Researchers found that a person with several thousand in their bank accounts is not necessarily happier than someone who only has a thousand.
It’s all about having a financial safety net that makes people happy, according to researchers from University of California, Riverside and Cambridge University. People who have £1,000 (S$1,934) in their bank accounts are happy, but their feelings of elation didn’t increase even if their money increased to £9,000 (S$17,414).
“Liquid money – having money actually available for use – confers a sense of financial security, which in is associated with life satisfaction,” said study co-author Joe Gladstone, who was quoted from the Daily Mail.
The study, which was conducted in United Kingdom, included 585 UK bank customers who were recruited through email in late 2014. Participants were asked to answer survey questions about their financial attitudes, behaviours, and life satisfaction.
For the study, researchers used a five-part scale in assessing the participants’ life satisfaction. Having £1 to £1,000 was linked to an average increase of 2 points in life satisfaction, because it provided a sense of financial security, the researchers found out.
However, an additional £9,000 to the initial £1,000 only resulted to an increase of 0.7 point in the same life satisfaction scale. The findings are not affected by the participants’ debts, income rate, or spending habits.
Gladstone explained that people’s satisfaction was anchored more on financial security. If they think they saved enough to be secured, then that was enough and additional savings beyond that “comfortable” level did not add to that happiness. The more important finding, he said, was that “having a buffer of easily accessible cash was associated with greater happiness.”
Interestingly, another recent study published in the Psychological Science seemed to support Gladstone’s findings, that spending money on things people like make them happy, and not necessarily how much they actually have.
University of Cambridge researchers studied nearly 77,000 bank transactions made by over 600 people and analyzed their spending habits based on “Big Five” personality attributes of openness, extroversion, agreeableness, neuroticism, conscientiousness. Researchers concluded that money spending based on personality increases happiness, Money Talks News wrote.
An extrovert spending money on bar tabs is likely to be happy, a conscientious person would happily spend money on health and insurance, and an agreeable person would opt to spend money on charities and pets. MIMS
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