How are money and subjective financial satisfaction related to short- and long-term well-being?

What is it about?

Does money buy happiness, or is it our psychological sense of satisfaction with our finances that really matters? This research addresses this question across three datasets that include the United States and Korea, and examines well-being both in the short-term as well as in longer-term analyses spanning approximately a decade or more. Many distinct types of well-being were analyzed as well, such as life satisfaction, emotions, health, psychological well-being, sense of control, depressiveness, and so on. In short-term correlations, across all different measures of well-being, subjective financial satisfaction was consistently and strongly related to better well-being, while income was not related to well-being. Moreover, the more people increased in their subjective financial satisfaction over time, the greater the likelihood that their well-being also increased over time. Changes in income were unrelated to changes in well-being. However, in analyses of whether income or financial satisfaction predicts changes in well-being, subjective financial satisfaction did not predict changes in well-being. Instead, income predicted more positive changes in well-being. That is to say, the higher one's income at the start, the more likely one's well-being is to show a healthier trajectory of change involving a greater likelihood of improving well-being over time or a reduced likelihood of declining well-being over time.

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Photo by 金 运 on Unsplash

Photo by 金 运 on Unsplash

Why is it important?

Money and financial concerns are inescapable realities of life. The question of whether money buys happiness has been one that has captured the attention of many for decades. The present work provides further clarification to this practically important question by providing a more comprehensive analysis across many different types of well-being outcomes, as well as across both short-term and long-term analyses. The findings suggest that both money and subjective financial satisfaction matters for happiness, but in different ways. When looking at short-term correlations, subjective financial satisfaction clearly seems to play a more significant role. Similarly, when looking at how changes in either income or financial satisfaction are correlated with changes in well-being, changes in subjective financial satisfaction play a larger role. However, when looking at whether money or financial satisfaction predicts changes in well-being, money plays a significantly larger role in predicting healthier changes in well-being.

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