In Part I of this series, we dove into the research on the relationship between money and happiness and found there is some connection there. However, money seems to be more like a catalyst than a driver. With the right ingredients, it can help magnify satisfaction and well-being, but it cannot fix underlying dissatisfaction.
The nuance of money and happiness is evidenced by declining self-reported happiness levels in the U.S. despite decades of economic growth. The chart below shows this by comparing the percentage of U.S. Adults reporting as “very happy” (NORC at the University of Chicago, 2025) alongside the U.S. Real Gross Domestic Product per Capita (U.S. Bureau of Economic Analysis, 2025). You can see that, despite rising income even after adjusting for inflation, happiness in the US has been on the decline since at least the early 1990’s.
Social scientist and Harvard Professor Arthur Brooks describes three changes in habits that have led to this decline: faith, family/friendship, and work (Brooks Ph.D., 2023). While there is evidence that aspects of religious practice are associated with greater well-being, faith in this context can be thought of more broadly as a values structure and recognition of one’s place in a bigger world. It can be practiced through worship, but also through other ways such as connecting with nature, appreciation, and meditation. Let’s delve into what science says the other factors and how they intertwine with money to influence our well-being.
Relationships: The Top Predictor of Happiness
Think about the following question, “If you were in trouble, do you have relatives or friends you can count on to help you whenever you need them, or not?” How would you answer? Those who answer “yes” consistently report higher life satisfaction. Why is this?
Humans are inherently social creatures. Scientists have developed the Social Brain Hypothesis to explain why humans have such a large prefrontal cortex as compared to other animal species. Beyond higher level thinking and decision making, this area of our brain is used to support complex social interactions. As compared to the less conscious limbic system, this part of the brain requires significant energy expenditure. From an evolutionary standpoint, which tends to favor efficiency, there is a suggestion that relationships have an important role in ensuring our survival.
As I was finishing college and exploring career opportunities, I had a choice to make. I could accept a role with a small, lifestyle firm with one owner and no employees paired with the opportunity to grow the practice and one day join as a partner. Alternatively, I could continue to pursue opportunities for employment with larger, established practices with defined career paths. I remember discussing the options with my parents, including the risks of choosing the small firm with an uncertain path, but possible tremendous upside. Ultimately, my parents helped me have the confidence to accept those risks with reassurance. Worst case scenario was, the small firm fails, I return home and pursue a job with a large firm.
It was with this confidence in the backing of my family that I was able to take the riskier path. With that reassurance, I am not sure what decision I would have made. This is exactly what the research shows. Strong relationships have been shown to provide a buffer against hardships including the emotional toll of negative life events, offering support when we need it most.
Relationships are not just important to mental well-being. Physical health can also be impacted by relationships. Research links social isolation to risks equivalent to smoking regularly, including heart disease, depression, and dementia (Helliwell, 2018). Loneliness has been on the rise, so much so that it led to the U.S. Surgeon General to declare it an epidemic and release a report on it in 2023.
While relationships provide the emotional and social foundation for a fulfilling life, they are not the only source of meaning and happiness. For many, work serves as another critical pillar, offering not just financial stability but also purpose, identity, and a sense of achievement. Whether it’s a career, volunteering, or creative pursuits, work allows us to engage with the world, build connections, and contribute to something larger than ourselves. Let’s explore how meaningful work intersects with happiness and how money plays a role in this dynamic. (Cross, 2018)
Work and Purpose: More Than Just a Paycheck
Work — or any activity that gives you a sense of purpose — often plays a huge role in our happiness. Sure, work is how we make a living, but it’s also about much more than that. Whether it’s a career, volunteering, or even caregiving, meaningful work connects us to a larger sense of accomplishment, belonging, and emotional highs that come from tackling challenges and celebrating wins.
But let’s be honest: work isn’t always sunshine and roses. Two common pitfalls can lead to frustration and dissatisfaction.
The Money Trap
We’re wired to chase goals—it feels great to achieve them. In work, this often means promotions, raises, or bonuses, and with those come lifestyle upgrades: the bigger house, the fancy car, or the dream vacations. But here’s the catch—those shiny upgrades often don’t bring lasting happiness. Worse, they can lock you into financial commitments that force you to stick with a job you don’t love. It’s easy to lose sight of the work itself and what it truly means to you.
Work as Identity
Success at work can also boost our status, which feels good and even validates our efforts. The problem? When too much of our identity is tied to our job, we risk losing touch with the people and activities that matter most outside of work. Jobs and industries change, expertise fades, and retirement comes eventually. The relationships and personal pursuits we neglect in the process are harder to rebuild later.
What Really Makes Work Meaningful
So, how can work enhance happiness? Studies show that meaningful work has three main ingredients (Ford, 2018):
Autonomy: The freedom to make your own decisions.
Variety: Tasks that keep things fresh and engaging.
Significance: Feeling like your work has a purpose and makes a difference.
If you find yourself on a career path that is increasingly frustrating, it may be time to step back and think about the true source of achievement and accomplishment. Don’t let your identity be all about your title or paycheck. I’ve seen many clients wrestle with the idea of stepping away from an unfulfilling job because it feels like “taking a step back” after years of hard work. But what’s the bigger win — five years in a job you dread, or ten years in a job you love, even at half the salary? In fact, I often find the financial planning favors working longer in lower paying positions not even considering the emotional and mental payoff.
For those nearing retirement, there’s an important lesson here: don’t rush the transition. Going straight from a demanding job to a full-on retirement can leave you feeling bored and disconnected. The happiest retirees ease into it — whether that’s by working part-time, taking extended vacations, or exploring new hobbies and connections well before their last day on the job.
Bridging Relationships and Work: The Role of Money in Happiness
How do relationships and work connect with money and happiness? Many believe climbing the career ladder or earning more will lead to a better life, but research shows the story is more complex.
Promotions and raises can boost financial security and social status, easing life’s burdens. Yet they often come with trade-offs: longer hours, greater stress, and time away from loved ones. Over time, the sacrifices required to achieve financial goals — missing family events or being distracted by work — can erode the very relationships that bring lasting happiness.
Work can also provide purpose and fulfillment when it aligns with your values and offers autonomy, variety, and a sense of significance. However, many workplace relationships are transactional and fade once roles change, highlighting the need to invest in deeper, enduring connections outside of work.
Three Steps to Balance Happiness, Work, and Money
Build and nurture close relationships. Strong connections with family and friends are vital for emotional support, resilience, and overall well-being.
Seek meaningful work. Choose roles that align with your values and offer autonomy, variety, and purpose.
Weigh trade-offs carefully. Reflect on whether financial goals are worth potential sacrifices to relationships or personal fulfillment. Prioritize what truly matters in the long term.
Stay Tuned for Part III
Happiness stems from balancing meaningful work with strong relationships, using money as a tool to support both. By being intentional in your choices, you can create a life where financial and emotional well-being work in harmony. Stay tuned for the third and final part of this series where we’ll explore how to use money intentionally to enhance happiness. Why do are we hardwired to always want more and to find fleeting satisfaction from the things we buy, and how can we counteract this tendency? We’ll discuss strategies for spending, saving, and giving in ways that bring lasting meaning and joy.
References
Brooks Ph.D., A. (2023, November 27). Cultivating happiness, emotional self-management, and more. (P. Attia, Interviewer)
Cross, M. P. (2018). Subjective well-being and physical health. In S. O. E. Diener, Handbook of well-being. DEF Publishers.
Helliwell, J. F. (2018). Social capital and prosocial behavior as sources of well-being. In S. O. E. Diener, Handbook of well-being. DEF Publishers.
NORC at the University of Chicago. (2025, January 16). General Happiness. Retrieved from 2022 General Social Survey: https://gssdataexplorer.norc.org/trends?category=Civil%20Liberties&measure=libath
U.S. Bureau of Economic Analysis. (2025, January 16). Real gross domestic product per capita. Retrieved from FRED, Federal Reserve Bank of St. Louis: https://fred.stlouisfed.org/series/A939RX0Q048SBEA