Money Can't Buy It

By Jean Chatzky

Do you have to be rich to be happy? How much money would it take? And how long would that happiness last? These are tough questions. And if you're like most people, you will answer from the gut: Of course, I'd be happier if I were richer. I'd be delighted. Or, alternatively: Don't be ridiculous. I have a spouse/partner/kids I love. I have a challenging job I enjoy. I have great friends. Money can't buy these things.

There's no right answer. But there are revealing data out there, as I learned researching my new book, You Don't Have to Be Rich (Portfolio). Here's what RoperASW, which polled Americans about their financial happiness for the book, concludes: Money can't buy the sort of happiness most Americans are looking for. To citizens in developing countries, a few extra dollars can mean a warm place to sleep or food on the table. That would make someone happier. But in wealthier countries like the U.S., an extra $1,000--even $10,000--isn't going to bring lasting happiness. Once you get above a certain comfort level (a household income of about $50,000), more money doesn't buy more happiness. People who earn $100,000-plus are no happier, on average, than people who earn $50,000, the survey revealed.

But people can raise their happiness by managing their money better. Some "financial-happiness habits" are surprisingly simple, like paying your bills as they come in rather than once a month, or saving 5% of your household income instead of the 10% that financial planners often advise and many individuals find impossible to achieve. Happiness means taking precautions, like having life insurance, disability insurance, a three-to-six-month emergency cushion and a will. And as antiquated as it may sound, it means taking the time to balance your checkbook once a month.

The payoff, the survey found, is significant. Those checkbook balancers, for example, have more savings, less credit-card debt and fewer financial worries than people who choose to rely on just their ATM receipts for confirmation of what's in their accounts.

Picking up a few of these habits isn't good just for your account balances; it's good for your psyche. Money can make us miserable. We feel we have less control over our money than any other aspect of our lives--our jobs, marriages, friendships, children, even, believe it or not, our weight.

Adopt a few of these habits, though, and you are back in control. Managing your money no longer has to be the bear sitting on your shoulder. And while you may not actually be any richer, you may feel as much as 50% richer. How's that for a silver lining?

You can e-mail Jean, a MONEY columnist, at [email protected]