Can Money Buy Happiness?

Recently our team had the privilege of meeting and spending time with renowned behavioral psychologist Dr. Daniel Crosby. Dr. Crosby is a New York Times Best-Selling author and has devoted his professional career to studying human relationships around investing and money. – If you’ve spent any time around our firm, you know we are incredibly passionate about behavioral finance. So, to say we had a few things to talk about would be putting it mildly!

Over the past several weeks I have been reflecting on a statement that Dr. Crosby made that really challenged me. I am going to paraphrase his words because I am sure he was much more eloquent:

“Money is great at eliminating misery, but poor at buying happiness.”

Now, I understand he is not the first to coin this phrase, nor is this an Earth-shattering revelation, but let’s sit with this thought for a moment…

Since you’re a client of ours, it’s likely you’ve achieved some degree of wealth in your life. Wealth is obviously a relative term and the type of wealth I am referring to is not that of those who fly private jets and spend their summers on the coast of southern France. The wealth Dr. Crosby is talking about is the type of wealth where one’s next meal is accounted for, there’s a roof over their head, and clothes on their back. We’re talking about the basic necessities. Without these it would be fair to assume that there would be some degree of misery in one’s life. Money, in this instance, is great at providing for these needs, eliminating this type of misery, and generating some degree of ‘happiness’.

Let’s assume you have surpassed this level of wealth, and chances are if you’re a client of our firm, you’ve exceeded this level of wealth handsomely. Dr. Crosby’s second point is where we want to finish: Money is poor at buying happiness.

I do not have the same statistics or studies at my fingertips like Dr. Crosby did but trust me when I tell you that the data is overwhelming. Once our basic needs are met, increases in income or wealth have a diminishing impact on happiness. Money just does not consistently deliver the same euphoric feeling of happiness that one might think it does. It’s truly fleeting. However, according to Dr. Crosby, (and to my surprise), there were three instances that money did consistently deliver happiness:

1. When it was used to create memories with friends and family (i.e. travel, experiences, etc.).
2. When it was used to pay your way out of doing things you hate doing (mowing your lawn, paying someone to do your taxes, etc.).
3. When it was given away to others.

By no means is this a robust or exhaustive list, but let’s pause here and reflect.

If you’re still reading, there’s a chance what we discuss next might offend you but know that is not my intention at all…

Having more money will not make you exponentially happier. Beating the S&P 500 will not make you exponentially happier. Achieving some arbitrary value in your portfolio will not make you exponentially happier.

It just won’t. – (And worrying about the market/economy/President/World won’t help either… but that’s another article for another time and someone smarter than me to write).

Naturally, that is how we are trained to think. “Once I save $1M I will be content.” You achieve this goal and then guess what? Your next thought: “I feel good about $1M, but if I could just get to $2M, I’d be even happier.” And so it goes…

But, please hear me when I say this: I acknowledge that a significant responsibility we have as advisors is to make our client’s money grow. Period. I am not saying that does not matter. It does. However, the goal is to shift our thought process to how this money contributes to our overall happiness.

Here at Sugarloaf Wealth Management one of our goals is to establish a financial mission statement for each one of our clients: What is the purpose of your wealth? What is your ‘why’? – For everyone it’s different, but everyone does have a reason. And that reason should be what guides the way you think about and steward your wealth.

By no means am I in any position to tell you what to do or how to spend the money you’ve worked so hard to accumulate. My hope is that this note could be a gentle push that sparks a change in the way you think about money that leads to creating more happiness in your life.

Besides, in your final days, which do you think you’d be most proud to achieve?

Your portfolio outpaced the S&P 500 nine out of the last ten years and doubled in value.


The time you took a trip with your spouse and/or children to Jackson Hole and created priceless memories. The time you paid someone to cut your lawn so that you could catch your grandson’s tee-ball game. The time you leveraged your wealth to give a generous gift to a family in need or a cause you support.

Our hope is that we all, including myself, can become more mindful of the decisions we make with our money and the impact it has on our lives… because according to these studies, it could significantly impact your happiness!

– Nick Schuessler, CFP®