Can Money Buy Happiness?

I just finished reading “The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money,” an excellent and easy-to-read book that preaches a lot of common sense about finances — something I often lack. (You know: Penny-wise and pound-foolish.)

The book doesn’t provide any hardcore financial advice; instead, it offers important reminders about money and life. And smart explanations to questions such as, “What’s the connection between happiness and money?” Author Carl Richards explains:

First, money can buy happiness — up to a point. You need some money to be happy, but once the basics are covered the link fades quickly.

Second, experiences matter more than objects. Remember the thrill of finally getting the shiny new toy? At some point, it stopped being new and shiny. The same doesn’t apply to that amazing trip you took with your family. The trip may last for only a few days, but the memories you create will bring you greater happiness throughout your life than the gadget you picked up at the store last week.

Third, happiness sneaks up on you when you let it. We may have an inalienable right to pursue happiness, but there’s no guarantee that we’ll actually capture it. Maybe we’ve let ourselves get so caught up in the pursuit that we’re missing the point….

Maybe happiness comes easiest when we are so busy working, taking care of kids, shoveling snow, or cleaning the house that we forget to look for it.

Richards’s words seem consistent with those of Gretchen Rubin, who wrote in “The Happiness Project” book that money can help buy happiness. “Whether rich or poor, people make choices about how they spend money, and those choices can boost happiness or undermine it,” she said.

So, my takeaway from these authors is that there is indeed a connection between money and happiness, but that they don’t necessarily rise and fall in-sync. And that how we choose to spend our money, not simply having money, is important to our happiness.

Also: I’ve learned recently that spending money can make me either happy or unhappy — and that my reaction usually has little relationship to the price of my purchase. For example, I’m very happy that I spent $750 on my iPad because I use it every day for work and pleasure; but I’m unhappy that I spent $15 on a book about learning to play the piano — because I’ve never opened it.

What’s your relationship between money and happiness?