What Is the Effect of Money on the Quality of Life?
With pay cuts, high unemployment rates, a wider gap between rich and poor, and a turbulent market, money is at the forefront of our minds more than ever before. What is the effect of money on the quality of your life? How significant is money to your happiness?
The answer is difficult. For sure, money affects your quality of life and emotional well-being. Keep on reading to find out how money relates to the quality of life and how much you should earn to feel happy.
What Is the Quality of Life?
Quality of life is a highly subjective self-assessment of a person’s overall well-being. The following factors affect the quality of life: monetary security, job satisfaction, and health. If you don’t just concentrate on one factor but find a balance between all three of them, you will be able to boost the quality of your life.
The Growing Divide between Rich and Poor
People hear a lot about the increasing divide between rich and poor in the USA. The American middle class is gradually disappearing, while there is an even bigger divide between rich and poor these days.
The wealth of the richest people grew quickly in recent years, while the rest of the country fell behind. The growing income and wealth divide may feel alarming for those of us being somewhere in the middle class. The National Poverty Center states that over 15% of Americans live in poverty.
These consumers experience a low quality of life and often feel financial stress. Those who can’t make the ends meet take out loans like Spotloan to cover urgent cash needs if they don’t earn enough income to support their families.
On the other hand, recent research claims that quality of life isn’t that great for the richest people. Consumers who accumulate wealth and have a higher income tend to report having a lower sense of happiness and emotional well-being compared to consumers who earn less. These people often experience too much stress owning their wealth that they can’t even enjoy it to the full.
How Does Money Relate to Quality of Life?
Many factors that influence the quality of life are related to personal finance. Experts believe that financial stability, of course, can indicate good quality of life. However, they have also stated the importance of finding a work-life balance. Consumers who work multiple jobs or long hours usually have less spare time to enjoy their earnings through experiences with family, friends, vacations, and hobbies.
Other working conditions may also play an important role in the quality of your life. Some jobs involve long hours and extended business trips, while others are connected with prospective hazards such as machinery or chemicals. Each person will need to consider how these work challenges compare to their advantages, such as travel opportunities, higher income, job satisfaction, or extended vacations.
When you don’t earn enough to support your household needs and cover basic necessities for your family including housing, child care, and good food, you may consider challenging trade-offs that may influence your quality of life.
On the contrary, people who have higher incomes may access amenities to boost the quality of their lives, such as counseling for health conditions or gym memberships. People with higher incomes have a chance to get better medical care and live in safer areas.
Money and the Quality of Life
The paper called Money and the Quality of Life issued by the Journal of Central Banking Theory and Practice deals with the influence of money on the quality of life. The article states that money is an everyday, unavoidable and inseparable companion, so it inevitably affects all segments of the quality of life. The relation between money and quality of life, therefore, can be viewed not only theoretically, but also at a practical level.
Although it sounds paradoxical, money causes people financial worries, no matter if they have it or not and so money can significantly influence their quality of life. This paper analyses the direct and indirect connections between effective and efficient money management.
Things You Should Consider No Matter What You Make
1. There Is a Type of Perfect “Happiness” Salary
A study by Princeton researchers Angus Deaton and Daniel Kahneman found that consumers tend to feel happier the more funds they make. Researchers found that an income of about $75,000 per year per person is considered good enough.
Life satisfaction of people who earned over $75,000 improved while their emotional well-being didn’t. Their level of happiness didn’t change if they earned more than this sum. The survey even found that when consumers made over $105,000 annually, their happiness levels lowered.
2. With Happiness, Being Rich Is Relative
While earning more funds doesn’t make us happier, making “more money relative to others” does. Even the wealthiest people can look around and find other people who are a little bit richer. Hence, their money won’t make them as happy as they think.
People have a tendency to compare themselves to others and always strive for more. If we can’t maintain the same standard of living as our peers, we may feel unhappy. Why just earning more funds doesn’t make us happier? This psychological phenomenon is called “hedonic adaptation”.
3. The Purpose Is More Important Than Money to Feel Happy
Surveys prove that if you want to feel happier in your job, you don’t need to chase a high salary. It’s essential for your job to provide a sense of purpose or meaning. An individual needs to concentrate on whether the job meets his or her values and major strengths. Having meaning makes you more productive and happier at work.
In conclusion, we can’t underestimate the influence of money on our daily lives. Money has a great effect on the quality of our lives. Money is what causes people to worry and stress out. It creates financial tension and uncertainty while proper money management can help us reach our targets and be more effective with our finances.