Six Steps to Financial Happiness
Can money buy happiness? There has been an outpouring of research over the last three decades on what researchers call "subjective well-being." They have found that a certain amount of money does make us happy, but once basic needs are met, happiness doesn't rise in proportion with more income. For instance, over the past few decades we have seen big jumps in economic growth in countries such as the U.S. and Japan, but only small increases in reported happiness. Surveys of lottery winners and people in the Forbes 100 list have found they are not much happier than the average person.
So how can you be happier, no matter what your income level?
1. Stop comparing. When people make relative-income comparisons, they frequently look at those who have more-and get upset when their income compares unfavorably, according to a study by Andrew Oswald of England's Warwick University and David Blanchflower of Dartmouth. Even if our incomes are rising, we tend to become less happy if the incomes of others are rising even more. Never measure your financial achievements against anything except your own goals.
2. Be grateful. Professor Sonia Lyubomirsky of University of California Riverside had subjects write down five things they were thankful for. "Gratitude seems to be incompatible with some negative emotions. It's hard to feel envious or greedy or bitter when you're grateful," Lyubomirsky explains. One group wrote on a weekly basis; the other group three times a week; and a control group didn't write at all. Only the group that did the exercise once a week experienced a significant rise in gratitude. So count your blessings, but choose a timetable that keeps the exercise meaningful.
3. Don't make money a top priority. People who say money is one of their most important goals score lower for mental health, according to a variety of studies conducted over the past decade by Dr. Tim Kasser, associate psychology professor at Knox College, and Dr. Richard Ryan, psychology professor at the University of Rochester. Money-seekers suffer a greater risk of depression; have more anxiety and lower self-esteem; experience more physical, behavioral and relationship problems; and score lower on indicators testing for vitality (feeling alive and vigorous) and self-actualization. The problems were not caused by being affluent-but by making money a primary goal in life.
4. Be conscious of how you talk about money. The way we explain things to ourselves has a big impact on our happiness, says author David Myers, professor at Michigan's Hope College. Instead of saying, "I can't afford it," say, "I choose to spend my money on other things." Think of yourself as an empowered person making wise choices based on your values and priorities - instead of a self-pitying victim who views life in terms of what she can't have.
5. Focus on essential psychological needs. Money scored last on the list of psychological needs that create happiness and fulfillment, according to a study by Kennon Sheldon, psychologist at the University of Missouri-Columbia. The four most essential needs? Autonomy-feeling your actions are self-chosen and self-endorsed; competence-feeling effective in what you do; self-esteem; and a sense of closeness with others. The University of Chicago's National Opinion Research Center found that people with five or more close friends (excluding family members) are 50 percent more likely to describe themselves as "very happy" than respondents with fewer friends.
6. Help others. Professor Lyubomirsky has done studies in which students were asked to practice altruism, doing five acts of kindness a week for six weeks. The participants reported a significant rise in happiness. Kind acts, she says, not only make you feel better about yourself, but foster a sense of interdependence, cooperation, and can inspire friendship.