Smart Reasons to Save, Use and Invest Money

How Money Can Improve Your Life and Make You Happier

There are some studies out there that claim that earning more than $75,000 a year can’t make you more happy in your day-to-day life.  If you want to read an article that claims such a reality, check out this article at Businessweek: After $75,000, Money Can’t Buy Day-to-Day Happiness.  The article is based on of a Gallup-Healthways Well-Being Index, which surveyed 450,000 Americans in 2008 and 2009 about their household income, and emotional state during the prior day and overall feelings about their life and well-being.

So it got me thinking, how could making over $100,000 improve my day-to-day life and potentially introduce more happiness in my life.  let’s say that I made $150,000 in discretionary income per year (this amount is after all taxes have been taken out).

Having Money

Here is how such an income increase could improve my happiness levels

Each year use the $150,000 to establish a dividend stream for money to use to increase my lifestyle.  Ideally I would purchase various dividend stocks that would provide around a 5% return.  This “dividend stream” money would be the basis for making the improvements in my life and in the process making me happier.

So after $150,000 invested for one year, the following next year I would have around $5,000 to increase my lifestyle spending or make me happier.  Then the following years I would continue to increase my money amount to used for life improvements and my happiness by $5,000 each year.  So after 5 years, I would have $20,000, after 10 years I would have $45,000* to spend to make my life better.

After saving for two (and maybe three) years I would have the finances to have at least one incredible overseas vacation annually.  While this doesn’t directly improve my happiness level, just thinking about having such an option makes me happy right now!

After establishing this “Happiness Increasing” dividend stream, I would do the following:

  • Hire a housekeeping services to clean our house a few times a month (perhaps weekly).
  • Join some athletic club or at least get a gym membership.
  • Joining or creating a community improving group to help with city concerns and improve the life of all the citizens.
  • Become a “Life Changer“.  By this I mean identify either a family or individual that is incredible in every aspect except with money.  Then help without them realizing it.  This would be accomplished by creating a business and hiring them or something similar that would help them out in a small way.  Granted, it wouldn’t be much help financial, but any help helps (lol).  And who know, perhaps the business that your create for the individual could help by being profitable.  Eventually after 5 or 10 years switch control the individual and become a minor partner or something similar where you wouldn’t be as involved.  Then your could focus your energies on someone else that needs help.
  • Become creative, if not in the traditional drawing, sculpting ways, then perhaps using technology.
  • Go out-to-lunch more and become a regular at such places.  Warren Buffett does this in his hometown and he seems to enjoy doing so.

I’m just scratching the surface, here, but the basic idea is that if you can’t increase your happiness level with more money, you are not trying to do so.  Money is a tool, and as such it can help you build happiness if you use it intelligently.

What ways can you think of to create happiness with money, please comment below any ideas that you can think of.




*the first year is considered the seed year, so it doesn’t count in my dividend stream, so because of the seed year, after 5 years I only have $20,000 but after 10 years I have $45,000 instead of $40,000 (the 5 year amount doubled).

28 Responses to How Money Can Improve Your Life and Make You Happier

  1. If I had more money… I can:
    (1) treat my parents out to vacations more often, upgrade them to business class, send them to really nice hotels. This would DEFINITELY make me feel like a better daughter.
    (2) buy a house more quickly, have a lower monthly payment because my down payment would be bigger => lower stress!
    (3) hire a night nurse if we were to have a kid, thereby guaranteeing I can get more restful sleep (your quality of sleep affects everything – so I bet your bottom dollar this would increase my happiness by 100x)
    (4) help out other family members to achieve their goals. Again makes me feel like a more involved part of the family.
    (5) Travel, travel, travel. Weekend getaways to bed & breakfasts, grand safaris in Botswana, culinary tour in France and Italy… I can go on. These experiences will certainly put a smile on my face.

  2. Doing things for others definitely helps your happiness levels. You could help younger family members through college.

    With more cash you can take on hobbies that you just can’t without it. For example you could learn to fly a plane.

    You are able to donate more cash to charities. This can help your feelings of wellbeing.

    You can buy your wife a boob job, then you would be more happy! ; )

  3. Having financial independence brings peace. The 3 things I’d do to help make a happier life:

    1) For me, my time is more valuable than money. I can create/earn more money but time is finite.

    Building wealth will allow me to “retire early.” Retirement for me doesn’t mean that I stop working, it simply means that I no longer have to work for the sole purpose of a paycheck. This will allow me to have time to can serve, volunteer, start businesses, and do whatever I wish.

    2) It’s no secret that Americans LOVE STUFF, and I’m no different. If I had some extra money I’d take a 3 week trip to the Fijian Islands and stay in a 5-star resort.

    I’ve looked into this and it costs about $1500-2000/day. But I’d have my own beach front and nothing but peace and quite. Sounds like my kind of fun!

    3) I’d give more and help as many other people as I could.

    Having extra money and wealth will enable you to give like no one else. Giving, for me, brings a great deal of happiness to my life, and there isn’t much more I’d love to do than to help those in need.

    4) Being financially independent also allows for you to live a stress-free life (relatively). Finances are the #1 cause of stress in this country, the #1 cause for divorce, and the #1 or #2 cause for male suicide.

    Financial independence gives you the freedom to no longer have to carry the burden of debt and bills. If the market tanks, it won’t matter much.

    If America is going to go bankrupt…then I could just move to another country.

    Money isn’t the source of all happiness, but it does allow for you to buy stuff, enjoy memorable moments/trips with your family, and allows for a life not filled with the constant worry that so many of us deal with day-to-day.

  4. If I had more money, it would make me happier by:
    1)being able to pay off my debts. I just had to finance an outstanding hospital bill so it wouldn’t go to collections. The knot in my gut that formed as I was signing the paperwork still hasn’t gone away.
    2)being able to visit my family across country. Instead of visiting one week a year, I would go 5-6 weekends a year. I wouldn’t feel like I’m missing watching my younger cousins grow up, and all the myriad family events of birthdays, holiday parties, etc. that make the difference between simply being related and being a family.
    3)I would spend a week camping somewhere…. somewhere with a lot of trees and little chance of stumbling across another person or sign that outside civilization exists. I’d do this as often as I needed to get away and recharge.

  5. 1) I would definitely do an around the world trip in style. We love traveling, but we usually do so frugally. It would be pretty awesome to travel in the lap of luxury for once. 🙂
    2) Health insurance is a big worry for me. I’m not sure what I can do with money here. Maybe set up a heath care fund for my extended family.
    3) I like where we live, but would like a bit more space. If money is no object, then I’d probably move up the the penthouse. 😉

  6. If I had more money I would:

    1) Be happier about going to school. If money wasnt an issue, I wouldnt feel as stressed about the loans racking up. I also would try and get the highest degree possible.

    2) Have a chance to make a living doing what I really want to do. One thing I would love to make a living at is stocks. I have dabbled in trading stocks, options, and futures but would love a chance to do that everyday. That requires a fat bank account!

    3) Fund a charity to help the needy. Those with money trees know others with money trees. Cash = power = getting your charity noticed.

    I am happy and thankful for all I have. I have been blessed with great family and friends. But I would be thankful for more too 🙂

  7. Donate my time more to help various organizations. Currently I am only able to give time due to limited funds.
    I would like to just make someones night, if we were out to dinner just buy the table next to us their dinner.
    Work with kids who are less fortunate and give them things that their parents aren’t able to give them. It bring a smile to my face as well as my heart.

  8. Oh, man, don’t get me started, especially if that income were passive, dividend or real estate income.

    1. Buy time! Yep, I know there are only 24 hours in the day, but with more wants and needs supported by passive income I could work less and spend more time doing what I want to do, like spend time with my family.

    2. Shift from working extra to volunteering. This is along the same lines as doing what I want to do, but it shifts working at a job to volunteering for a cause.

    3. Spend time overseas learning the language and culture from the locals.

    4. Set a Guinness World Record. I’m not sure which one, but I’ve always wanted to set a world record. 100 meter dash is probably not in my future, so I’m probably stuck with the Guinness variety. Some sweet passive income would go a long way in helping me get there.

    5. Bring an invention to market. Don’t you hate watching infomercials for products you thought of 5 years earlier? Well no more! Some juicy cash could be great seed money for the next snuggie!

    Oh, I’d also play a lot more practical jokes…

    I could go on and on, but I’m pretty sure there’s a word limit, haha 🙂

  9. With that income stream, I think I could improve my quality of life and happiness quite a bit.

    Just three quick ways that come to mind.
    (1) Quickly build a nest egg for my kids college savings. It would bring great peace of mind knowing that their future education was secure

    (2) Allow for us to contribute more to charity. Right now, since we don’t have discretionary income, we are mainly able to donate time and used items.

    (3) Being able to ensure that we could take at least one nice vacation per year, can do a lot for happiness.

  10. If I had more money, I would:

    1. Pay off my mortgage – this would significantly reduce my overall level of debt and would help me sleep at night a whole lot better.

    2. Start saving for my kid’s education – Sallie Mae has never been nice to me. I definitely do not want that lady going anywhere near my kids. She is such a bad influence.

    3. Invest in more online properties – Have you seen the returns a decent website can make? I would buy as many of these small, income producing properties as I could manage. Then I would hire someone to manage them for me.

    All of these things would allow me to spend more time with my family; which would easily ‘buy’ me a certain level of happiness.

  11. It’s not so much the level of income but rather the degree of freedom. To me, what would really make me happy is having a large income stream derived from investment income and passive income, from multiple egg baskets, and use this to re-invest for the future and pay down debt.

    The future is always getting better, so keep your savings rate high and you will benefit down the road. 🙂

  12. If I had more money I could/would:

    1) Give more – both time and money – to people in need. That’s the best feeling!

    2) Take courses without worrying about how expensive they are. I could learn about psychology or womens studies, just for fun.

    3) Learn another language by immersing myself in the culture. For instance, I could go to Paris for some time to learn French (always a dream of mine)

    4) Put my brother through school. He’s never been able to afford it and seeing my family happy makes me happy!

    5)See my family more. I can’t afford flights to Winnepeg, MB right now, but if I made $150K /year I’m sure I could go a few times a year and watch my cousins grow up

    6) Go to the spa more often. There’s something seriously amazing massages do for your psyche.

    7) Do yoga. It’s expensive. But it’s proven to up your happiness levels.

    8) Meet some of you awesome bloggers!

  13. 1. Randomly buy gifts for people on a regular basis, kinda like a modern day Santa Claus (without the beard or belly).

    2. Build and fully stock a wine cellar.

    3. Teach others how to create the same wealth that I am enjoying.

  14. 1 – buy a second car (for those cold walks to the train and when the number one car is broken down)
    2 – pay someone to do my dishes (i hate them with a passion, it also doesn’t help that I don’t have a dishwasher
    3 – buy my own house (i hate renting…) with a non-coin operated washer/dryer. haha
    4- travel more often

  15. 1) The additional income would mean our choice regarding whether or not Mrs. SPF stays home to raise our children would be exponentially easier. Our biggest struggle with this decision is that we want to maintain a certain lifestyle (the ability to upgrade our home, take vacations outside of North America, to save for retirement + lil’ SPF’s education).

    2) Agreed 100% on housekeeping service! To get those hours back every month means more time for projects and family time.

    3) Reduced stress. Lack of money causes stress, at least to us. If we didn’t worry about money I believe our stress levels would drop some.

    4) A more secure marriage. Mrs. SPF and I don’t argue about money. My parents did however. They ended up being part of that statistic that indicates that if a marriage were to end the cause is most likely to be money issues/problems/disagreements.

  16. If I had extra money, I would:
    1. Buy my mom a new car.
    2. Give money to people that I feel really deserve it. For example, I would cover my physical therapist’s student loan payment for a month because he is awesome and I would love to help him.
    3. Give something meaningful to those that are working so hard but seem to have trouble getting ahead. (New tools to a carpenter, that kind of thing.)
    4. I would travel at will. For instance, I am so sick of winter that I would just drive to the airport and hop on a plane on a whim.
    5. Hire a housekeeper.

    I am sure there are more, but that is off the top of my head. I may have a post brewing for myself…

  17. As we’ve started making more money, we’ve been using it mainly to pay off our home. Since that day is less than 3 months away, we have been giving major thought to what to use our extra income for after that. Here is what we’ve come up with so far:

    1) More investment income (we also invest in dividend stocks)

    2) More cash savings. I’d like to start saving our current mortgage payment every month in cash so we can pay for our next house in cash instead of needing any loans again. We have been doing that for our cars since 2010. Plus, that cash is like an extra emergency fund until we decide to use it.

    3) More fun money. We will be using some of the monthly extra to fund more vacations and our personal fun money accounts.

    I use some of my own fun money for random acts of kindness like paying for the groceries that someone in front of me would have needed to leave behind otherwise (happens more often than it should). My husband uses some of his money to fund charities of his choice.

    Overall, our happiness level seems to be more dependent on how our personal relationships with friends are going than it is based on money. But I like padding and it does help me worry less.

  18. Money could improve my happiness by enabling me to:

    1) Give more!

    2) Travel at the drop of a hat to cheer on our university’s men’s basketball team in tournaments. And buy season tickets to the games when we are alumni.

    3) Travel to the many places/sights I want to see in my life: the Northern Lights, the Louvre, Athens…

    4) Buy the the cute dresses that catch my eye! And the electronics that catch my husband’s.

    5) Spend more time with far-away family and friends.

  19. 1) Invest in my own business and provide new product offerings and features for users and clients.

    2) Send my parents on a 30 day cruise every year that they want to travel. They love cruising!

    3) Not feel guilty buying a car worth more than $30,0000, since I know it’s a waste of money.

    4) Go on a two week vacation around all four major tennis opens with tennis buddies!

    5) Establish a sizable Yakezie Scholarship Fund for people who need help with furthering their education.

    I’m not sure what else I’d use the extra money for. I feel I truly have everything I need and want, and don’t have desires for much more.


  20. What to do with more money ?
    That’s an easy one.
    (1) travel to Europe *every* year, business class instead of cattle car.
    (2) fix up our property with some cool additions, like a wraparound porch.
    (3) fly friends and family with us to Europe. Coach.
    (4) allocate more for direct charity.
    (5) pay the full ride tuition for Number One Son at Carnegie Mellon without too much fuss.
    (7) get a Kubota tractor with all the fixins.
    (8) stock a 300-count humidor with crazy expensive cigars.

    That’s it for now.

  21. I like your idea of becoming a “life changer”, and of investing for an income stream. Those are both outside the normal types of things you’d see in musings of this type. I haven’t really thought about how to create happiness with money, but I like the idea of doing so. (Creating happiness vs. “just” alleviating misery)

    • I would very much like to do that “Life Changer” thing, where I make more money or not. For now I’m just going to work on the “Life Changer” think with my kids. I’m going to do the dividend stream thing with them (in fact, I’ve already started).

      Along with the financial education I’m providing them they should be able to have a much better lifestyle than I had when I was in my teens.

  22. Give most of it away. Might not work for others, but works better than anything else for us. We have a charitable trust fund that we are setting money aside every year with a specific goal. We would accelerate that.

    I would also establish a scholarship fund, not for studies but for entrepreneurship and innovation.

    We will also make sure our parents retirement is funded for. They sacrificed a lot to bring us, we want to make sure they have a comfortable retirement.

  23. Interesting thought.

    Everyone touched on the charity bit, so I won’t elaborate there (but that’s some of what I’ve done with more money..doing special events for my kid’s school).

    Since paying off our mortgages, we’ve had extra money piling up and we’ve just been sitting on it. After a bunch of soul searching, we are launching operation “live with Babci someday in a better school district.” I’ve always been kind of against the McMansion concept, but having more space does offer us some flexibility in case of emergency that our home does not.

    One house we are looking at has it’s own pond on 10 acres. The house is a mess but the land is awesome. The childhood experience of living on an idealic bit of property with a pond that you can ice skate on in the winter and catching frogs and fish on in the spring and summer is awesome. But more importantly, having my children growing up with their grandma and in a better school district is also pretty nice.

    Other things money can buy..most of these are not important to me but they are for some:

    -Money can buy privacy (you can build your own compound).
    -Money can buy prestige (you are more respected if people think you are successful or are a big donor to certain organizations)
    -Money can buy into a powerful network of contacts (ie…exclusive country clubs)
    -Money buys all kinds of experiences that a normal Joe does not have access to. (everything from superbowl to literally a trip into space)
    -Money buys piece of mind and a feeling of security. (if you use part of it to build a hefty emergency fund).
    -Money can influence political agendas.
    -Money can solve all kinds of problems.
    -Money can save a life (my mom had a sibling who died as a child from a minor illness because they couldn’t afford a doctor)
    -Money can buy education which can lead to knowledge.
    -Money is an enabler which is limited only by the morals, integrity and imagination of it’s owner.

  24. @Everybody that commented:

    Thanks for the incredible responses! I’m now going to create my super “Money buys Happiness” post!

    You guys rocks!

  25. If I had more money I would:
    – pay off my CC debt
    – pay off my mortgage
    – pay off my student loan
    – buy an apartment for my parents
    – give financial help to friends and family
    – give more to charities

    Would that make me more happy? YES!

  26. “Money is a tool” to build happiness. Wish I learned this when I was younger. I mistakenly thought the more I had the happier I would be. Big difference!