Happiness & Money: Studies, Examples, and Tips

Discover the ways in which money does and doesn't buy happiness and how this changes over adult development.

*This page may include affiliate links; that means we earn from qualifying purchases of products.

Happiness, which may be described as a combination of eudaimonic happiness (meaning and purpose) as well as hedonic happiness (positive emotions) can arise in many moments as a result of many different experiences. We intuitively understand how money can increase the frequency and duration of these happy experiences. But why does money increase happiness for different people in different ways? And what are the best ways for us to spend money if our goal is to increase happiness?

It turns out that developmental psychology can answer this question. So, in this article, we’ll explore how our development—and changing definitions of what is important—leads us to spend and benefit from our money.

Before reading on, if you're a therapist, coach, or wellness entrepreneur, be sure to grab our free Wellness Business Growth eBook to get expert tips and free resources that will help you grow your business exponentially.

Are You a Therapist, Coach, or Wellness Entrepreneur?

Grab Our Free eBook to Learn How to
Grow Your Wellness Business Exponentially!

✓ Save hundreds of hours of time ✓ Earn more $ faster
✓ Boost your credibility ✓ Deliver high-impact content

What Is The Correlation Between Money & Happiness?

Many studies show that more money is generally correlated with more happiness. Initially, this effect appeared to be stronger in poorer countries—if we’re struggling to meet our basic needs, money is more likely to increase our happiness. More recently, it was found that the effect was stronger in wealthier countries (Oishi, 2022). This led some researchers to ponder why money leads to more happiness sometimes and not others.

The “end of materialism” hypothesis predicts that the money–happiness correlation should get smaller as a society gets richer. An alternative hypothesis could be that as a society gets richer, people’s desires for material goods could also grow (Oishi, 2022). Although these researchers have interesting theories about why money generates more happiness in different countries, they’re not considering how people spend money (and it turns out that this is important!)

What About Us? The Relationship Between OUR Money and OUR Happiness
Other research shows that how we spend our money has a big impact on our happiness (Dunn & Norton, 2013).

Specifically, these “money & happiness” researchers recommend that we should:

Buy more experiences (and fewer material goods)
Use money to benefit others rather than ourselves
Buy many small pleasures rather than fewer large ones
Not buy extended warranties
Delay consumption, in general
Reflect on how peripheral features of our purchases may affect our day-to-day lives
Avoid comparison shopping
And pay close attention to the happiness of others (Dunn et el., 2011).

Keep in mind that this research only looks at how money leads to happiness on average. In other words, this may be true for you, or it may not be true for you.

In the next section, we’ll talk about how to figure out the best ways for you to spend your money, depending on your developmental stage.

Money > Happiness When It Matches Our Beliefs, Meets Our Needs, or Improves Our Emotions
The existing research fails to addresses whether our buying habits match our beliefs, meet our needs, and improve our emotions. But these are ways by which money increases happiness. So if money doesn’t do these things for us, it’s not likely to make us happy.

So how do we make our buying habits match our beliefs, meet our needs, and improve our emotions?

Money & Happiness Across Adult Life Stages

Life stages—or developmental stages—represent the different perspectives we move through as we go through life. Each stage has a dominating worldview or perspective (Wilber, 2007). This dominating perspective affects how we view every single thing in our lives, including our spending. In other words,

If we spend in ways that don’t reflect our worldview, it’s not likely to make us happy.
If we spend in ways that do reflect our worldview, it is likely to make us happy.

Before continuing on to discuss how money can increase happiness at each stage, let us quickly review the stages.

The 8 Life Stages

I am my body
I am my personality
I am my actions
I am my outcomes
I am my understandings
I am my patterns
I am my awareness
I am

You’ll soon discover that all of the suggestions made by researchers on how to spend money focus only on one or two developmental stages. In fact, for people at other stages, the advice to do what is best for the average person is downright destructive!

In the sections below, we’ll talk about what to buy at each life stage. I’ll refer to the stages by colors of the rainbow to help you keep track of how we move through these stages, from red to violet.

All-Access Pass - Wellness PLR Content Collection

Money & Happiness at The Red Stage

At the red stage, our dominating perspective is self-focused or body-focused. We feel that if we can just meet our own immediate needs, we’ll be happy. Approximately 5% of the adult population is in this stage (Cook-Grueter, 2014).

Perspective: I am my body.
Beliefs: If I can just be bigger, stronger, or more clever than other people, I’ll be happy/safe. Everyone is out for themselves.
Needs: Physical safety, survival, taking care of my body.
Thoughts: I could die. I am fragile or in need of protection. I must defend and protect my physical body. When I feel bigger, stronger, or more clever, I think I’m better than others. When I feel smaller, weaker, or less clever, I think I’m not good enough.
Emotions: Positive emotions emerge from feeling safe; negative emotions emerge when feeling unsafe.

How to Use Money to Boost Happiness at the Red Stage
At this stage, spending money on material, physical things is likely to have the greatest impact on our happiness. Often, people at this stage have few financial means, and buying things that make them feel safe, protected, secure, or protected likely has the greatest benefit for them.

Money & Happiness at The Orange Stage

At the orange stage, our dominating perspective is personality-focused or peer group-focused. We feel that if we are completely accepted by our small group (family, social group, religion, race, political group, etc…), we’ll be happy. Approximately 10% of the adult population is in this stage (Cook-Grueter, 2014).

Perspective: I am my personality.
Beliefs: If I can just get the approval of “my” people, I’ll be happy. The right type of person is the type of person that I am.
Needs: To feel like my personality is good. This is usually achieved by placing oneself around like-peers, “yes-men”, or others who provide validation.
Thoughts: My value depends on what others in my group think of me. When accepted, I think I’m better than others. When rejected, I think I’m not good enough.
Emotions: Positive emotions emerge from positive social experiences like social approval, inclusion, and acceptance by the group; negative emotions emerge when given negative feedback or constructive criticism and when rejected by the group.

How to Use Money to Boost Happiness at the Orange Stage
At this stage, spending money on our small group likely gives us the most happiness. We might buy gifts for our family members, donate to our church, or spend money taking a trip with our best friends. At this stage, spending money on those we are close to is likely to have the biggest impact on our happiness.

Money & Happiness at The Yellow Stage

At the yellow stage, our dominating perspective is action-focused or skill-focused. We feel that if we can just take the right actions, we’ll be happy. Approximately 37% of the adult population is in this stage (Cook-Grueter, 2014).

Perspective: I am my actions.
Beliefs: If I can just take the right actions, I’ll be happy. The right type of actions are the actions I would choose.
Needs: To feel like my actions are right and good.
Thoughts: My value depends on the actions I take. When I take actions that are valued by the larger group, I think I’m better than others. When I take actions that are NOT valued by the larger group, I think I’m not good enough.
Emotions: Positive emotions emerge from positive actions; negative emotions emerge from negative actions. What is defined as a positive action or negative action varies from person to person.

How to Use Money to Boost Happiness at the Yellow Stage
At this stage, spending money on action-related items or experiences is likely to give us the most joy. We might buy a musical instrument to play. We might buy a tennis racquet so we can play tennis. Or we might buy cake-making pans so that we can bake. Purchases that help us engage in the actions we value are likely to have the biggest impact on our happiness at this stage.

Money & Happiness at The Green Stage

At the green stage, our dominating perspective is outcome-focused or achievement-focused. We feel that if we can just achieve the right things, we’ll be happy. Approximately 30% of the adult population is in this stage (Cook-Grueter, 2014).

Perspective: I am my outcomes.
Beliefs: If I only achieve X, I’ll be happy. The only valuable achievements are the ones I think are valuable.
Needs: To feel like my outcomes are good.
Thoughts: My value depends on what I achieve. When I achieve my goals, I think I’m better than others. When I fail to achieve my goals, I think I’m not good enough.
Emotions: Positive emotions emerge from achievement and positive outcomes; negative emotions emerge from failure.

How to Use Money to Boost Happiness at the Green Stage
At this stage, spending money on experience or outcome-related items is likely to give us the most joy. Overall, society is thought to be in this stage (Wilber, 2000), which is probably why most researchers suggest this is how we should spend our money (e.g., Zhang et al., 2013). If we are at this stage, we might buy a trip to a tropical island. We might buy tickets to a concert. Or, we might take a series of classes to help us achieve our career goals. These experiential and/or outcome-focused purchases are likely to have the biggest impact on our happiness at this stage.

Well-Being PLR Courses - Grow Your Business Fast

Money & Happiness at The Teal Stage

At the teal stage, our dominating perspective is understanding-focused. We feel that if we can just understand ourselves and others (and they can understand us), we’ll be happy. Approximately 11% of the adult population is in this stage (Cook-Grueter, 2014).

Perspective: I am my understandings.
Beliefs: If I can understand myself and others better (and they can understand me), I’ll be happy. The right values are the ones I have.
Needs: To better understand myself and my world.
Thoughts: My value depends on how well I understand myself and my world. When I have more understanding or knowledge, I think I’m better than others. When I feel confused or realize that I got something wrong, I think I’m not good enough.
Emotions: Positive emotions emerge from understanding something; negative emotions emerge from a lack of understanding (or getting something wrong).

How to Use Money to Boost Happiness at the Teal Stage
At this stage, spending money on things that help us better understand our world or live our values is likely to give us the most joy. We might go on meditation retreats or spend money to join groups where we can learn from people who are very different than us. These understanding-focused purchases are likely to have the biggest impact on our happiness at this stage.

Money & Happiness at The Blue Stage

At the blue stage, our dominating perspective is pattern-focused or process-focused. We feel that if we can just see through and undo our (and society’s) negative patterns, we’ll be happy. Approximately 5% of the adult population is in this stage (Cook-Grueter, 2014).

Perspective: I am my patterns.
Beliefs: If I can undo my negative patterns (or the negative patterns of society), I’ll be happy. The right way to resolve internal and external patterns is the way that I choose to resolve them.
Needs: To understand the roots of emotional pain, move past trauma and cruelty, and stop the patterns of behavior that lead to human suffering.
Thoughts: My happiness arises from patterns (both internal and external)—patterns that were created through conditioning from peers, family, community, and society. Internal patterns may include limiting beliefs or bad habits; external patterns may include oppression or racism. When I can see the patterns, I think I’m better than others. When I feel trapped in a pattern, I think I’m not good enough.
Emotions: Positive emotions emerge from identifying a pattern and stopping it from playing out; negative emotions emerge when we realize that we are still stuck in a specific pattern (personal or societal) and don’t know how to get out.

How to Use Money to Boost Happiness at the Blue Stage
At this stage, spending money on things that help us change personal or societal patterns is likely to give us the most joy. We might contribute to organizations that are making a difference in some way that’s meaningful to us. We might also buy self-help books or take classes to get to the route of what we are the way we are. At this stage, making purchases that help us rewrite internal or societal scripts is likely to have the biggest impact on our happiness.

Money & Happiness at The Indigo Stage

At the indigo stage, our dominating perspective is awareness-focused or consciousness-focused. We feel that if we can just become aware of everything, we’ll be happy. Approximately 1.5% of the adult population is in this stage (Cook-Grueter, 2014).

Perspective: I am my awareness.
Beliefs: If I can just transcend my ego (which includes all of the self-identifications of the earlier levels), I’ll be happy. The right way to transcend the ego is the way that I choose.
Needs: To find the self, to move beyond suffering, to find true well-being.
Thoughts: I begin to observe all the thoughts that I’ve had in all the earlier stages including the ones that lead me to think, “I’m better than others” and “I’m not good enough.” When I have greater awareness, I think I’m better than others. When I have less awareness, I think I’m not good enough.
Emotions: I observe how positive emotions emerge in the same ways they did at any of the prior stages; I observe how negative emotions emerge in the same ways they did at any of the prior stages.

How to Use Money to Boost Happiness at the Indigo Stage
At this stage, we realize that wanting anything (i.e., attachment) just causes suffering. We now can directly observe that while spending money can provide temporary happiness, it always ends in suffering (that happiness fades or we lose the thing we bought). At this stage, we might stop spending money on all wants (other than basic food and shelter), give our possessions away, and/or donate our belongings to non-profits. At this time, money does not bring us happiness, and that forces us to look inward and grow.

Money & Happiness at The Violet Stage

At the violet stage, our dominating perspective is oneness-focused. Happiness has now infiltrated all of our experiences. We spend or give away money when it feels right, guided by the desire to serve the whole of humanity. Spending is unlikely to make us happy because we already are happy. Approximately 0.5% of the adult population is in this stage (Cook-Grueter, 2014).

Well-Being PLR Article Packages - Grow Your Business Fast

Articles Related to Money & Happiness

Want to learn more? Check out these articles:

Books Related to Money & Happiness

If you’d like to keep learning more, here are a few books that you might be interested in.

Final Thoughts on Money & Happiness

As you can now see, the way we spend money has an impact on our happiness, but this varies widely across developmental stages. By considering what ways of spending feel best to us (and trying to identify what stage we’re in), we can likely make purchases that better reflect who we are, and thus, make us happier.

Don't Forget to Grab Our Free eBook to Learn How to
Grow Your Wellness Business Exponentially!

References

Cook-Greuter, S. (2014). Ego development: A full-spectrum theory of vertical growth and meaning making. mimeo, Wayland.
Dunn, E. W., Gilbert, D. T., & Wilson, T. D. (2011). If money doesn't make you happy, then you probably aren't spending it right. Journal of consumer psychology, 21(2), 115-125.
Dunn, E., & Norton, M. (2013). Happy money: The science of happier spending. Simon and Schuster.
Oishi, S., Cha, Y., Komiya, A., & Ono, H. (2022). Money and happiness: the income–happiness correlation is higher when income inequality is higher. PNAS nexus, 1(5), pgac224.
Wilber, K. (2000). Integral psychology: Consciousness, spirit, psychology, therapy. Shambhala Publications.
Wilber, K. (2007). Integral spirituality: A startling new role for religion in the modern and postmodern world. Shambhala Publications.
Zhang, J. W., Howell, R. T., & Caprariello, P. A. (2013). Buying life experiences for the “right” reasons: A validation of the Motivations for Experiential Buying Scale. Journal of Happiness Studies, 14, 817-842.

Are You a Therapist, Coach, or Wellness Entrepreneur?

Grab Our Free eBook to Learn How to Grow Your Wellness Business Fast!

Key Articles:

Content Packages: