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Can Money Buy Happiness?

Is the narrative moving towards the state of your mental health and quality of life is now depending heavily on the amount of money you bring home?

With the unprecedented times we are currently facing, money is tighter than ever, unemployment rates on the rise and the pound no longer stretching as far as It once did, meaning people are cutting back on daily activities they once did. The question is, does more money mean more happiness?

How does the amount of money affect the happiness of someone?

The answer is undetermined there isn't one easy answer, studies have been finding the correlation between money and happiness, which in psychological terms means the "emotional well-being and the overall satisfaction of the way you live". Right now money is tighter than ever, it doesn't go as far as it once did, meaning if money is the forefront of peoples mood, it could lead to a decline in mental health and can be at an all-time low. This is a scary and depressing thought.

We all know the famous saying "money can't buy happiness" but it is actually scientifically proven money can provide stability to people especially families, who have outgoings and have people reliant on the amount of money they supply. Money also allows people to have what we consider 'luxuries' such as holidays, the car you drive and following the newest trends in clothing.

In 2010, a well-known study was conducted by Daniel Kahneman and Angus Deato. They found that money did actually have an impact for the way people are satisfied their lives when they think about the amount of money they have and that people with more money feel better about their lives. However, emotional well-being rose with income, as expected too, but only to an annual salary of $75,000 ($90,000 in today’s money). Anything over this amount people saw no difference in their overall mood. This shows to a certain level money provides happiness to people.

"People tend to feel happier the more money they make, up until a point, which Kahneman and Deaton estimated to be about $75,000 a year per person. After that, [happiness] kind of levelled off,”

How much do you need to earn to be "happy"?

The unprecedented times we are currently facing has resulted in needing more money just to survive. Does this also mean the cost of happiness has also risen?

The average couple with two children, around the primary school age, on average have to earn £35,824 a year, which is around £688.92 a week for them to achieve a minimum decent standard of living, according the minimum income calculator. This is based on what the public classify as a minimum standard of living. This is having a warm shelter, access to food and clothes. However, a lot of people want to live a 'comfortable' life with added luxuries. A study concluded that the below 'added extras' to people's life is what they deem to also be essential to satisfy a comfortable standard of life.

  • Two cars for the household, average 2 years old and replaced every 5 years.

  • Holidays of 3 weeks in Europe each year

  • £1,500 per person for new clothes and shoes each year.

  • £94 on the weekly food shop

  • New kitchen and bathroom every 10 to 15 years

  • 2 nice bottles of wine each week

For this the average couple with two children need to earn £67,554, this is nearly double the salary to live a minimum standard of living.

We are brought up learning that 'money doesn't buy happiness' however it provides stability to families which allows a strong correlation between money and happiness. However, money can buy materialistic items which we believe makes us happy, but no amount of money can buy what really makes people happy. A study shows that the key factor to people's happiness, is self belonging, positive relationships and the feeling of being loved. Everyone has different expectations for their perfect lifestyle, this is based off upbringings, past experiences and desires for the finer things. To stay afloat with the current situation the UK is facing it is more important than ever to spend wisely and budget, you can access help and guidance to this from money saving experts and contacting your bank.

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