We have all heard the saying that “money can’t buy happiness”, but we don’t hear that phrase with full context of what that implies. We can all agree that money cannot be used to create a transaction to purchase an emotion or psychological state of being based on happiness being immaterial and subjective to each of us. What makes me happy and sustains the feeling of happiness may not be the same as what makes another person happy. That is the subjective nature of an individuals state of being, that is specifically unique to the individual.
Before we can dive deeper into the original phrase, we need to understand each of the components that are said to not be able to have a transactional interaction, Money and Happiness.
What is Money?
Money is both a storage of value and a medium for the exchange of value. Depending on the type of money, it may or may not have intrinsic value. Gold has intrinsic value, Silver has intrinsic value, and United States Nickels have intrinsic value due to the metals they are composed of, whereas other fiat currencies such as the United States $1 dollar bill has little intrinsic value. The intrinsic value comes from having utility beyond being a medium of exchange. Gold has value for its application in jewelry, electronics, and other real world applications. The U.S. dollar bill can be used as kindling to start a fire which gives it the utility of any other piece of paper when it can’t be used as a medium of exchange. Cryptocurrency has little to no intrinsic value and in the event of a catastrophic loss of internet or electricity, would have no intrinsic at all. Where there is no intrinsic value, money is only worth what someone is willing to exchange for it.
As a storage of value, money is capable of storing the value of what it is exchanged for or can be exchanged for in the future. This includes time such as wages paid from employment or the amount of time that one may go without working (trading time for money) before needing to work again.
Money is utility. It is a tool to store our accumulation of time worked and to store our accumulation of wealth. Having this storage of value and medium of exchange allows us to transact with the world to meet our wants and needs.
What is Happiness?
Happiness is a feeling of being content. This may be on a long term basis or short term euphoria. Short term happiness can co-exist during periods of long term depression. We all know someone that may be depressed for weeks but have good days periodically where they appear to be happy. It is similar to a long term downtrend where there are temporary bullish retracements before the bearish trend continues. Likewise people that are generally happy long term, can have events that illicit temporary sadness that interrupts their overall trend of happiness. Happiness, elation, euphoria, and generally being content are states of being specific to each individual. It is not possible to transact a psychological state of being with a fiat currency.
Maslow’s Hierarchy of Needs
The theory to Maslow’s Hierarchy of Needs is that lower level needs must be fulfilled before higher levels needs can be attained.
Physiological Needs
The lowest level or basic needs are Physiological or the needs that everyone must have met to survive such as food, water, hydration, shelter from the elements, and clothing. No matter how much a person tries to attain higher level needs, if they don’t have food, water, or air, their attention will always be focused on attaining these basic needs. Living at the bottom of this pyramid is purely survival mode, this is where many of our homeless population are within the hierarchy. Meeting this need is a mandatory prerequisite before happiness may be obtained.
Safety and Security Needs
Safety and Security are a slightly higher level but are still a very basic need. If a person doesn’t feel safe due to living in an unsafe neighborhood, living with an abusive family member, living with fear of losing their job (livelihood), they generally will not feel safe and secure. The attention will always revert to the lowest level need that is unfulfilled before a higher level need can be met. This level is where many people that live in high-crime and impoverished neighborhoods are stuck at, until they are able to assert themselves enough to either become the apex predator in their environment to resolve their safety and security or surround themselves with a strong enough group to provide safety and security. People that are incarcerated in prisons fall into this category. Happiness can be found in this level on a temporary basis, but the overall state of being is usually highly stressed in a fight or flight mode until safety and security can be resolved.
Social Needs (Love and Belonging)
This is the first higher level need that encompasses attaining meaningful relationships with others, being included in a social group, and having intimacy. You may think that you can have this need met without having the lower needs met, but I assure you that your significant other is not going to be inclined to be intimate if you can’t make them feel safe. I can also assure you that you won’t have time to develop meaningful relationships if you are always hungry and trying to find your next meal. Many of us are at this median level of Maslow’s Hierarchy of Needs. We have the basic needs met, we generally feel safe, and we have friends and family around us. This is happiness for most, but this happiness can be short term or easily interrupted by lower level basic needs becoming a priority.
Esteem Needs
This higher level need is how we advance after meeting our social needs. Once having our place within our social circles, we can attain a higher status and recognition for our place within our social groups and families. This is where we feel confident about ourselves and start to believe in our self worth from our own experiences and the recognition received from others. Without basic needs being met first, this level is not attainable. Those that occupy this level have begun to be acknowledged for their accomplishments and have developed a sense of confidence and competence in their ability to stay high on the pyramid. This is a strong level of happiness that is marked by our confidence in our ability to quickly resolve lower level needs that may attempt to interrupt this happiness.
Self-Actualization
This is the highest level need for becoming the best version of ourselves and pursuing the things that satisfy our need for additional growth, self-fulfillment, and charity. Few make it to this level and this level is hard to stay at because it is dependent on each of the lower levels always remaining intact. The most successful people in the world are at this level, which allows them to create foundations, do charity work, build schools, setup scholarships, and have other creative outlets that allows them to share their success and best parts of themselves with the world. Self-actualization can be interrupted by any of the needs that have a lower priority. A Self-Actualized person that has their reputation damaged publicly, will revert back to attempting to fulfill their lower Esteem Needs before they can resume meeting their Self-Actualization Needs. This is the highest level of long term happiness and fulfillment.
Can Money Buy Happiness?
Money cannot buy happiness directly, but money can transact to take care of the basic lower level needs that prevents one from having overall happiness. This is money indirectly contributing to a person’s positive state of being. Where there is a lack of food and water, money can solve that. Where this is a lack of shelter or the shelter is in a high-crime neighborhood, money can solve that. Where there is a need for security such as an alarm system, personal firearms, body guards, guard dogs, fencing, security cameras, etc., money can solve that.
It may be true that money can’t buy happiness itself, but money can take care of all the things that get in the way of us being self-fulfilled and happy on our own.
It’s all about how you perceive and harness the power of money.