Top 11 Ways Money Actually Can Buy Happiness

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People love to say “money can’t buy happiness.”

But is that actually true? Or is it simply a narrative repeated so often we’ve come to believe it?

Some go further and misquote the Bible, claiming that “money is the root of all evil.” Consider instead an alternative narrative, that poverty is actually the true root of all evil. After all, poverty is correlated with shorter life expectancies, poorer health, and in fact lower reported happiness levels (more on that shortly).

I’d personally go a step further, and contend that the root of poverty is financial illiteracy. A solvable problem if ever there was one.

Money can buy happiness, or at least open more doors for achieving happiness. Which plays out in the research behind happiness and money, and why most people aren’t very happy regardless of how much they earn.

Why the Average Person Says “Money Can’t Buy Happiness”

Most people aren’t happy because they spend their money on the wrong things.

In fact, they shouldn’t be buying so many “things” at all.

When you first entered the real world, you probably didn’t make much money. You told yourself fairy tales like “If I just made $10,000 more, I’d be able to do ______, and my life would be better.”

Then you got promotions, and you did start earning more money. You put that extra money toward status symbols: a bigger home, a flashier car, trendier clothes, more meals out at fancier restaurants. Worse, you justified these higher expenses by telling yourself they were basic necessities: you need a roof over your head, you need a way to get around, you need clothes.

When you first bought them, you felt a surge of short-term happiness. Then it became the new normal, and your happiness returned to baseline levels.

This phenomenon is well documented in psychology, and it has a name: hedonic adaptation. And that human tendency to keep spending nearly every penny you earn, even as you earn more disposable income? That has a name too: lifestyle creep.

It’s no wonder that when you ask people to define “rich,” they inevitably respond with a number about twice as high as their current income. (Never mind that wealth is measured by net worth, not income, but that’s another story.)

This is the very definition of the rat race: you work to earn more money, then when you do earn more money, you find ways to spend all of that too. But this racing happens on the hedonic treadmill, and you don’t actually go anywhere. You aren’t building wealth, because your savings rate stays the same even as your income rises.

If you want your money to actually buy you happiness, you need to step off the hedonic treadmill, stop keeping up with the Joneses, and start putting your money to better use.

The Research: Money Does Buy Happiness

You may already be familiar with a famous 2010 study by Princeton researchers Daniel Kahneman and Angus Deaton, which found a clear correlation between income and happiness, but only up to around $75,000 per year. Their conclusion: below a certain income level, not having enough money causes real problems and stress, which make you unhappy. Surprise, surprise — poverty makes you miserable. (See? Poverty is the root of all evil!)

But more recent research actually refutes this famous study. A 2021 study out of University of Pennsylvania’s The Wharton School found that the correlation between money and happiness doesn’t plateau at $75,000/year. It keeps rising, with mo’ money meaning mo’ happiness, not mo’ problems.

Even among millionaires, more money creates measurably higher happiness. Researchers Grant E. Donnelly and Michael Norton of Harvard Business School found that decamillionaires (those with more than $10 million) are happier than those with $1-2 million. (They also found that self-made millionaires are happier than vapid heiresses, surprising no one.)

So, can you buy happiness with money? Absolutely. It’s just that the average person is doing it wrong.

How Money Can Buy Happiness

There’s a line I love from Robert Kiyosaki. To paraphrase: “Over the course of my life, I’ve been poor and I’ve been rich, and I’ve been happy and I’ve been unhappy. And I can tell you firsthand that being unhappy and rich is far better than being unhappy and poor.”

That’s why Kiyosaki earns the big bucks: because he puts it so irrefutably.

But how, specifically, can we use our money to buy more happiness?

Try these 11 ways to buy true happiness and earn the best dividends of all from your money.

1. Move Somewhere Better for Your Kids to Grow Up

I grew up in a safe middle-class neighborhood, where my parents just told me to be back by dark.

While my own daughter isn’t old enough to run around by herself, we live in a neighborhood where I’d feel comfortable with her doing so. It’s a walkable neighborhood with plenty of local amenities. In fact, we don’t even own a car!

With more money comes the freedom not just to live in a bigger McMansion. It also comes with the freedom to design a better life, for both you and your children. (Psst: Lifestyle design is a recurring theme among ways to buy happiness.)

2. Buy Security for Your Family

Money lets you buy safety and security for your family, beyond simply living in a great neighborhood.

Use your money to buy excellent health insurance for your family. If you’ve reached financial independence and quit your high-octane job with all its benefits, try these options for health insurance for early retirees.

If you’re still dependent on your job to cover your living expenses, buying security might mean life insurance or long-term disability insurance. Although one of my favorite hidden benefits of the FIRE lifestyle is that you often don’t need these insurance policies, because you live on a fraction of your income and build your net worth and passive income so quickly.

3. Switch to Your Dream Career

Far too many people work long hours doing work they “can live with” or worse, actively dislike. In fact, 85% of people don’t like their jobs, according to a 2019 Gallup poll.

Even among middle- and high earners, many feel stressed out and work more than 40 hours each week. Why do they keep doing it? Because after years of lifestyle creep with every raise, their living expenses demand that high-salary job. You probably know this phenomenon as the golden handcuff.

Instead, imagine an alternative path. Imagine designing your ideal life, doing work you find fulfilling and meaningful, living in the perfect city or town for you. The opposite of the rat race is called lifestyle design, and more money helps you achieve it faster.

That requires you to stop spending so much, so you can build wealth and passive income faster. Because the lower your living expenses, and the higher your passive income, the less you rely on your day job to generate income.

Which in turn means you can quit your high-stress day job and go do work that you find meaningful — even if it doesn’t pay as well.

4. Volunteer

That work could even involve volunteering for a cause you feel passionate about.

Once you reach financial independence, you can cover your living expenses with passive income alone. Which means you no longer have to work for a paycheck at all if you prefer, and you can volunteer full-time.

Of course, no one says you have to quit your job to volunteer. But having more money means less dependence on working full-time, which frees up more of your time to volunteer as you see fit.

5. Travel

My family and I have lived overseas for six years now, and we love it.

Our daughter Millie even has two passports! She’s a dual citizen, having been born in Brazil to American parents.

Before the coronavirus pandemic, we visited around ten countries each year, on average. We typically spend around two months of the year in the US, and the rest of the year abroad.

And we’ve had some incredible experiences. Experiences like beach camping in Oman and watching bioluminescent algae spark with light as the waves crashed on the beach. Or exploring the ancient cave city of Uplistsikhe in the Republic of Georgia. Or spending a month living in historic Prague, or a month in the medieval caruggi district in Genoa in a former palace.

These are all life experiences we could never have had without money. Spend your money on experiences that broaden your horizons, rather than on material items that offer only a quick bump in happiness.

6. Treat Your Friends & Family

It makes me happy when I treat my parents or my siblings to dinner every once in a while. It makes me happy to occasionally pick up the bar tab when I’m out with friends.

Not often enough to rub it in anyone’s face, or so that people come to expect it. But it’s nice to be able to treat your loved ones sometimes, with no strings attached.

You can do that when you have money. And, for that matter, less dependence on your job means more freedom to spend time deepening your relationships with friends and family.

And no one says that it only makes you happier to spend money on friends and family. Randomly buy coffee for the person behind you in line at the coffee shop. Or put money toward the meal of the family sitting nearby at a restaurant, particularly if they look like they could use the boost.

For that matter, put your money to work for the people who need it the most.

7. Give Money to Charities & Nonprofits

Your time isn’t the only thing you can volunteer when you have more money.

Donate your money to charities and nonprofits that make the world a better place. Charities that align with your values. That do lasting good for the neediest people on our planet.

Perhaps surprisingly, a decade of research shows that your money actually pays greater happiness dividends when you give it to others than when you spend it on yourself.

Having more money is great — if you use it in the right ways.

8. Help Your Kids with Their College Costs

College is outrageously expensive. And even more so when you add the interest from student loans on top of tuition, room and board, books, and other student living expenses.

So? Use your money to help your kids with it. After all, what’s the point of building wealth if you can’t set up your children for success? You certainly can’t hold onto it after you kick the bucket.

Which doesn’t mean you should necessarily send your kids to an overpriced $60,000/year liberal arts college. Try these college tuition hacks to lower your kids’ education costs.

9. Spend More Time Being Active

Researchers at Yale and Oxford found an intriguing result in their 2020 study: as much as money boosts your happiness, exercise makes you even happier.

In their study of over 1.2 million Americans, those who exercise regularly felt mentally unwell an average of 35 days a year. Those who didn’t exercise regularly felt unwell — as measured by depression, stress, and emotional problems — an average of 53 days per year.

In fact, physically active people feel as good as inactive people who earn about $25,000 more per year.

Again, more passive income and less dependence on your job frees up more time to be physically active. I work out every day, plus take my daughter on a 45-minute walk. At 40, I still have a six pack, and use exercise as a critical way to manage stress.

Which says nothing of my longer expected lifespan, or the fact that I don’t feel guilty eating the occasional dessert.

An active life is a better life. And more passive income makes it easier to scale back your working hours and exercise more.

10. Master Something Meaningful & Challenging

Instead of fixating on goals, try pursuing mastery.

I like goals, but they come with an inherent risk. Too many of us frame a narrative around goals of “I’ll be happy when…” Then after they achieve that goal, they celebrate for a day — then set a new goal, and return to their baseline happiness level.

Try instead to build good habits, in the pursuit of mastering difficult but rewarding skills and tasks. Do you really need to run a marathon, or is it more important that you be an active, healthy person? I know plenty of ex-marathoners who hate running today, and don’t work out much anymore. They trained like a fiend for their marathon, were completely miserable for six months, ran their marathon, then promptly threw up and said “I’m never doing this again.”

I don’t run competitively anymore. But I’ve incorporated fitness and a daily workout not only into my routine, but into my identity.

Become a master musician, or painter, or writer, or cook, or whatever appeals to you personally. Aim for daily practice and improvement; pursue mastery, rather than arbitrary goals. Embrace challenges and push through the adversity that comes from them.

And yes, science backs this one up too. One study by researchers from the University of British Columbia and the Barcelona School of Management found that those who push through adversity live happier lives than others.

That practice of pushing through adversity also prepares you better for life’s tragedies and traumas as well. They hit all of us sooner or later, and the mental toughness from daily practice will help you recover your happiness faster when life throws you a curveball that hits you in the back.

11. Retire Early

When you reach financial independence, work becomes optional. You can retire early if you like.

I personally don’t plan to, because I find meaning in my work. I get to teach people about real estate investing, passive income, and financial independence! I get to teach and write about financial literacy! Which is my way of changing the world. I truly believe that financial illiteracy ranks among the worst causes of poverty, at least in wealthy countries like the United States.

Doing meaningful work brings happiness. But if you don’t know yet what work would give your life the most meaning, don’t give up on the notion of FIRE. Aim to retire early — even if you eventually change your mind after reaching financial independence, and discover the work that brings your life meaning.

Final Thoughts

Average people moan that money doesn’t buy happiness, and they can tick off all the reasons why money can’t buy happiness. They’re wrong.

The reason most people think money doesn’t buy happiness is that they use money incorrectly. They use it to buy things, status symbols like bigger houses and cars.

How can money buy happiness? By enabling you to sculpt your perfect life.

Money buys freedom, safety, and security for you and your family. Money can buy experiences that make you happy and help the world become a better place. And you can invest it to create passive income, which in turn severs your dependence on your high-stress job to survive.

If nothing else, build wealth for the pleasure of giving it away and spending it on other people. You’ll derive far more happiness from that than from buying the latest gadget or car.

How do you plan to buy happiness with money?

This article originally appeared on and was syndicated by

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Claire is a student turned financial enthusiast who has a passion for helping others. Her goal is to help as many people reach financial independence and early retirement as possible. When Claire isn't working on her blog, you can find her buried in a good book, testing recipes in the kitchen, or outside playing with her ducks.