A large-scale international study has found that people who feel satisfied with their finances tend to report better mental, physical, and emotional well-being in the present—regardless of how much they actually earn. However, when it comes to predicting changes in well-being over time, it is income—not financial satisfaction—that shows a stronger connection. The study, published in the Journal of Personality and Social Psychology, suggests that subjective feelings about money and objective income levels influence well-being in different ways.
The study was conducted by Vincent Y. S. Oh, a senior lecturer at the Singapore University of Social Sciences, who wanted to better understand how money—both in terms of what people earn and how they feel about their finances—relates to overall well-being. Although it is often said that “money doesn’t buy happiness,” the relationship between financial circumstances and life satisfaction has long been debated.
Some studies have found links between higher income and greater happiness, but these findings have typically focused on short-term outcomes or used limited definitions of well-being. Oh sought to build a more comprehensive understanding by examining both income and financial satisfaction across many types of well-being over a long period.
“The question of whether money buys happiness is one that I think has great appeal to many, probably because money is such an inescapable reality of almost everyone’s lives. You see it being discussed online on Reddit and news commentaries, you hear people talk about it, you see memes about it online, and so on,” Oh told PsyPost.
“More personally as well, financial pressures were also a significant part of my memories of growing up. I think our experiences of life can be shaped quite significantly by our economic and financial circumstances, and this was thus a practically important and relevant topic that was worth delving into empirically.”
For his study, Oh analyzed three large longitudinal datasets from the United States and South Korea, which together followed more than 7,600 people over time. The studies used included the Midlife in the United States Study, the Understanding America Study, and the Korean Longitudinal Study of Aging. Participants were tracked over multiple years, with measures taken at different time points to assess income, financial satisfaction, and 22 indicators of well-being. These included emotional states, physical and mental health, life satisfaction, social relationships, and a sense of purpose.
Income was measured using reported annual earnings, adjusted for comparability across time points and across currencies. Financial satisfaction was measured with simple self-report questions that asked participants to rate how satisfied they were with their financial situation. Well-being was assessed using a range of items, such as how satisfied people were with their lives, how often they experienced positive or negative emotions, and how they rated their physical and mental health. The researchers applied statistical techniques called latent growth modeling and meta-analysis to track both starting levels and changes in these variables over time.
The findings showed that financial satisfaction at the beginning of the study was strongly associated with higher well-being across nearly all domains. People who felt good about their finances tended to also feel more satisfied with life, healthier, less depressed, and more positive in general. The size of this relationship was substantial. In contrast, starting levels of income were not reliably associated with starting levels of well-being. In fact, in some cases, higher income was linked to lower well-being after accounting for financial satisfaction.
But the picture changed when looking at long-term changes. Higher starting income was consistently linked to more positive trajectories of change in well-being. That is, people with higher income at the start were more likely to experience improvements—or smaller declines—in things like emotional health and life satisfaction over time. Financial satisfaction, on the other hand, did not predict long-term improvement in well-being. While it was strongly tied to how people felt in the moment, it did not seem to help people get better or stay well in the future.
“It was interesting that although subjective financial satisfaction was clearly more strongly related to one’s current well-being, there was no evidence that it played a role in predicting future trajectories of change in well-being,” Oh said. “Instead, income had relatively stronger evidence supporting its role as a predictor of future changes in well-being. Thus, it seems that both income and subjective financial satisfaction could matter to well-being, albeit in different ways.”
The researcher also explored whether being happier or healthier at the start of the study predicted future increases in income or financial satisfaction. There was little evidence to support this. In most cases, people with higher well-being at the beginning did not go on to earn more money or feel more satisfied with their finances later on.
“The main takeaway is that there isn’t a single answer to the question of whether money buys happiness or whether one should be content with what one has,” Oh told PsyPost. “Money does matter in that higher-income-earners were more likely to have better future well-being, but at the same time, being subjectively happy with one’s finances played a much larger explanatory role in current well-being than how much one earns.”
“Any conventional wisdom that takes the form of asking people to forgo material concerns entirely is unlikely to be good advice, because ultimately, money is important to our day-to-day lives and can make a significant difference to our psychological and physical wellness. At the same time, time and again, research has shown that excessive materialism is likely to be detrimental.”
“Independently of how much we actually earn, our subjective relationship with money makes a lot of difference. As much as many of us chase after material goals (and for good reason, since money does matter), we do need to moderate this pursuit and to try to cultivate some level of contentment with our finances as this may ultimately play a more significant role in our current sense of wellness. I do acknowledge, however, that this can be easier said than done.”
There were some important limitations to the study. The average participant was middle-aged or older, and some of the measures—especially for financial satisfaction—were fairly simple. The researchers also caution that the study cannot show cause-and-effect relationships. For example, it’s possible that people who feel good about their lives are more likely to feel good about their finances, even if their financial circumstances haven’t changed.
“The present findings do not support a direct causal inference since the studies reported are non-experimental,” Oh noted. “Still, the present findings provide longer-term findings spanning over a decade, which complements some other studies reported which do support a causal role of money in well-being over shorter time frames.”
“Additionally, the findings reported are quite comprehensive, spanning multiple well-being measures as well as participants from two relatively distinct nations (the United States and Korea). Despite this, we should be cautious of generalizing beyond what the methodology allows. There is some previous work suggesting that there are divergent relationships between money and well-being across countries, and the present findings may not generalize to all other countries equally or to other forms of well-being (e.g., meaning) that weren’t measured in the present work.”
Despite these limitations, the large sample sizes and long follow-up periods make this one of the most thorough investigations of money and well-being to date.
Looking forward, Oh told PsyPost he would be “keen to pursue further research that examines the nuances of socioeconomic status and its relationship with well-being. For example, beyond indexing monetary wealth in terms of income, I’m also curious how financial obligations (e.g., the amount of financial support provided to others, such as caregiving for children or parents) or debts might have an independent explanatory role in happiness and well-being.”
“I’m also curious why regardless of their actual wealth, some individuals may tend to be more easily content with their finances, while others less so, and I think an interesting direction could be to explore the reasons behind such individual differences as well as whether there are ways to mitigate excessive materialism given its reliable links to poorer well-being.”
“Amidst global inflationary pressures and other economic uncertainties, I think these are times where economic concerns are really critical to the everyday experiences of many people,” Oh added. “While the present research may offer little direct comfort, I hope they at least provide some validation of the experiences of those struggling with economic/financial concerns – money (and our subjective experience of money) does matter to our psychological and physical wellness, and such concerns should be taken very seriously and hopefully addressed by policy-makers throughout the world.”
The study, “Money Matters for Future Well-Being: A Latent Growth Analysis and Meta- Analytic Integration of Associations Between Income, Financial Satisfaction, and 22 Well-Being Variables Across Three Data Sets,” was published February 17, 2025.
