Wealth With Sophia

In this month’s Wealth With Sophia column, the co-founders of Sophia consider how happiness can be defined and measured, and the role of money in bringing us joy and purpose

Money can’t buy happiness, as the old adage goes. And it “can’t buy me love”, sang The Beatles.

Indeed, life’s happiness is in your relationships, the time you spend with those near and dear, and the experiences that life’s special moments can bring. This all sounds like something a good friend would tell you over a glass of wine. And they aren’t wrong. But what if we told you that money can in fact buy you happiness?

Happiness can be measured in two ways: your day-to-day happiness and your overall life satisfaction. Past research in this space has shown that those with incomes above US$75,000 experience day-to-day happiness, but not overall life satisfaction. However, a recent study from 2021 concludes that those earning incomes beyond US$80,000 can still experience higher levels of day-to-day happiness as well as overall life satisfaction. So, it seems, money can buy happiness after all.

The gender happiness gap

How do women in particular navigate money and happiness? Research shows us some very interesting findings when we bring gender into the mix. One study demonstrates that low-income women have higher levels of life satisfaction, and that’s because they are less likely to define their self-worth by their financial and economic status. Women instead derive gratification from other things such as motherhood, and were found to be more hopeful.

Is there, however, a middle ground for women in all of this? Can we rewrite the script on money because it can bring us (and our communities) joy and purpose?

A conversation on money and happiness

The Sophia team decided to reflect on the role of money and happiness in our own lives, asking, how do you define happiness? And how does money play a role in that?

Christine Yu: Money means having the power to create the life that I want, and that means money allows me to live with more joy and purpose. Purpose is my North Star—in my many years as an impact investor, I’ve always believed that my money can do good, empower others, as well as earn a decent return.

Tanya Rolfe: If I think about being happy, money doesn’t pop into my head, but freedom of choice and having time to do the things I love does. However, when you consider those two things, money affords me both. To me, building wealth is as important as making a positive impact. Gone are the days when impactful investing meant not receiving material returns—women have opened their eyes to this first. My personal impact comes from supporting women founders, especially those building businesses for women.

Nicole Denholder: Happiness and money ties very closely to security. When we feel secure financially, emotionally and physically, this allows us the space to be happy with ourselves, family, friends and environment to live our best lives. To build wealth, it's about directing my energy and focus into causes and businesses that I am passionate about, from supporting companies that I believe in, to investing in businesses that are making a positive impact.

The takeaway? Money can ‘buy’ happiness because it allows us to do more of the things we love, and less of the things we don’t.

How to use money to bring more happiness

1. Get the basics right

Get on top of your budget and your savings, and prioritise your investing literacy. It can seem challenging to start, but all it takes is that first step.

2. Be clear on what makes you happy; understand how financial security can play a role in that

Warren Buffet wrote about how giving to others was a way to improve our emotional well-being. Would financial security mean you could devote more time to other pursuits like volunteering for an NGO or mentoring other women? Spend time reflecting on this.

3. Understand what money can and can’t do

Money can’t improve your personal relationships and neither does having more of it guarantee a problem-free life. It can however give you the time and space to do the things that give you joy.

4. Get your plan in place and stick to it

It’s all about having a plan. Be consistent with your budgeting, savings and investing. Surround yourself with a good support system to stay the course.

5. Always check in with yourself

Prioritise your happiness and well-being. There’s no need to be draconian in your financial planning. It’s okay to treat yourself to the things and experiences that could give you pleasure and joy every now and then—whether it’s that dream trip to Machu Picchu or a cappuccino with a friend.

Money can buy you happiness—to a point. The rest is up to you…

Nicole Denholder, Tanya Rolfe and Christine Yu are co-founders of Sophia.

This article is part of Front & Female’s Wealth With Sophia series, a collaboration with Sophia, a financial education platform built by women for women, to open up the conversation about money and help drive female financial literacy. The online series covers all things money and investing to enable women to gain the confidence to take control of their wealth creation.

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