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Dear Millennials: Money Can't Buy Happiness, But Debt Could Lead To Unhappiness


The adage "money can't buy happiness" has been debated, researched and tested many times over. And while the prevailing opinion is that the axiom is true, the conversation continues, fueled by studies that seem to confirm that material wealth does influence a person and a society's sense of well-being.

While the most recent findings are so wide in scope it would take hundreds of pages to detail, the newest verdicts are deceptively simple. Applying them may be more difficult, but due to the economic obstacles many Millennials in particular have experienced (from crippling student loan debt to putting off major life events), it is worth highlighting these principles and emphasizing how little changes can influence satisfaction.

Debt, Poverty And Economic Stress Weighs On Emotional Health

University of British Columbia professor, Elizabeth Dunn, conducted a series of studies on the matter and concluded, "Savings are good for happiness; debt is bad for happiness. But debt is more potently bad than savings are good."

Related Link: 4 Financial Pitfalls Fooling Millennials

This ties into human psychology and how the brain interprets negative events – the longevity of negativity and its consequences on emotion are more heavily influential than their exact opposite. A single negative event can counteract a multitude of positives, simply because of how humans experience and interpret the bad.

Prof. Dunn explained it another way, "From a happiness perspective, it's more important to get rid of debt than to build savings."

San Francisco State University professor, Ryan Howell, reiterated, "The stress you'll feel when the credit-card bill comes in will probably wipe out the good you got from the (positive) experience."

The Security Money Provides Leads To Contentment

Similarly, it has been found through multiple studies that not only does eliminating debt influence life satisfaction, but having savings can also boost overall happiness. The sense of security savings provides can influence our well-being. When the concern over where the next meal will come from and the concern of how provisions will be made in an emergency are dealt with in tangible ways, stress is reduced and happiness can settle in.

While these concepts seem intuitive, it is easy to become distracted by the obstacles life hurtles and become bogged down by the particulars.

Prof. Dunn and colleagues commented, "Wealthier people may feel a greater sense of control than poorer people when difficult situations arise."

The easiest solution is often the simplest. Go back to the basics and take control by ensuring your basic needs are being met. Psychologist Abraham Maslow proposed a theory that helps explain these principles. Maslow's hierarchy of needs represents what humans require psychologically. If the most basic needs are not met, emotional contentment ("esteem" and "self-actualization") cannot be achieved. Physiological and safety needs must be addressed before happiness can take over.

When a threat to basic needs is perceived, when debts flood the certainty of food and shelter, when making ends meet seems improbable, happiness slips away. The preoccupation with ensuring life's simplest needs pushes emotional fulfillment out of the picture as our whole being focuses on survival of self and loved ones.

Related Link: Unanticipated Life Events Cost Americans $2.5 Trillion In Lost Savings

Happier People May Generate More Income

Therefore, while income may not be the key to happiness, the reverse might be true. When financial stability is baseline, those generating income are free to experience psychological happiness. With the concern over basic needs being non-existent and the comfort of financial security for emergencies in place through a safety net of funds, an individual can experience a higher degree of fulfillment.

And with that happiness, with the lack of blinding anxiety, individuals can work more efficiently, thus, making more income.

Explained another way, "It may be that less money doesn't cause more sadness, but that more sadness causes less money," said Money's Susie Poppick commenting on a contentment and money study conducted by Nobel-prize winning economist Daniel Kahneman.

At a certain point, the relationship between money and happiness becomes reciprocal in nature – with happiness, an employee can excel in the workplace; with reliable and sufficient income, an employee has the freedom to be happy.

There are, of course, multiple exceptions to these findings, but the gist of the research confirms that happiness is not measured by how much you bring in, but by ensuring a secure tomorrow now.

Take the initiative to ease tomorrow's worries. Take care of today and focus on the future. Start small and start simple and don't sink in comparisons to others' lives. Work toward eliminating debt and saving for later; superfluous monetary excess will not grant you a better or more fulfilled life – providing for yourself and your loved ones will.

Posted-In: Abraham Maslow Daniel Kahneman debt Elizabeth DunnEducation Psychology Personal Finance General


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