There’s a raw, often unspoken truth buried in modern life: being broke hurts. Not just practically, but emotionally, psychologically, and even existentially. When we lose our job, our home, our savings—or live under the constant threat of losing them—our sense of safety and dignity takes a hit. Words like foreclosure, bankruptcy, eviction, and pink slip don’t just represent financial hardship; they echo a sense of personal failure, of dreams derailed. They keep us up at night, riddled with panic, wondering if happiness is even possible when our bank accounts are empty.

The fear of financial instability isn’t just for the poor. Even those who seem comfortable are haunted by the possibility of job loss or economic downturns. Thirty years ago, 17% of people feared losing income; today it’s one in four. Despite relative wealth, the gnawing anxiety about being broke remains ever-present. It raises a powerful question: If money is so closely tied to fear and security, can we ever feel happy without it?

The book these pages are from dives deep into this very tension, taking on the enduring question: Does money buy happiness? The answer is nuanced—yes and no. Money does affect happiness, but not in the way many think.

First, let’s state the obvious: income and happiness are significantly correlated, though not strongly. Wealthier people tend to report greater happiness, but only up to a point. Why? Because money buys comfort, status, choices, and security. It allows for better health care, safer homes, quality time, and freedom. It makes life easier to manage, especially when adversity strikes. In that sense, money cushions life’s blows.

But here’s the twist: money has a stronger effect on our happiness when we evaluate our lives overall—as in, “Am I doing well?”—than on how we feel in the moment. In contrast, our day-to-day emotional states—joy, love, stress, sadness—don’t correlate as strongly with how much money we make. So while someone may say, “I have a good life,” thanks to their financial stability, it doesn’t mean they’re smiling more or worrying less on any given Tuesday.

Another layer to this discussion is causality. We often assume money causes happiness, but it might work both ways. Happier people may also earn more—they tend to be more optimistic, productive, and resilient. Research even suggests that people who are happier are often better at making money. So the relationship is complex and reciprocal.

Then there’s the matter of who benefits most from money. The link between money and happiness is far stronger for people with less. For someone struggling to meet basic needs—food, shelter, safety—an increase in income has a dramatic impact. It can mean escaping hunger, avoiding eviction, or affording life-saving medicine. When you’re poor, money doesn’t just add convenience; it adds dignity, security, and peace of mind. For the wealthy, however, more money yields diminishing returns. The additional income may buy comfort, but it also brings stress, pressure, and a creeping inability to appreciate life’s simple joys.

Zooming out even further, this relationship becomes even more pronounced when comparing nations. Wealthier countries are generally happier than poorer ones. But again, it’s not just the money—it’s the accompanying benefits: freedom, democracy, stability, and rights. Money makes a difference, but so do the systems and values that surround it.

Yet there’s a final paradox. In many wealthy nations, even as incomes have skyrocketed, happiness levels have barely moved. Take the United States, where incomes have tripled over decades, but people aren’t significantly happier. Why? Higher incomes tend to shift our aspirations. What once felt luxurious—owning a car, flying first class, even indoor plumbing—now feels necessary. We end up trapped in an endless cycle of wanting more. And as our incomes rise, so do our comparisons. We don’t measure our wealth in absolutes, but in relation to others—neighbors, colleagues, influencers. Even with more, we often feel like we have less.

So, does money buy happiness? To a point, yes—especially if you don’t have enough to begin with. But once basic needs are met, the returns diminish. What’s crucial isn’t just how much money we have, but how we use it, what we value, and how we relate to others. Perhaps the better question is: How do we find contentment, even when money is scarce? That’s where resilience, community, purpose, and perspective come in. Because while poverty can rob us of happiness, wealth alone doesn’t guarantee it.

Credit: Content and insights drawn from The Myths of Happiness by Sonja Lyubomirsky.