Money Myths: #1 - Money can't buy you happiness

Money can't buy everything, but there are lots of things that can be bought and which will increase your "happiness" level - for example, shelter, food, clothing, education and healthcare. Money is a tool, and it can be used to maximise happiness by spending on the things that are important to you. For example, if your kids getting a good education is important to you, you will be happier knowing that you are regularly saving in a college education fund, than you would be without. Similarly, if you want to provide for your family if anything happens to you, paying for life and disability insurance and having an emergency fund put aside will increase your level of happiness. And many people are happy to be able to afford charitable giving to those less fortunate than themselves.

When people say "money can't buy you happiness" they are generally thinking of people who are unhappy despite being "rich" - but they often forget that their current level of contentment relies on having sufficient money to satisfy their basic needs and some of their aspirations. A recent report issued by the
Pew Research Center found that of those surveyed 49 percent of repsondents with an annual family income of more than $100,000 said they were happy, while only 24 percent of respondents with an annual family income of less than $30,000 reported that they were happy. (The findings are drawn from a telephone survey of a nationally representative, randomly-selected sample of 3,014 adults, conducted from Oct. 5 through Nov. 6, 2005.)

Once you have enough income to take care of basic needs, any excess can be used to maximize your happiness. But in order to do this, you have to know what's important to you, and set some realistic goals. It's often best to put these goals down on paper, with dollar amounts required to achieve them, and a realistic time-frame. If you put down some milestones along the way, so much the better.

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