A recent article in the AFR raised the money versus happiness debate. We know the well-trodden phrase that money can’t buy happiness, yet it is equally apparent that wealth may help alleviate financial stress and provide a sense of security.

In diving into the topic, journalist Lucy Dean references two research papers: a 2010 study by Nobel Prize–winning psychologist Daniel Kahneman and a follow-up in 2023 by Kahneman and researcher Matthew Killingsworth, both surmising that larger incomes are in general associated with increased happiness – apart from the already wealthy and unhappy, for whom more money makes no difference.

Moving from theoretical study to first-hand experience, a family advisor, Philip Pryor, is adamant money is far from an answer to happiness, having helped wealthy families navigate conflicts for over two decades.

Also quoted in the article is a chartered accountant, Kate West, who suggests a point where wealth may become damaging. When there is enough to technically never work again, it can be a life-changing moment for those who accumulated the wealth, and more strikingly, for their children. West recalls clients worrying that their wealth had negatively shaped their children’s lives, with individuals who hadn’t pursued a career or even figured out how to navigate relationships (uncertain if they were pursued because of attraction or money).

Statistics point to Australians as the third wealthiest individuals globally as of this year, a figure likely influenced by surging property values and superannuation. Simultaneously, research has found Australians are apparently 15% less happy now than 14 years ago.

Then there is the phenomenon of ‘money dysmorphia’, a non-clinical term that describes a distorted view of one’s own finances, and an illogical belief that there is never enough money. It’s a state amplified by social media and a constant need to keep up with other’s supposedly wonderful lives.

The article makes a particularly salient point when describing two types of happiness – hedonic happiness, which is associated with doing and feeling pleasurable things, and the rarer eudaimonic happiness, achieved by a life well lived with a strong sense of purpose.

Philanthropy is one such purpose, described as a cure for ‘the philosophical quandaries of profound wealth’, provided, Dean writes, that it is meaningful and introduced at a young age. She discusses how wealthy individuals, for instance, are much much more likely to become philanthropically inclined if they are introduced to giving as a teenager, and if they have a strong understanding of how others live.

The short answer to this question? No, money does not ‘buy’ happiness. Family and a sense of purpose are key to a fulfilling life, but building sustainable wealth may help provide financial stability to look after those you most care about.

Read More.

General Advice Warning:

The information in this blog is general in nature and does not take into account your personal objectives, financial situation or needs. You should consider whether the information is appropriate for you and seek professional advice before making any financial decisions.
Newealth Pty Ltd ABN 61 091 100 275 | AFSL 231297