How much money do you need to be happy?
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How much money do you need to be happy?
Probably less than you think.
Researchers from the University of Otago have recently published research that showed people living a simple life are happier.
Associate professor Leah Watkins said consumer culture promoted the idea of higher income bringing happiness because people were able to buy more things.
"However, research is clear that attitudes to, and experiences of, materialistic approaches to life do not lead to increases in happiness or wellbeing. Nor do they lead to sustainable consumption necessary for planetary health."
Watkins and co-author professor Rob Aitken said a life of "voluntary simplicity" led to more wellbeing because it provided opportunities for personal interaction and social connection, through things like community gardens, sharing resources and peer-to-peer lending.
Watkins said it was well established that, beyond a certain point, having more money did not reliably boost happiness.
"There's an income curve that up to a certain level as income increases it does lead to greater happiness but above a certain point it no longer contributes to people's sense of wellbeing.
"In fact it may lead to more depression and unhappiness."
The research looked at behaviours such as material simplicity, frugality, self-sufficiency and local procurement. People were happy to work less and live more simply, Watkins said.
"We found that it's not …the frugality that makes the difference but it's the subsequent behaviours, the connections to a community, living one's values - it's those things that lead to well being.
"If you're sharing commodities rather than going to Mitre 10 and buying something… you're building relationships."
Stats NZ wellbeing statistics from 2023 showed that, in income terms, it was only having household income of $30,000 or less that correlated with having low life satisfaction.
In 2023, the average household expenditure was $1598 a week. Housing costs and utilities were almost 25 percent of that. One-person households had average spending of $808 and one parent with dependent children $1115.
Updated spending data is due in early 2027.
Shamubeel Eaqub, chief economist at Simplicity, recently conducted work on social cohesion. He said money was a necessary but not sufficient condition for happiness.
"What we found was when it came to personal income versus satisfaction with life was the satisfaction would generally increase [when income did], but the rate of increase was not one for one.
"Once you're relatively well off that kind of additional improvement in happiness or satisfaction was modest.
"It's when you're stressed about money that causes unhappiness. When you become less stressed about money, it becomes not a source of happiness itself, but it gives you a choice to do other things. It's not the money itself that's making you happy, but the fact that because you have money, you have choices. You have dignity."
Research in 2012 indicated that people earning below the median had the biggest improvement in happiness when they had more money, and the effect plateaued for those in the upper quartile.
The Ministry of Business, Innovation and Employment said the median household income last year was $122,500.
In 2023 it was suggested that an annual salary of just under $180,000 would bring "peak happiness".
Aitken said there were psychological and emotional connections as well as a sense of purpose that was giving people a sense of personal achievement. "Doing something that's important to them - a much more values-based approach to living, actually putting your values into practice."
"For these things to make a big difference you need systemic changes and we can't really do that but we can show to some brands or companies, emphasise the values-driven sharing, collaborating peer-to-peer stuff is really liked and wanted and does lead to happiness."
Aitken said they were not suggesting people throw out their possessions.
"It's not directly the commitment to material simplicity that leads to wellbeing, but the psychological and emotional need fulfilment that derives from relationships, social connection, community involvement and a sense of living a purposeful and meaningful life.
"In a world where billionaire weddings are treated like state occasions and private yachts are the new status symbols, voluntary simplicity offers a quiet, powerful counter-narrative - one that values enough over excess, connection over consumption, and meaning over materialism."
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