Money and Happiness: Maximizing Your Happiness in Money Matters

There is no question that money plays an important role in our lives. The fact is we spend a big portion of our waking hours working. But make no mistake: what people actually want is not the money itself; it’s the happiness that money can bring.

There is a common misconception here: many people assume that the more money they make, the happier they will become. To an extent, that’s true. When you have no house to live in and no warm food on the table, making more money does increase your happiness. But beyond a certain point, studies find that additional income brings no increase in happiness. In general, I would say that you reach that point when you are considered “middle class.”

Once you reach this point, making more money is not a good strategy to increase your happiness. What should we do then?

The answer lies in the fact that there is another side of making money: it’s not the amount you make, but how you make it. Once we reach the point where increasing the amount doesn’t increase happiness, it’s time to focus on the other side of the equation. This, then, is what you should do:

Improve the way you make money instead of the amount.

There is nothing wrong with making more money. But you should focus more on how you make money rather than on how much. What’s the use of making a lot of money if your work makes you stressful and unhappy? Isn’t it better to earn a decent income in a way that makes you happy?

Being content plays a role here. In order to move your attention away from making more money, you should learn to be content. You should believe that what you have is already enough. Only then can you move your focus to how you make money.

The next question is: what is the ideal way to make money?

To answer this question, I’d like to refer to an interview with Andreas Illiger, the creator of Tiny Wings. Tiny Wings is a successful iOS game that has sold more than six million copies. Even more astonishing, the entire game (coding, graphics, and music) is created by just one person. You might want to read the complete interview, but here is an excerpt:

Q: How has success changed your lifestyle?
A: I still live in my cheap two-room apartment together with my girlfriend, I still do not have a car (I don’t even have a driver’s license), and most of my days are the same as before Tiny Wings: sitting in my room doing creative stuff. Things that changed: I am buying good food, mostly organic (in [2010] I was very poor and had to buy cheap food); I bought a new laptop and some cool toys.
Q: What would you like to be doing in five years?
A: … I live my passion and never want to do something else, so I would like to do the same thing I do now.

The excerpt above shows us two things about Illiger. First, he was content. He earned millions of dollars but his lifestyle was practically the same. His work wasn’t motivated by material things. Second, he lived his passion. He said that even with the success he had, he wouldn’t want to do anything else. He would keep doing what he had been doing.

That gives us a sign of the ideal type of work for a person: you live your passion and don’t want to do something else. Even with a lot of money in hand, you would keep doing what you have been doing. Why? Because it’s your passion. It makes you feel alive.

Once you reach the middle class, I believe your goal should be to live your passion rather than make more money. Find ways to make a living from your passion. You might not be able to do it right away, but you can start a side project and keep building it over time. Eventually you will reach a point where you can live entirely from your passion.

When that happens, work will feel like play. I like the way Stephen King put it in On Writing:

For me, not working is the real work. When I’m writing, it’s all the playground.

It’s a great way to live, isn’t it?

Photo by F.C. Photography


  1. What perfect timing for a post! I’m struggling with this right now … I have enough saved away to last a few more years, but haven’t yet found that passion that will allow me to work at something I truly enjoy. “Retirement” in the traditional sense of the word, is outmoded – we need to feel engaged as long as we can. Finding that sweet spot is the hard part….

    • Yes, it’s not easy to find the sweet spot. But you can start exploring and experimenting with different things. Remembering what have made you excited in the past will also be helpful.

  2. I love this subject. I’m always excited when people write on the idea of more money =/= more happiness.

    A lot of people assume more money means more happiness. That’s only true for a very short amount of time until they fall back into their unsatisfied selves. I like the way you approached this problem by focusing on HOW you make money. That is powerful.

    If anyone is interested in reading more into it, search for “hedonic adaptation,” or “hedonic treadmill.”

    Reading William B. Irvine’s “Guide to the Good Life,” a book on Stoicism, introduced me to the idea.

  3. I’m happy to see these kind of posts. Life looses its meaning and becomes dry when money becomes the sole motivation. We shouldn’t underestimate the importance of passion.

  4. Hi Donald,

    Glad to see this article, love when I get an article from you in my Google Reader.

    In 2006, living in Thailand, I realized that I didn’t want to teach English to survive. I realized I wanted to do what I wanted, and nothing less. I began by building a fleet of websites with all sorts of topics. Then I started filming video for Youtube and joined the partner program. Then I wrote some books. Then I shot some stock photography of Thailand. I worked really hard for 2-3 years. I stepped up the game in areas that seemed to be taking off.

    Today I have stuck with writing ebooks (26 published) and shooting Youtube video. Both of these are fun, and I’d be doing them whether or not they made me any income.

    Changing the WAY you make money is so important. I know a handful of people personally that are making money from ebooks and other online ventures. They are not tied to a job. They could quit doing anything today for a couple months, years, or a lifetime, and the money will keep coming in.

    Creating something that has everlasting value – a book, song, photo, video, art piece, video game, app for a phone, whatever it is – is VERY SMART and the only way to go if you have it in you.

    I have friends that are working hard everyday online to create content for others. Some are programmers. Some are writing books for publishers. Some are writing blog articles. Some are creating music for Dom Perignon ads in France. They are all making decent money, but they are not working as intelligently as they could. They still have to work to make money.

    Create something of value. Something you love to do.

    Focus on creating things that pay you over time, long-term – not that you work hourly to create for others.

    • Well said, Vern. What you described is also how I work these days. This kind of business takes time to build, but once you get there you have the freedom to live the lifestyle you want.

  5. How much is too much? Many people including me are trying to find how much money is needed the rest of the life. When we do such math, i tend to forget the fact that life cannot be infinite (and need can be infinite) and i cannot afford to spoil or not to focus on happiness when i m solely focusing on earning money without even thinking whether or not i m happy.

    So, it makes sense for me to understand this and pursue happiness (prefer happiness over money). Pursuing happiness is actually a choice, a bold choice to be made.

    Wonderful post that made me to reflect on what i m doing and what i should be doing.

    I m sure that i m going to spend my weekend thinking about this.

    Thank you.

  6. Hey Donald, great blog.

    I think you’re spot on. Money is not life.

    I wonder if chasing money might be a bad idea even when we’re struggling financially.

    Focusing on money often causes us to take shortcuts instead of learning new skills.

    It can cause us to treat the people in our market as objects and means to our own ends — rather than as people whose lives we are trying to make better.

    And sometimes we will seek money as a way to meet our core psychological needs indirectly. It’s a way to prove we are competent, or to get autonomy, or to buy our way out of a bad relationship.

    Because our plan is to meet our need deficits by making a ton of money, and because money often takes a long time to make, we often let our psychological needs go unmet for long stretches of time.

    It’s a shame given that there are more direct ways to meet our needs (for things like autonomy, competence and connection) that don’t require a lot of money.

    Keep up the good work.

  7. This is a wonderful article, that come when I most need it. Made my day better. Thank you.

    @ Vern L: Creating something that has everlasting value – a book, song, photo, video, art piece, video game, app for a phone, whatever it is – is VERY SMART and the only way to go if you have it in you.

    Vern, I love the way you said it. I’m trying hard to create something I love first, and hope others in turn will love it.

    @ Jim: It can cause us to treat the people in our market as objects and means to our own ends — rather than as people whose lives we are trying to make better.

    Jim, I just wanted to say I love what you said, well said. I wish more people would think like that the world will be a better place.

  8. wow, nice post. but here in africa, people don’t actually believe you can be happy without money. happiness for an average african is money, more money, and even more money

  9. I think it’s clear that more money does not mean more happiness. Many rich people have been known to commit suicide so they obviously weren’t happy. There’s nothing wrong with wanting to have as much money as possible. It’s really up to each individual to decide how much is enough. The key as you say is to be careful to do what makes you happy. I think it’s also important not to compromise your values. Great piece and great blog Donald.

  10. I agree with all that this is a great article and it is definitely going to promote thought and hopefully insight on my part. However, it’s easy to eschew money when one has money. It’s easier to abandon the quest for money when one lives in a prosperous country and/or environment. What is hard is facing fear. There are many, many people who have had a dream, followed it, only to fail and fall into despair and poverty. I’ve seen it. Not trying to be a buzzkill, but to bring a different perspective to the topic. Not everyone ‘makes it.’ What holds me back is fear of the future (gotta save for retirement, etc.) and not being able to take care of myself (need health insurance in a country that monetizes medical treatment). I think my fears are real, but at the same time, how does one recognize these legitimate concerns and still pursue ‘the good life,’ one filled with love, joy and purpose?!

  11. This article is spot on, it’s all about living your passions.

    The problem is people don’t believe you can make money out of doing what you actually love.

    They don’t realise that money comes from a by product of doing what you love.

    If you have passion for something, then you have motivation regardless of money. The beauty of that is if you started your business based on your passion then even if you don’t make money initially you still have your motivation intact.

    And because it’s your passion you’re offering people so much value that they want to feed off you and learn from you.

    Good article. I

  12. When I retired I discovered something for which I could not have planned. I had enough money, friends, hobbies and interests but there was an unexpected emptiness of nat having people to care for and about. My work hg become very busy but fun. We should enjoy life but not to the exclusion of others who we may help. Clients, staff and friends. They for me were the internal conversation, when gardening or running or at 4 in the morning; not stress or worry just concern. too many say they cannot wait to retire. It needs more preparation than you think.

  13. Absolutely love this post, Andreas sounds like he’s really got his act together. So many people are changing the mythical rainbow, but once they get there they soon realise the grass isn’t always greener on the other side 🙂

  14. I agree with this post 100%. I wrote a similar post on my blog called “Money and Happiness” and I related it back to Johnny Cash’s song, “Satisfied Mind.”

    As a third year college student, I’m financially struggling, and I know having a little more money would make me happier. I would be thrilled to have enough money to eat something other than Ramen Noodles every night. After graduating college, I hope to land a public relations job that pays well, even if it’s not necessarily my passion. Once I’m living comfortably, however, I want to move onto what I truly enjoy: helping people. Whenever I tell someone my dream job is to work for a non-profit that helps either elderly people, or people who have disabilities, he or she will ask me, “Why? There’s no money in non-profits.” Little do they know, money can’t bring happiness.

  15. Such an intriguing topic, and as you say – so many misconceptions (well, the main one about money = happiness).

    You say that money can bring happiness up to a certain point, I’m struggling to see that if I’m honest, but I do think it’s relative as to where you live. Some people in third world countries are dirt poor – but have treasure chests of happiness, but perhaps that’s their middle class? I prefer to avoid the confusion, and like you say – associate the happiness to what you do, i.e. how you get the money, and not the amount you have.

    I don’t have much to add to the topic of passion here, but I full-heartedly agree that passions are the way to go, that’s if you’re to make not only a fortune, but be happy at the same time. Wonderful thoughts, Donald!

  16. I really agree with improving the way you make money instead of the amount. Very thought provoking post. Thank you.

  17. It all boils down to how we relate to money and if we believe we have enough to realize our dreams. We relate differently to money and those lacking or grow up lacking often internalize beliefs such as money doesn’t grow on trees or more for one means less for another. Money is just a vehicle to realize some of our dreams.
    In health and happiness
    Anita Sig Happiness Therapist

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