In our society, money is an essential part of daily life. You simply cannot do without it. It enables us to put food on the table, have a roof over our heads, pay for healthcare, and make our dreams come true. 

But the question of whether money actually makes you happy remains a topic where opinions are divided and much is still discussed to this day. 

More holidays, dining out at gourmet restaurants, buying that expensive bag... 

Having a healthy bank account and being able to do all this... 

It sounds like music to the ears, right? But does more money really make you happy? Most people would probably answer this question with: Love, friendship, and realising your dreams, that’s what life is all about. Or health cannot be bought. 

However, new research indicates that you better make sure your savings are full. Let's delve deeper into the question of whether money truly makes you happy and whether having more money is indeed the solution for a carefree life. 

The (old) relationship between money & happiness 

Numerous studies show that money does make you happy to a certain extent. You need a certain level of financial stability to be happy. After all, you need a roof over your head, want to enjoy your favourite sandwich, and need enough money to pay your bills. This concerns fulfilling basic needs. Moreover, no one wants financial worries. 

However, once basic needs are met and one does not experience financial worries, researchers observe that the level of happiness does not increase in a direct linear way as income grows. In other words: not every extra euro you earn automatically brings extra happiness. This principle is known as the saturation point theory. Once a certain income level is reached, extra money does not necessarily lead to more happiness. 

In 2010, Daniel Kahneman from Princeton University conducted research showing that the happiness plateau is around an annual income of approximately 70,000 euros (which has now become 100,000 euros due to inflation in 2024). Even if people earn 10 million euros a year, they will on average not feel any happier than if they earned 70,000 euros a year. 

Money & happiness: A relationship that is actually much more complex 

In 2021, it was time for new research. A study led by Matthew Killingsworth from the University of Pennsylvania. He concluded that even above 70,000 euros per year, people still become happier with more money, and thus there is no plateau. 

From this moment, various researchers joined forces to investigate this opposing conclusion, and the following emerged: When zooming in on the individual, the relationship between money and happiness appears to be much more complex. 

It seems that most people become happier with a higher income, except for those who are financially secure but unhappy for other reasons. Simply put, if you are wealthy but extremely unhappy, more money will not help you. However, if you are happy and start earning more money, it will indeed bring you more happiness. 

So, it really varies per person and situation. 

This is because emotional well-being and income are not directly linked. Happiness does not solely depend on material wealth, but also on immaterial aspects such as health, relationships, and personal fulfilment. Money can certainly contribute to a sense of security and comfort, but health, relationships, and personal fulfilment cannot be bought. 

So, does money make you happy? 

Yes, money makes you happy to a certain extent. Research shows that there is a happy majority who become happier with money and an unhappy minority for whom money at some point stops making them happy. These findings offer a much better insight into the relationship between happiness and money. 

The role of saving money in happiness 

But there is more. Notably, saving plays a crucial role in enhancing financial well-being and indirectly, happiness. According to data from the DNB Household Survey by CentERdata, households with the smallest assets (or even debts) score significantly lower than average regarding their happiness. The sense of happiness grows as financial resources increase. 

Saving money provides more financial security. You can build up a buffer that can protect you against unexpected expenses or financial setbacks. This sense of safety and control can reduce stress and contribute to a feeling of peace and contentment. We call this financial mindfulness. And if you want more tips on this, by the way? We wrote a blog about it! 

Saving money also ensures you can achieve your goals. It helps you work towards buying a house, starting your own business, or financing an education. And this naturally results in happiness. 

Finally, saving money also gives you more freedom and flexibility. It gives you the freedom to make choices that might not otherwise be possible. Think about taking a sabbatical, changing careers, or following your passion. Because how happy does it make you to have the option to explore these paths?! 

A jar of happiness! 

At Potje, we believe that realising your dreams and achieving your goals makes you happier. You can use Potje to save for various objectives and in this way, realise your dreams. For example, read here how Esther saved with Potje for her dream holiday to Southeast Asia. 

Build your financial security together with Potje and strive for the freedom to make choices that enrich your life and help you achieve your personal goals! 

We are very curious about your opinion on the relationship between money and happiness! Does money make you happy? 

Let us know what you think about this topic in the comments or via our Instagram or LinkedIn page!