwing a party for a friend.
There are, of course, broader factors, like income inequality, cost of living, and systemic barriers, that shape how money impacts well-being. But the core takeaway is this:
More money can help, especially when you don’t have enough. But beyond a point, it’s not about how much you earn. It’s about how you use what you have.
Because happiness isn’t something we buy. It’s something we build.
