A-Z of personal finance: H is for happiness and money

The Relationship Between Money and Happiness
Why doesn’t the lucrative promotion or the brand-new five-bedroom house keep us swathed in a permanent state of happiness? We like to think that if we just had a little bit more money, we would be happier, but once we attain that goal, something is still missing.

We tend to overestimate how much pleasure we will get from having more money.

“The Hedonic Treadmill”
Professor Emeritus Lord Richard Layard, Director of The Centre for Economic Performance at the London School of Economics, in his book Happiness: Lessons from the New Science discusses the relationship between happiness and rising standards of wealth. A critic of consumer society and the all-consuming pursuit of money, he suggests that
we eventually get trapped on the “hedonic treadmill”: Our happiness begins to wane as we start to take the new positive changes in our life for granted.
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Money can bring happiness but for the most part it is temporary.

What Brings More Lasting Happiness?
Having spent several years interacting with people with various levels of wealth, I am convinced that money does not in itself create or sustain happiness. It certainly buys things and improves the quality of life and a standard of living. Yes, money is important, as it helps you to pay your bills, to educate your children, support your family and so on; but if you rely upon it as the key to happiness, it can be illusory as it does not always address life’s real issues, such as, concern for your family, problems in relationships, and work-related stress.

Happiness Comes from Giving
Having money is a great responsibility because it enables one to do things. Material possessions eventually lose their sparkle then beg to be replaced. Yet, one can make transformational gifts by helping others and even shaping or saving lives. It is through generosity that one can attain the best relationship with money. By deciding to make a difference in someone else’s life, you give more meaning to your own. The joy that this brings is a lasting form of happiness.