A very common saying that everyone has probably heard before is money cannot buy happiness.
However, a study shows that money can buy happiness to a certain extent, which goes against the traditional notion of what we believe in.
Joe Gladstone, a research associate at the University of Cambridge in the United Kingdom did a study and found out that money can buy happiness to some extent, such as a bank balance may be more important than overall wealth when it comes to happiness.
According to Mr Gladstone, they have worked with a U.K. bank which allowed them to survey thousands of its customers about their happiness and then match those responses to transaction data from their accounts.
From the survey, they have found out that that the amount of money you have in your bank account right now is a better predictor of happiness than your aggregate wealth.
Having more money in their bank account makes people feel more financially secure, which leads to an increase in happiness. Even for someone wealthy, having more money in his checking account brings him more happiness even though he has lots of savings and investments.
This goes against the traditional advice a financial advisor may give. They feel that money sitting in a bank account is wasted and hence, from a purely economic viewpoint, the money should be invested. However, this will only maximise our monetary benefit and not our well-being.
Many people are living as financial zombies, going from paycheck to paycheck. Yet often, they do have some assets. If they shifted their approach and built up more of a buffer to make themselves feel more secure, it might be a powerful way to make them feel happier with their lives.
A personality test called the “big five” can be used to measure the link between personality and spending.
A simple acronym for this test is OCEAN: openness, conscientiousness, extroversion, agreeableness and neuroticism.
Those who identified with a certain personality type tended to spend more on products that matched with that type, and the extent to which they did so was found to be highly correlated to their happiness.
In short, spending in the right way mattered more than total income or spending.
For example, someone who scored well on openness will spend more on entertainment and beauty and the more they spend, the more likely they are to be happy. Similarly, people considered to be “highly conscientious” spent about $175 more each year on health and fitness than those who had a poor correlation to those personality traits.
So, what do you think? Do you agree that happiness can be bought with money?
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