Newsweek has a brief article on what research has told us about the link between money and happiness. Essentially, more money makes you happier until you’re comfortable, and then, it really doesn’t do much good.
Interestingly though, a study that looked at how happy a number of similarly earning young people were, found that the happier ones went on the make more money later in life.
If money doesn’t buy happiness, what does? Grandma was right when she told you to value health and friends, not money and stuff. Or as Diener and Seligman put it, once your basic needs are met “differences in well-being are less frequently due to income, and are more frequently due to factors such as social relationships and enjoyment at work.” Other researchers add fulfillment, a sense that life has meaning, belonging to civic and other groups, and living in a democracy that respects individual rights and the rule of law. If a nation wants to increase its population’s sense of well-being, says Veenhoven, it should make “less investment in economic growth and more in policies that promote good governance, liberties, democracy, trust and public safety.”
(Curiously, although money doesn’t buy happiness, happiness can buy money. Young people who describe themselves as happy typically earn higher incomes, years later, than those who said they were unhappy. It seems that a sense of well-being can make you more productive and more likely to show initiative and other traits that lead to a higher income. Contented people are also more likely to marry and stay married, as well as to be healthy, both of which increase happiness.)
It’s not only the case that money doesn’t buy happiness, being materialistic is also associated with worse mental health and overall adjustment.
Link to article ‘Why Money Doesn’t Buy Happiness’.