Money & You: 5 Reasons Why Cash Is Not The Key to Happiness

“Money cannot buy you happiness.”

I hear that so much amongst my social circle now that I’m secretly convinced it’s the only way my friends can keep sane in this horrible economy.

But there just might be some truth to that saying! While money has the power to open opportunities, it also comes with certain pitfalls.

Here are 5 reasons–some proven by psychologists–why money does NOT make you happy:

A. The Dollar Effect

University of Minnesota psychologist Kathleen Vohs conducted several studies and found that simply glimpsing dollar bills makes people less generous and approachable, and more egocentric.

If looking at money can make someone less generous, then it’s no surprise that American families who make more than $300K a year only donate 4% of their incomes to charity.

B. You lose the ability to enjoy things

Researcher Jordi Quoidbach reported in the August 2010 issue of Psychological Science that having more money inhibits our ability to enjoy the things we buy with money. The researchers believe that this happens because once a person enjoys the luxuries of the world, they stop enjoying the little pleasures life has to offer.

For example, once you eat authentic Italian pasta with truffle shavings, you forget the deliciousness of the Olive Garden.

I think back to when I was 5-years-old and opening an art set on Christmas morning made me SO happy. If I received one now, I’d probably chuck it to the side. My expectations have since increased and, as a result, I lost the ability to enjoy the simpler things–and I’m not even rich!

C. Money is relative

How money makes you feel is TRULY relative. I have friends who started making $150K fresh out of college and when they inadvertently show off, I feel like crap.

I have other friends who are incredibly broke and around them, I feel grateful for what I have.

D. You never have enough money

My dad always narrates the story of when he and his other Indian immigrant friends came to the United States.

They all vowed to make $50,000, work for 5 years and and move back to India. That day came pretty quickly for them and by that point their goal had changed: they no longer wanted to move back to India, but they said they would be happy if they made $75,000.

Now, all of his friends make more than $75,000K, but none of them are as content as they predicted. Why?

When you make more money, your expenses increase. For instance, you get a raise and now can qualify for a house. You decide to buy the house, but now you have a mortgage. The more money you have, the more you spend.

E. Materialism does not equal Happiness

That’s a shocker. I understand that if you don’t have good friends, then money can’t buy happiness. But I still think it can help.

A study by Leaf Van Boven from the Unviersity of Colorado and Thomas Gilovich from Cornell University tested the correlation between materialism and happiness only to find that people were happier when their purchases provided an experience (e.g., movie tickets, concerts, traveling) as opposed to materialistic pleasures.

At the end of the day, I agree that money can’t buy you happiness. But I also believe it can get rid of one obstacle PREVENTING you from happiness. Money is a major issue for many American people and families and having a whole load of it would eliminate all the stress caused by needing to pay credit card bills, mortgages, etc.

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