More Money: 3 Benefits, One with a Very Big Downside

One of their funnier demotivators shows a castle-style mansion with lovely landscaping surrounding a beautiful pond. The caption under it? “Wealth: All I Ask for Is a Chance to Prove that Money Can’t Buy Happiness.”

With some scaling from what research tells us, your annual family income in the US would need to be close to $200,000 to reach peak happiness.

Can Money Buy Happiness?

What More Money Gets You

In general, more money brings you 3 benefits: - You have more security against financial catastrophes. - You can say “No” to more things you don’t want. - You can say “Yes” to more things you want.

More money lets you survive such financial calamities. And, no, there’s no downside to this benefit (unless you take stupid risks because of the sense of security).

Financial Security

Saying “No” to Things You Don’t Want

In each of these scenarios, and in countless others that can and do happen to people, having more money lets you say “No” to more things.

In this regard, more money just runs your hedonic treadmill faster and faster, without higher long-term happiness. It just costs more to be as happy as you were before.

Saying “Yes” to More Things You Want

Since the increased happiness from spending more money is temporary, and it puts you at greater risk of poverty (especially in retirement if you run out of money), you need to do something different.

How to Avoid the Downside

More money offers greater security, greater freedom/control, and a way to improve your standard of living. However, that last comes with a big downside, that you have to take into account and mitigate.

The Bottom Line