More money is always better – isn’t it?

This question can be answered scientifically with the so-called paradox of prosperity. Money has a diminishing marginal benefit. Decreasing marginal utility is a bulky economic term. This term only says that from a certain level, an additional dollar creates less benefit.

And where is the truth now? How important is money to your happiness?

Since you have probably never hit the lottery jackpot, you don’t necessarily have the opportunity to compare. And as long as you have not had the experience yourself, you will probably think like most: “Of course, money alone does not make you happy … But it makes life a lot easier!”

And you’re not entirely wrong with that either.

But it’s not that simple … Because of course there are still some questions:

Let us take the knowledge gained so far in investigations as a basis.

Up to what income or wealth does happiness increase through money?

Earning more money increases happiness, but only up to a certain limit. Various studies have shown that a higher income makes us happier until we can regularly satisfy our basic needs. That means until we can easily pay our rent, our fridge is full, and we can take care of our health. In the pyramid of needs, the lower two levels, i.e., the physiological needs and security needs, must be met. To be satisfied, a net salary of 60,000 euros a year (or an average of 5,000 euros per month) is enough for a comfortable life. This means that the quality of life and the feeling of happiness through money only increase up to this value.

This limit is rather high because, depending on living conditions, you no longer have to worry about money, even with 3,000 or 4,000 euros net per month.

For the sake of completeness, let’s consider the case that no more money should be earned from active work, but that enough income is available from existing capital. Let us stay in the middle of the monthly earnings that are called to be happy, namely 4,000 euros. With 1.5 million euros in assets, you would be on the safe side to receive 4,000 euros in monthly net income from capital gains. If you want to use up the capital overtime to get these monthly amounts, just under a million is enough for about 40 years. A 40- to 45-year-old today could be left with these assets until the end of his life, especially since there is still a certain payment from the statutory pension fund on top from around 70 years of age.

Ok, let’s stick to this: As soon as someone has enough money available monthly so that they don’t have sleepless nights because of their basic needs, they have already achieved a feeling of happiness that little or little more can be increased with more money. Can higher-income still ensure that there is more satisfaction differently?

The British and US economists Angus Deaton and Daniel Kahnemann (Nobel Laureate in 2002) also stated the following in addition to the already mentioned limit of around 60,000 euros per year: One of the biggest obstacles to happiness is the feeling of not being able to do anything useful (anymore). Therefore, for example, unemployment is a trigger for misfortune for many.

Regardless of the level of income and wealth, one of the greatest drivers of happiness is something useful for other people to do. One of the results of various surveys is that well-off people often work more towards intangible goods. On the one hand, this can be a famous trip around the world or learning a new language, even in old age, or just a commitment to other people in this world who are not doing so well. 

Who has more than others “feels happier.”

The following result is also interesting: Those who see themselves relatively better in comparison to their neighbors, acquaintances, or work colleagues feel more happiness.

Fittingly: In a study at Harvard University in Massachusetts, students should choose between two possible scenarios: in one they earn $ 50,000 a year, all other people only $ 25,000. In the other scenario, they get $ 100,000, but the others get $ 250,000. The majority of the students chose the first option. Better to have much less money than to be poorer than other people.

So it is good for general satisfaction if the social differences are not so big if one does not do so badly compared to others. “According to a study of the Aarhus School of Business, people are all the more unfortunate, the further they are politically left. They suffer particularly from social inequalities, even if they are not affected. “

Ultimately, nobody forces us to constantly compare ourselves to others. We developed this habit ourselves because we have acquired it from society throughout our lives. 

How can you be proactively happy with a lot of money?

The previous knowledge of how happy financial prosperity can make was rather mixed. The question now is, what can you do specifically to feel happier?

I’ve never seen a bag of money score a goal.
– Johan Cruijff

You don’t have to own money to be worthy.
– Gandhi

A drop of tenderness is more than money and power.
– Buddha

A rich man is often just a poor thunder with a lot of money.
– Onassis

Having enough is happiness; having more than enough brings bad luck. That goes for all things, especially money.
– Lao Tse

You can buy a very nice dog for money, but not the tail wagging.
– Josh Billings

Money alone has not made anyone rich.
– Seneca

Power is the right of the strong, justice is his interest; It is better to leave his children a good conscience than money.
– Plato

Money makes you happy – as long as it is used properly, and this resulted in some recommendations, including:

• “Invest in experiences, so spend more on experiences than on material things”.
• “Make others happy”, that is, whoever spends more money on other people feels happier than if he had done it for himself.
• “Insert less money in safety, so to do without too many guarantees”. We humans get used to and recover from losses faster than we previously thought.

The points of putting money into experience and less into security can also be put into practice when investing. One example is to put less money into insurance and supposedly safe investments, to take more risks by using shares to invest. Or from a professional point of view, in which one sticks less to a supposedly safe, but little-loved workplace. 

Anyone can make others happy with money or do something good in general by donating. In my view, however, it is not very helpful to give a homeless person a dollar. He could buy something for the next few hours, but it doesn’t solve his problem in itself. To spend a further training course or other systemic aids are more effective here, that this person comes out of his misery again. Aside from the joy you feel when you donate, I think it is part of the sense of duty for people who can live in abundance to give some of it to the needy.