When discussing wealth or being rich, we often think about lavish homes on the beachfront, mundane parties, or expensive cars. Those are seen as vanities that "can't buy happiness". Yet, we all feel we might get a tad more content if we would get this 5% pay raise.
So why and how can wealth help you be happier?
A life with less stress is a happier life
Do you remember that moment when you had an unforeseen emergency that forced you to take a plane? Or jump into an Uber because it was pouring rain? Wealth helps get over the small and not-so-small nuisances that disturb life. And this is why poorer people are exposed to much more financial stress.
This seems trivial, right? Weirdly though, richer people are struggling too. 40% of Americans with an annual salary over $100,000 live paycheck to paycheck. They are not saving enough either because of their lifestyle or just because life in certain areas has become so expensive.
The shame spiral
The problem is that being cash constrained aggravates your outcomes. Researchers found that people in tight financial situations are more likely to defer taking care of their financial problems, worsening their outcomes.
People feel responsible for their financial situation and are less likely to seek help. This increases their stress level, decreases their overall happiness, and harms their social interactions.
What can be done?
Emergency funds are a great way to significantly decrease your stress level. Set aside 3-6 months of your expenses. This will help you in any financial emergency and relieve a lot of daily stress. Put this money in a high-yield savings account to avoid getting it crushed by inflation