A couple of blog entries I’ve written recently have been inspired by academic studies. I’d like to continue this trend for by examining a 2010 study from Princeton university about the connections between money and happiness.

The study found some interesting things.  Firstly it suggests that a higher income does provide greater happiness….but only up to a point.  The ‘point’ the Princeton study suggests is £49377.83 per year of income ($75,000 dollars).  Individuals who have an income above this level are, based on the research, no happier than individuals who earn more.

The study found that for individuals who have an income of less than the ‘point’ did have lower levels of emotional well being and the study also found that pain of life’s misfortunes were made worse the less income an individual had.

Now i’d suggest that other factors come into place when it comes to evaluating happiness. I firmly believe that a range of factors including close relationships with friends and family, satisfaction with our day to day activities and being meaningful members of our society and communities all help toward us leaving happy and satisfying lives.

However I also think the Stanford study has some genuine value and makes the valid point that money plays a significant part (up to a point) in helping us lead happier lives.

Whilst throughout our careers many of us have or will achieve and exceed the income point  the Stanford study suggests the key question is the ability to continue this level of income when our careers start to change and we approach and enter retirement.

I’ve spoken already in previous posts about how retirement has changed over the last few years and how many of us continue to work past the ‘standard’ retirement age.  However many of us do decide to either stop work or spend less time in work when we enter our later years.  This makes it more difficult to maintain the suggested level of income required for ‘optimum happiness’ unless we have prepared for this change.

Preparing for this change means that you and I need to take one action and this action isn’t rocket science.  We need to save more of our income whilst we are working to ensure we are ready for the potential drop in income as we approach out selected retirement age.

Now, I understand that times are tough for many of us.  However by understanding the need to save regularly for our financial future to ensure consistency of income and therefore improve our chances of greater happiness throughout ALL of our lives we can take action now to either achieve or get close to achieving lifetime financial security.

The interesting point about the Stanford study is that it is based on averages.  As we all know none of us are average and will have a greater insight into what we need financially to truly makes us happy both now and in the future.

However the point of the Stanford report still stands.  Income has an impact on our happiness.  The question to ask yourself is…..’am I planning to ensure I have the income I need not only now but also in the future so that I’m able to achieve lifetime happiness?’

As ever I’m interested in your thoughts.  What do you think of the findings of the Stanford study?  Does money buy happiness…up to a point?  and what other factors do you believe are meaningful when it comes to happiness?

As ever I’m interested in hearing your thoughts.