Can money make you happy? No doubt you’ve asked yourself this question, particularly if your experience with money and happiness has not lived up to your expectations. One thing is certain: everyone needs money to survive in today’s modern world. How much or how little you need depends on your attitude, lifestyle, aspirations and financial future.

Easy money?

Studies have shown that people who suddenly come into a large amount of money are generally happy for the first year or so, then they return to their “normal” state of mind shortly afterwards. So if you were happy when you came into money, it’s likely you’ll continue to be happy. But if you are prone to depression or feeling down, then despite having money, you won’t be entirely happy underneath.

We’ve all heard stories of people who win large amounts of money through gambling or the lottery and then squander it in a few short years. They find themselves almost back to where they started. Unfortunately, they get caught up in the moment and neglect to think about the future; they may also succumb to societal pressures that suggest money and happiness go hand in hand.

Many people underestimate the power of sudden wealth and what it means. It has the potential to destroy relationships and families, and some people feel pressured to share their windfall with family members because they would feel guilty if they didn’t.

A calculated question

If the mere mention of money and happiness in the same sentence makes you cringe, or you believe money is the root of all evil, perhaps your attitude towards making money is stopping you from deserving more money and happiness. That’s not to say you must focus all your energy and time on amassing money and nothing else.

Having a healthy attitude towards money is as important as having a healthy attitude towards your weight, the food you eat, your relationships and so on. According to American evangelist Billy Graham, “If a person gets his attitude toward money straight, it will help straighten out almost every other area in his life.”

So, what do the experts think? Does money buy happiness? I posed this question to psychologist Dr Timothy Sharp, founder of The Happiness Institute in Sydney and author of The Happiness Handbook . “There is no doubt, based on my years of experience and a considerable body of research, that money only buys happiness up to a point. Beyond this point, which is relatively low and requires only that a person is not below the poverty line, increases in wealth or income contribute only minimally to happiness. At the same time, I should note that this does not mean in any way that money is bad or that it leads to unhappiness; only that happiness and money are not highly correlated. The good news is the things that do lead to happiness (such as having a clear sense of purpose, optimistic thinking, good-quality relationships and the ability to live in and enjoy the moment) do not cost anything!” he says.

Retail therapy

If you’re thinking you have nothing to worry about because you’ve never used money for instant gratification, consider this. You’ve had a hard day at the office or a fight with a loved one, so you decide to hit the shops to let off some of your frustration. Perhaps, in some small way, you’ve fallen into the trap of using money for an instant lift. “Retail therapy” really does exist — Australia’s ever-growing credit card debt and consumer spending are certainly testament to this.