Is There a Direct Correlation Between Money and Happiness?

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April 17, 2014 by Lisa Brammer

Can money buy you happiness? That age-old question has been studied repeatedly and the short answer is yes. But, as you might already know it really isn’t that simple.

There are many people who don’t believe that money can buy happiness and there are those who believe that to be happy you only need enough money to cover basic necessities like the lower levels in Maslow’s Hierachy of Needs. But research has shown that it really doesn’t matter whether you are rich, poor or anywhere in between, an advance in income is always met with an increase in life satisfaction—happiness.

Does more money afford you more freedom? Again, the short answer is yes. But, like I used to tell my children ad nauseum when they were growing up, “With freedom comes responsibility.” For example, when my kids asked for freedom from their designated bedtime, they were given that freedom along with the correlating responsibility of getting themselves up on-time for school. Freedom from a strict 9:00pm bedtime wasn’t as freeing as they once thought when they realized that there was a consequence to staying up past midnight. The same goes for money. The freedom extra money affords you must be managed responsibly or you will consequently end up in serious debt.

Let’s say you just received a big promotion at work and now qualify to buy that mini-mansion you’ve always had your eye on in the most desirable neighborhood in the city. Your happiness quotient is soaring isn’t it? Now, let’s fast-forward a year and see how you’re doing. Okay, the house is beautiful (you can’t believe it’s yours as you drive up each night) and your PITI (payment, interest, taxes, insurance) is manageable. But with that extra square footage came extra furniture, cha-ching, your credit-card debt just ballooned. That extra square footage also accounts for the 20 percent increase to your utility bills. Your new home is also further from work and gas prices went up 30 cents a gallon. Cha-ching, there’s more money out the window. Then on Sunday afternoon your next-door neighbor joined you for a beer after you finished your spring yard clean-up. He gave you the business card of the lawn service all of your neighbors use to handle fertilizing, pesky weeds and mowing. Coincidently, that business is owned by another neighbor’s little brother. Now you’re grappling with a decision. Do you hire a service you really can’t afford or do you risk offending a neighbor and find the time to take care of the lawn maintenance yourself? What do you think, will you succumb to the keeping up with the Joneses peer pressure?

As your added debt piles up, guess what’s happening to your happiness quotient? It’s not long before you realize that the decrease in your happiness is in direct proportion to your increased stress levels. This increased debt will not only hurt your financial health, but the resulting stress can also harm your physical and mental health as well. For years studies have shown people in debt have higher rates of depression and anxiety than those who are debt-free. Financial stress is also known to cause high blood pressure which can lead to heart attacks and strokes, not to mention a host of other health issues like headaches, digestive issues and insomnia. It can also result in conflicts at work and at home.

There might come a time, in the not so distant future, when you look at your old house and life longingly, wishing for those simpler, less stressful times. But, it doesn’t have to be that way.

• Face your situation head-on, especially if you are someone who avoids handling things that make you uncomfortable. You need to understand what your balances are and what interest rates you are paying.

• Choose a debt-elimination method that you can live with comfortably. Such as making the minimum payment on all of your debts, then paying any money left over towards paying off either your smallest debt (to eliminate it all together) or the one with the highest interest rate.

• Avoid future debt by knowing your purchasing triggers. Are you a therapy shopper, keeping up with the Joneses shopper, or just someone who can rationalize expenditures to get what you want? Also, once you see a zero balance on a credit card, be careful not reward yourself by purchasing some big-ticket item.

• Once out of debt make sure you have a rainy-day account for emergencies that come up like unexpected medical debt. Also learn to save up for large purchases so you can pay for them in-full instead of falling back into debt.

Careful money management and planning can help you get your debt under control and your stress levels receding. Guess what will happen to your happiness levels then?

Founded in 1950, United Credit Service, Inc. is a full service revenue cycle management and debt collection agency in Wisconsin providing highly effective, customized one on one management and recovery solutions for our business partners. We offer pre-service collection solutions as well as traditional back-end collections. Visit our website at or call 877-723-2902.


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