Can Money Buy Happiness? (The Answer Isn't What You Are Used to Hearing!)
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00:30 Ones Laura versus fruit flies Swarming your fruit and terrorizing your kitchen These little freaks multiply at a rate That would make a rabbit say yo Chill But Laura shopped on Amazon And saved on cleaning spray
00:49 Countertop wipes and fly traps Hey fruit flies, your baby boom ends here Save the Everyday with Amazon On this episode of the Personal Finance Podcast, we're going to answer the question, Can Money Buy You Happiness? I'm your host, Andrew, founder of Master Money. And today on the Personal Finance podcast, we're going to answer the question, Can Money Buy Happiness?
01:37 If you have any questions, hit me up on Instagram at Master Money Co. That's Master Money CEO. And follow us on Spotify, Apple Podcast, or whatever podcast player you love listening to this podcast. tune. If you want to help out the show, leave a five-star rating and review on Apple Podcasts. Thank you so much to all of you who have been leaving five-star reviews on Apple Podcasts. And don't forget to check us out on YouTube as well. We're master money over on YouTube. And we're putting out two videos every single week so you guys have more fresh content.
02:08 Now, why are we answering the question, can money buy happiness? Because for the longest time, people have been saying money cannot buy happiness. Money cannot improve your happiness. this is something I truly don't believe. I do believe that money can improve your happiness. We're going to talk about why that is today. Because when you're pursuing this wealth journey, when you're going after building wealth, you need a why as to exactly why you're doing this. You have to have a why so you can continue to pursue your goals to make this whole thing worth it. And you've heard me talk about it all the time. That money should be spent on things that bring you value.
02:42 Well, things that bring you value are things that make you happy. And if money is spent towards things that bring you value, that's going to be a big difference than money who is just hoard it away. See, what I'm talking about today is I'm not talking about hoarding money away and allowing money to just sit in a savings account somewhere or under your mattress. What I'm talking about is building up wealth so that you can utilize that money to spend on things that bring you value because that's what money is there to do. It's there to be spent on your priorities. Whether your priority is to retire early or your priority is to buy more stuff
03:16 or your priority is to get more experiences, money is there to go towards your priorities. And everybody's priority is vastly different. It's a very personal choice. And we'll talk about that coming up here soon. But the first thing I want to talk about is there's an old study. A lot of people know about this is a famous study that was done. And the study was trying to figure out can money buy happiness. And this study came out in 2010, but they found that people tend to feel happier,
03:41 the more money they make up to a certain point. And the point they found was about $75,000. a year. Now, today, $75,000 is worth about $90,000 today because this study was done in 2010. After that, they said happiness tended to level off. And they said that people's emotional well-being and how they felt on a daily basis didn't improve as they made more than $75,000, which is $90,000 today. Now, how did they measure emotional well-being? Because this is a big factor in this study. They measured emotional well-being by asking about feelings experienced the previous day. Then what they did is they classified the responses by whether they felt a positive effect
04:21 or they felt sadness like anxiety or worry or anything like that. But what is not talked about this study? And I've always thought this study was BS. Because what's not talked about in this study is that people's life satisfaction or how happy they were with their life overall did go up past $75,000. And there's a lot of holes that I could poke in this study. There's a lot of things that I do not agree with with this study. But it's one of the most famous ones that have come out. Now, as of late, a new study came out to contend with this because a lot of people felt the same way I do that this is completely BS, that's $75,000 or $90,000 in today's dollars is very, very subjective. And so they did a new research study.
04:59 But this time, what they utilize, instead of just asking them on a questionnaire, they utilize an application to ask them questions every day. So for this study, the researchers took 33,000 people between the ages of 18 to 65, and they used a smartphone app. and that app prompted them each and every day to check in on their emotions throughout the day. And they would ask questions like, how do you feel right now and overall, how satisfied are you with your life? And what they did was they collected this data for seven years. And what they also talked about was seven years doesn't really matter because the data would be the same if you extended this out for a longer period of time.
05:33 And what the data showed was that all forms of well-being continued to rise with income across a wide range of income levels and didn't plateau at $75,000 a year. it didn't go down after $75,000 a year. And what it found was at an individual level, people that advanced in their careers and their incomes rose. They said that their life was genuinely better each time that happened. And there was no one who hit a ceiling after $75,000. So what this study showed was essentially 33,000 people within this data set showed that their emotional well-being went up as they made more money.
06:08 Now, what I'm going to talk about today is why I agree with this study and why I think your emotional well-being will go up to a certain point after $75,000. And I do believe that if you can use your money and you can figure out how to utilize your money to spend on things that bring you value, and we have an entire episode of how to do that, how to spend your money on things that bring you value. Because a lot of people out there who are pursuing fire have been told for a long period of time that you need to deprive yourself, that you need to cut back on everything and not spend any money whatsoever.
06:38 And we hear at the Personal Finance Podcast and Master Money, Do not agree with that whatsoever. Because what we agree with is that you should be spending your money on your priorities. That's what wealth is. Being able to spend money on what you care about and what you want to do with your life. That's what money is there to do. It's not there to cut back on lattes if you love to have a coffee every single day. It's not there to cut back on restaurants if you want to go out to eat and enjoy that.
07:03 But there's ways that you have to make it fit into your budget so that you're still investing your dollars and you're still watching your wealth grow. And one of those big ways is to increase your income, which we talk about all the time on this podcast. Increasing your income allows your income to rise so that you can spend more money on things that bring you value and invest more dollars. It fuels the fire. It's the major fuel to the fire that allows you to live the life that you want. Now, is money going to be able to take away all your problems or is it going to take away any emotional stress or anything else like that that you have? Maybe in some ways, but it's not going to make you completely happy. If you're the type of person who thinks, oh, if I just got rich, I'm going to be the happiest person.
07:40 in the world. That's absolutely not the case. We're always going to have hardship no matter what level of wealth we hit. But at the same time, wealth that make your life a little bit easier. And we're going to talk about exactly how that is. So if you're into that, let's get into it. So I'm going to go through some of the ways that I think money can bring forth more happiness within your life, more joy, more ease of mind, more peace, more wealth to use towards impact, all of these different things. So we're going to talk through this here and why that. is. So the first one, this is one of the biggest things that you can utilize your money for is money creates freedom. So here's how this works. What we talk about on this podcast a lot is
08:20 financial independence because financial independence is one of the most important things that you can do with your money. Why? Because you buy back your time and time is the greatest asset that you have because you only have a finite amount of time. And if you're spending at a job you hate or you're working in a cubicle or you're doing stuff that you just don't want to be doing day in and day out because you need to earn money, then earning that money and putting that money towards assets that's going to allow you to not have to work anymore, it's the most powerful thing that you can do with your money. So utilizing that to create freedom so that you can do what you want with your time is going to absolutely increase your happiness. Because if you're
08:58 doing what you want day in and day out instead of going and working in a cubicle or working in that construction yard or working wherever you do each and every single day is going to change the way you see your life. Now it creates freedom in a number of ways. First, freedom of choice with your time. You can choose what to do every single day. If you want to pursue a business that brings you joy or you want to pursue your passions, you have the choice to do that. You don't have to go into work every single day and someone else is making the choices for you. The second thing it allows you to do is have freedom over your time, which is the same thing. Because you can utilize your time in the way that you want. If you want to work out in the middle of a day on a
09:35 Tuesday, you can absolutely do that. If you want to go in a hike or a run or a jog, money creates that freedom for you. So accumulating enough money so that you can retire as soon as possible, early is preferable, maybe your 30s, 40s, somewhere in that range is going to allow you to utilize your time in the way that you want. And it creates energy because having the freedom to do the things that you want every single day creates energy. I am way more energetic when I'm working on things that I want to do every single day.
10:04 Now, if I'm working on stuff I don't want to be doing, my energy level is crushed. But doing things that you want to do every single day creates energy and increases your energy over time. So those are all the ways that money can create for you. There's a number of other ways. If you have any, hit me up on Instagram. Tell me some other ways that money can create freedom for you. I'd love to hear it.
10:22 Because this is one of the most important things that money can do. And if this brings you value, if it brings you value to have freedom with your time, your energy, choice, buying back your time is one of the most valuable assets that you can do. do. Number two, money reduces stress and anxiety. So I've said this a number of times, but wealth is self-care. Why? Because wealth reduces your stress and anxiety. Say, for example, you have your emergency fund built up and you're starting to build wealth and you have an emergency fund sitting there. Well, if your car breaks down, you have the money just there. You know how stress-free it is to have the money just there? You're not worrying about, well, where am I going to get this money? How am I going to
11:01 pay for this and stressing out saying how am I going to get my kids to school without a car? How am I going to do this? Instead, you have the money just there. And if your car has to go to the shop, you can go rent a car and be able to get to A to B when you need to get there. Your stress is absolutely gone. You don't have anxiety of what you're going to have to do next. You don't have anxiety or worry about what's going to happen in life because you've already prepared for it. You have that safety net there. And that's why wealth is self-care. Because we're reducing your stress, allows you to be a healthier person, it increases your mental health. All of these are so incredibly important, A, for longevity, but for a number of other reasons as well.
11:42 And so understanding that wealth of self-care and preparing for these types of emergencies is extremely important. The next one, it creates opportunity for your family. So I've talked about this a number of times on this podcast as well, but privilege is a real thing. Let's all get real about this. Privilege is absolutely real. Some people are born in better situations than others. And what we have to realize here is that we all have the power, no matter where we started, to start building wealth.
12:08 I truly believe that. That's why this podcast exists, because we all have the power to start building wealth for ourselves and our future generations. And so as we're building up this wealth, we can make sure that if we were born in a bad situation, that our children and our children's children don't have to be born in that situation. And you can give your future family the privilege that you never had. That is one of the most powerful things that you can do. And having that power in your hand, oh my goodness, you are going to be absolutely unstoppable. Imagine coming from nothing, building yourself up, becoming self-made,
12:43 because as we know, 80% of millionaires are self-made. So you become a millionaire being born from nothing. Who can stop you if you do that? That's one of the hardest feats that you can do. But anybody can do this, because small amounts of money over time can become large amounts of money. And that's why this is so incredibly powerful. Because it creates opportunity for your family. Do you think that's going to increase your happiness? Because I absolutely know it's going to increase your happiness to give your children the opportunity that you never had. Or give your parents the opportunity that they could never give you because they were working so hard.
13:16 Or to give your brothers or your sisters, your aunts, your uncles, whatever family members or people around you friends doesn't matter. but creating opportunity for them by building wealth. Your kids can go to whatever college they want because you started a 529 plan and built up an investment fund. This is the power you have. This is the power you have with just small amounts of money, protecting yourself with emergency funds, going through the stairway to wealth
13:39 and making sure you understand how to do that. It's going to increase your happiness and it's going to allow you for opportunities. So lately, I've been noticing how fast things are changing at home. The kids are growing like crazy, clothes don't fit anymore and routines are changing. And it just hits you. Life is expanding. And when your life grows, your responsibility grows with it. That's something I've been thinking about more this spring, making sure the safety net we have in place actually matches the life that we're building.
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16:53 The next one along those same lines is money reduces hardship for your family. Now, hardship can be one of the least satisfying things in life. And everybody's going to have to go through hardship like we talked about at every level of wealth. But you don't have to go through as much hardship if you start to build well. Your stress goes down, your anxiety goes down. But that hardship, when you're going through hardship, is hard on your kids as well. It's harden your family as well. It's a hard on your husband or your wife, your boyfriend, your girlfriend, your friends, your family.
17:21 Everybody around you, it reduces that hardship. I mean, you can look at people who are in low-income situations. They've started out with zero privilege. And not knowing where your next meal is going to come from or anything like that is one of the hardest things that you can do. My mother has been in the school system forever. My mom was a teacher and still is in the school system. And she was a principal for a long time. And seeing all the kids who could not afford lunches was one of the sadest things.
17:46 every single day. And it's all across this country. But you can reduce that hardship by working on your finances and just getting educated with your finances. That's going to bring you happiness if you take your family out of a situation where they can't even afford lunch to now being able to start to create wealth and you're on your way to your first 100,000. Then after you get your first 100,000, you're on your way to half a million.
18:07 And once you get to half a million, you're on your way to a million. It's step by step taking the small steps every single day so that you can hit those goals. And that's our goal here at the personal finance podcast. It's for every single person to be able to build wealth. We're going to be here for the long run to teach you how to build well. That's our goal. That's what we're here to do. So listen, if you're in that situation, if you're in a hardship situation,
18:30 keep listening to this podcast. We're going to pull you out of it. We're in this thing together. So making sure you understand that financial education is the biggest thing that you can invest your time in is extremely important. The next thing money can do is it increases your sense of accomplishment and satisfaction. So we as humans, we all want to progress in life. We all want to take the next step, progress, whether it's in fitness, whether it's in
18:53 parenting, whether it's with your family, your marriage, whatever it is. We want to progress in life. And specifically, progressing in your career or progressing with your wealth goals is going to bring satisfaction. You're going to be happier as you see those number rise. Now, it's not going to make you happy, but you're going to have a sense of accomplishment. Those endorphins are going to be flowing because you moved up with your job. You increased your income.
19:15 you allowed yourself to progress in life. We need to progress as humans every single day. And we become unhappy as humans if we don't progress physically or mentally or emotionally. All of these progressions will help you grow and help lead to additional wealth. The next one, and this is a major one, is money allows you to make an impact with giving. Now, giving is one of the most important things that you can do with your money. And money allows you to give back. Maybe it's to give back to your friends who are really struggling,
19:43 or it's giving back to the poor, or maybe you're giving to causes that you truly believe in. Maybe you want to create more wells in Africa, or you want to give to other causes across the country. Whatever you think is a major cause in your life, and the thing that you really care about, you can give back more when you create well. And you can give your money to those causes,
20:02 and you now have the time to give your time to those causes as well. This is a double whammy for you. Because if there's causes you believe in, If there's things that you want to give more time to and you truly can't because you're stuck at your job and you're stuck working so that you can try to build enough enough wealth, well, imagine what wealth can do for you to give back to those causes. Imagine if everybody built wealth, how much more time could be given to causes and how much better we can make this world. And that's what I truly believe. That's why wealth is so important. There's so many different things that wealth will do and that will increase everybody's happiness because it's been proven by a number of studies that giving back increases happiness.
20:40 So imagine if you could do that. The next one, it allows for additional opportunity. So wealth and investing allows for additional opportunity. So if you have wealth, for example, and let's say your neighbor's house goes up for sale, and you've been wanting to get into real estate investing for a long time. Well, if you built up enough wealth, you have some cash or you have enough money to put down for a down payment,
20:59 you could take advantage of that, maybe even under the table before it goes on the market. And you can get a deal that way. Wealth allows opportunities like this. Or maybe a big investment property comes up on the rise and you want to go invest in that. Or you see a car wash come up. You want to go invest in a car wash
21:13 and put your wealth towards that. There's so many different opportunities that can arise. And usually when opportunities arise, you have to be ready. And wealth allows you to be ready for those opportunities. Another way wealth will give you opportunity is for job opportunities. See, a lot of people who are poor
21:28 cannot take advantage of job opportunities because maybe they have to make a move where their income would double, but they can't take advantage of it because they don't even have enough money for the move. So having that emergency fund in place, having money in place, having money in place and starting investing your dollars allows you to get closer to taking advantage
21:44 of major opportunities. The reason why the rich stay rich is because they take advantage of opportunities. When the market takes a dip, well, you have some cash available to invest more dollars if there's a recession or something of that nature. Now, like we said, we don't condone keeping cash so that you can wait for dips. But what I'm talking about here is having money available, having money ready so that you can take advantage of opportunities. That's what wealth provides. And taking advantage of opportunities, is going to increase your career. It's going to take you to the next level and that's going to increase your happiness.
22:13 The next one, it allows you to make choices and allows you to work on what you want to work on. Now we talked about this before. That increases your energy to be allowed to work on what you want to work on every single day. Maybe there's a business you want to start, or there's a cause or a startup that you want to start, or there's a nonprofit that you want to start to give back more.
22:29 Wealth allows you to do that so you can work on what you need to work on. So how much is enough? That's one of the major questions that a lot of people will ask, is how much money is enough money? Well, this is an extremely personal question. And each and every person who asks this question
22:43 has to look at it themselves. How much money do I need to live on every single month? Now, we have a bunch of financial independence episodes. I'll link up some of them down in the show notes below so that you can figure out how much money you actually need to live on. Now, if you want to go higher than that and pursue something like Fat Fire, where you can have a lot more money than you're living on right now,
23:00 that's definitely a major option. But you've got to figure out, hey, here's a couple of factors you've got to look at. Dependence, do I have kids? or do I have aging parents who I need to take care of? Well, you're going to need a little bit more money if you have that situation. Location. What is your cost of living? How much money do you need to live on where you live? If you live in San Francisco, you're going to need a lot more money than someone who lives
23:20 in the middle of Georgia in a town that has 2,000 people. So you have to understand what's your cost of living? Your interests. So when you have this additional time, what are your interests? Someone who loves to go boating or travel or wants to start a big business is going to need more money than someone who just likes to go out hiking every single day. So look at what your interests are because your income is going to need to be higher if you have specific interests that you want to pursue. All of these are factors to take into consideration so that you can figure out how much is enough.
23:48 Now we're going to talk about if you're not utilizing money to buy happiness. Here's how to change that. So before we wrap this episode up, we're going to talk about how you can utilize your money and how you can buy more happiness if you want to utilize your money towards happiness. Now, we have an episode talking about how to spend your money on things that bring you value. I'll link it up in the show notes. So make sure you check that out if you haven't heard that episode because that's the major deep dive into how to do this. But we're going to run through some of these pretty quickly on how to do this as well and give you a 101 bird's eye version.
24:19 So the first one is to buy more experiences and less material goods. So studies have shown that experiences have given people more happiness than spending money on stuff because stuff gets older. It erodes away. But experiences create memories with you and your family or you and your friends. it allows you to have these experiences that can never be taken away. I love spending money on experiences. We love to travel. We love to go different places.
24:41 And that's one of my favorite ways to spend money. The second one is use your money to benefit others rather than yourself. So this has also been shown in a bunch of studies that giving money away increases your happiness. And giving money to people in need or people who need money is going to truly help you. Maybe it's giving your time back. Maybe it's giving to the poor. Maybe it's just helping a homeless guy on the side of the road that you saw need some food. There's a bunch of different ways that you can do this,
25:07 but if you're not happy with the way that you're spending your money, maybe give back some of it, maybe give to the causes you believe in, or the church that you go to. Think about ways that you can do this, especially coming up in the new year. The next one, look at how much you're consuming. Because if you're consuming a lot of stuff,
25:22 if you're buying a lot of stuff, maybe you have Amazon packages coming every single day. I know I do still, and this is something I still have to work on all the time. But delay your consumption. What I mean by that is, think through your purchases a little bit more. budget really helps doing this, but delaying gratification on consumption means that everything
25:40 that you buy in the long run is going to mean a lot more if you're buying less of it. And so thinking through your purchases every single day, I'm not saying cut back on purchases that bring you value. I'm saying cut out the stuff that doesn't bring you value. If something doesn't bring you value, you should be radically cutting that out and spending lavishly on the things that do bring you value. The next one, consider how your purchases affect your day-to-day life. So a lot of times stuff can really weigh you down. And things can actually weigh you down because there's extra things that you have to maintain or upkeep or all this other stuff. For example, if you don't really value buying a bigger house, but you see all your
26:13 friends buying a bigger house and your family's buying bigger houses and they're telling you, you need to buy a bigger house, you have all this income, you're building all this wealth, you need to get a bigger house. Well, that comes with a lot of additional responsibility. There's bigger lawns to mow. There's a bigger house to clean. It's going to take more of your time and more of your money and income to fix up and things like that. And that may be something that you really want to consider before spending that money. Which leads me in the next one. Don't try to keep up with the Joneses.
26:38 Because trying to keep up with other people is never going to lead to happiness. Your friend gets a bigger house or buys a fancy car. You get a bigger house or buy a fancy car. Your friend buys their kids a bunch of toys. You go buy your kids a bunch of toys. But none of this leads to happiness. None of this increases your happiness. Spend your money on what you value.
26:55 And that's all you got to do. That's all you got to focus on is focus on you. And the last one. If you're truly not happy with your spending, look at just trying to make someone's day with your money every single day. Maybe it's buying the person's coffee behind you. Maybe it's buying some Christmas presents for a mother in need. But look at just ways that you can make someone's day with the wealth that you're building.
27:13 And you can even make a line in your budget to do this. Call it the Make Someone Smile Fund or something like that. What can you do to actually do that? Because that is one great way to increase your happiness with your wealth as well. Listen, I hope you guys enjoyed this episode. If you have any questions, hit me up on Instagram at Master Money Co. that's Master Money, CO, and follow us on Spotify, Apple Podcasts, or whatever podcast player you love listening to this podcast, too.
27:37 If you want to help out the show, leave a five-star rating and review on Apple Podcasts. I truly can't thank you guys enough for leaving those five-star reviews on Apple Podcasts. And don't forget to check us out on YouTube as well at Master Money on YouTube. Thank you guys, again, so much for listening to this podcast, and we will see you on the next episode.
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