Illustrations by Olivia Fields | The Atlantic

Many assume that building wealth alone will create greater contentment—but social science shows that how we use our money is the key to lasting joy and satisfaction.

Six years ago, Imani Day was living the dream. Or so she thought. An architect in New York City, Day was working for some of the most prestigious firms in her industry, learning from a series of brilliant designers, and building a resume that would help her climb the career ladder and make a lucrative living. But there was just one problem.

“I was absolutely miserable,” Day says.

Many people believe that increased wealth will invariably bring them happiness—that just a few more digits in one’s paycheck or bank account will act as a one-way ticket to deeper joy and lasting contentment. I wanna be rich, go the lyrics from a chart-topping 1980s pop song. For a little love, peace, and happiness.

However, social science suggests that this expectation is misguided. Researchers studying human happiness consistently have found that other factors—namely, relationships, our faith, and our sense of purpose—are far more important for our sense of well-being.

As for the role of money? That’s more nuanced. By itself, studies show, increased income has a real but limited and diminishing impact on how happy we feel. After a certain level of prosperity, in fact, just having more cash doesn’t seem to make us any happier.

Instead, what matters is how that money facilitates the parts of our lives that are more likely to produce happiness. While wealth in a vacuum can’t buy satisfaction, purposeful spending, saving, and investing can build and strengthen the foundations of a life well-lived—enabling and empowering us to pursue and find happiness as we each define it.

“People who have more money are generally happier than those who do not—but money just doesn’t make as much of a difference for happiness as people assume,” says Elizabeth Dunn, a professor of social psychology at the University of British Columbia who studies happiness and co-authored the book Happy Money: The Science of Happier Spending. “So my research focuses on what people are doing with that money. How are they spending, saving, using money as a tool? That is what it’s all about.”

When it comes to happiness, money matters. Social scientists such as Dunn long have understood that having too little can make people unhappy, and many studies have linked poverty to higher levels of misery.

Similarly, high levels of debt seem to be especially harmful to how we feel—emotionally and physically. One recent study that tracked almost 8,000 American adults for more than a decade found that those who carried consistently high levels of unsecured debt, largely via credit cards, were 76 percent more likely to have joint pain or stiffness that interfered with their daily life than people who did not.

Dunn says that a study conducted by Happy Money, where she serves as Chief Science Officer, found that people with no credit card debt reported 40 percent less financial stress than those who had a “revolving door” of it. “Debt is a real drag for people’s happiness,” she says. “We even see that with married couples. The ones with more debt have more conflicts, not just about money but pretty much everything, from in-laws to intimacy.”

Brandy Mickens, a Cleveland-based Executive Vice President, Mid America Branch with Equitable Advisors, has seen debt cause comparable stress for some of her clients. “One of the biggest things about debt is that it prevents people from doing the things that they want to do,” she says. “Buying a house, saving money for their kids for college, saving for retirement—they feel like they can’t do that, because the debt is holding them back.”

Once people have enough money to not stress about lacking it, however, the relationship between wealth and well-being changes. On average, wealthier people tend to be happier. But just how much happier is less than you might assume. In a famous 2010 study, Princeton University researchers found that the closer people’s annual income was to $75,000, the less unhappy they felt on a daily basis. But once their incomes exceeded that benchmark, their sense of daily well-being didn’t substantially increase. (A more recent study found a comparable happiness plateau at an annual income of roughly $100,000).

Some of this likely stems from what psychologists call the “hedonic treadmill,” the idea that while our individual levels of happiness rise and fall in response to life events, they tend to move back to a baseline level. Beyond that, there’s a simple explanation: money doesn’t guarantee happiness. Not when other life factors are far more significant.

Day, the architect, experienced this firsthand. For most of her life, she fretted about money—not because she grew up without it, but because she lacked financial understanding. “I always felt I never had enough,” she says. “I was a person who would stare at a phone bill from across the room and feel anxious, and literally not even open it.”

Day didn’t become an architect to become rich. She entered the field because she felt a creative passion for it. The more she worked, however, the more money she earned. “I never thought I would have money to manage,” she says. “Suddenly, I realized I needed to be more intentional about managing whatever money I did have.”

Only that realization didn’t boost Day’s sense of well-being. Often working long days that could last 18 hours or more, she didn’t have time to enjoy her money—or have any kind of life outside of her job. In 2015, she moved to Detroit, seeking a better work-life balance and more socially impactful projects in a city with a majority Black population. “The pace of life was different, and my mental and general health improved quite a bit,” Day says.

Happiness remained elusive. Working at a new firm, Day continued to thrive, winning business and clients. But she was trying to align her sense of purpose with her work, her desire to do good in the surrounding community with climbing the corporate ladder. As a Black woman in a profession with very few people who look like her—just 2 percent of registered architects in the United States are Black—Day didn’t always feel like she could bring her full self to her job. Entrepreneurial by nature, she longed to go into business for herself—the better to work on the kinds of small business and neighborhood development projects she most cared about, especially those serving communities of color.

All the while, Day continued to build wealth. Problem was, she wasn’t sure what to do with it. “For years, I let anxiety drive my relationship with money,” she says. “And I didn’t realize how crippling and detrimental financial illiteracy could be.”

When Dunn was a graduate student researching happiness, wealth was hardly at the top of her mind. “I made no money whatsoever,” she says with a laugh. “Just enough to survive.”

That changed when Dunn landed a full-time faculty job—and started earning what she calls a “normal, median, grown-up salary. I was like, ‘Oh my God, this is so much money.’”

Like any curious professor, Dunn turned to the academic literature for guidance, assuming existing happiness research would offer clues about how she should spend her newfound wealth. “There was almost nothing,” she says. “So much of what had been studied was on how much money you had, and so little of it was on what people were actually doing with that money.”

Dunn has since worked to fill that knowledge gap. Along with other researchers, she has discovered that the ways individuals use money can have a significant impact on their happiness.

Within these broadly shared parameters, every individual defines happiness a bit differently—close family relationships may be especially joyful for one person, while purposeful work may bring the deepest satisfaction for another. Stephen Dunbar, an Atlanta-based Executive Vice President with Equitable Advisors, sees subtle but important differences between his clients when it comes to their relationships with money and happiness.

Some clients, Dunbar says, are spenders: “These are people who feel better at the end of a bad day when they go out and buy nice suit.” Others are savers. “They like seeing a big balance in their bank accounts,” he says. A third group prizes experiences. “Money lets them go on trips or to movies or plays with people they love,” he says.

A sound strategy for happiness, Dunbar says, is to think deeply about the things that bring you joy, satisfaction, and fulfillment. Once you’ve identified them, use your money to make them part of your life on a consistent basis. “In my job, I have to be careful about pigeonholing people when it comes to happiness,” he says. “A big part of it is slowing down to learn who people are and what makes them happy as individuals.

“If I had my dream with every client, it would be to help them craft the purpose for which they feel they exist—and then help them achieve that purpose.”

After moving to Detroit, Day increasingly found herself thinking about her purpose. She was happiest working with diverse and entrepreneurial clients and design partners—particularly people of color, who too often were both overlooked and underserved by an overwhelmingly white architecture industry.

“Part of what brings me the most joy is doing what I love for people and clients I feel really strongly about supporting,” Day says. “But a lot of firms are not built to do that type of work. You have to battle uphill and bootstrap it to make sure those clients are valued. There’s a gap in the architecture field that’s waiting to be filled.”

Day’s feelings only intensified during the pandemic, when she found herself working from home and juggling her day job at a local firm, freelance projects, and teaching college classes. The experience was taxing. But it also taught Day that she could manage her own time—and even be her own boss.

“I started exploring going into business for myself,” she says. “For me, there has always been a clear entrepreneurial focus. The question was, ‘will I do this within a large corporate culture? Or will I do it for myself and form my own ideal culture and environment?’”

Day wanted the latter. But she was hesitant—and anxious. Her longtime financial worries still ate at her. Without working at a large firm, would she be able to make a living? Afford health insurance? Pay taxes? Survive a personal emergency?

Day had long conversations with her financial professional. They crunched the numbers, mapping out a plan for her future. You’re in good shape, her financial professional told her. You have the ability to do what you want. There’s no reason to wait. Hearing that gave Day the confidence she needed—and last April, she went into business for herself by starting her own design firm, RVSN Studios.

“I knew that if I didn’t do it, I would wake up in 20 years and say to myself, ‘why didn’t you try?’” Day says. “‘Why didn’t you do something for yourself?’ Unless I was going to crush my dream down, there was only one choice. And to be able to do it and not feel like, ‘if I fail tomorrow, then I can’t eat,’ is an important aspect of feeling good.”

Half a year later, Day describes her life is “a rollercoaster.” Running a business can be stressful, she says, and there’s a lot she’s still “figuring out. For sure, it’s not all rainbows and daisies.” Still, Day is thriving. She is collaborating with clients she cares deeply about, like a Black-owned beauty brand based in Detroit that has expanded nationwide. She’s teaching remote classes for a historically Black university, and bringing her full identity to her work.

“Every one of my clients represents some anomaly in their industry,” Day says. “To be able to serve underrepresented and underserved communities as a Black female architect is fulfilling in itself.”

For years, just having money never made Day happy. But using that money in a meaningful way—to live and work on her own terms—has changed everything. “I feel a really different sense of energy in my life,” she says. “My actual purpose is now aligned with what I do. And I’m wildly happy and grateful because of it.”

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