Idea 13 - Will a bigger salary make me a lot happier?

For most, no, a salary increase won’t make you a lot happier (it’ll make you a little happier but not as much as other factors).

Yet, for some, it will make you a lot happier 

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Salary and happiness have a complicated relationship.

Biggest ever study on wellbeing in the workplace

Indeed and Oxford University asked millions of people what they thought was the most important factor in determining their happiness at work. The overwhelming answer was compensation. 

Double the importance of the next option, flexibility.

Indeed work happiness report 2022

Yet, when the clever people at Oxford  worked out the real drivers of happiness, compensation came in at a lowly 6th.

In short, people think salary and perks are the most important factor in determining their happiness at work but in reality, they aren’t (most of the time). There are other factors that have a greater influence on your happiness.

So what is happening?

Once you have enough money to cover your needs, having more of it won’t be the biggest driver of your happiness levels. Don’t get me wrong, having more money will make a little difference to your happiness (there is a positive correlation), but not as much as doing more exercise, sleeping more, or coming off social media. And if you are unhappy to begin with, money alone will not solve your problems.

On the other hand, if you don’t have enough money to cover your basic needs, having more of it will have a huge effect on your happiness levels. 

Think of it this way: if your family has to wash their clothes by hand, getting a washing machine will make a big difference, but if you already have a perfectly good, basic machine, getting a top-of-the-range one will have little effect.

I know what you’re thinking … more money will definitely make me happier, what’s he talking about? I can get a better car and go on nicer holidays. And you are right. If you’re already happy, there is a positive correlation between getting more money and your happiness; it basically gives you more choices. But money alone will not make you happier; you need to use the money to give you more free time, do more exercise and spend more time with friends. If you’re not happy and just use the extra cash to buy “stuff”, money alone will be the answer to your troubles.

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Perceived lack of money is a big driver of happiness

However … if you think you are underpaid, or paid less than your coworkers, then that will make you unhappy. And even if you work in a company with great colleagues, working for a worthwhile cause and doing fascinating work, if you think you are not being compensated fairly, it may be enough to outweigh all the good things your company is doing. Perceived lack of money will make you unhappy.

Tip of the week

If you are a company owner or director and have control over how much you pay your team, make sure they are paid fairly. Not doing so may negate all the other good work you are doing.

If you’re already paying fair salaries and your team is unhappy, throwing bigger and bigger salaries at the problem won’t have as much impact as treating your team with respect, giving them ownership and trusting them.

If you are a worker and being paid a fair salary and you want to be happier at work, finding a new job with a bigger pay packet may not work. Your best option would be to find a job which fulfils your personal happiness needs, which may be a nicer team, more freedom or flexibility. 

Still think a new car will solve all your issues? Let me hand you over to the Dalai Lama; he knows a few things about happiness.

“We need to learn how to want what we have NOT to have what we want in order to get steady and stable Happiness”

Dalai Lama XIV, The Art of Happiness

I know this is a contentious topic. Whenever I talk about it, people just plainly disagree with the data. If you’ve got any thoughts please do let me know in the comments.

Further reading

The World Happiness report summary