Why You Should Follow The Money (And Not Your Passion)
Recent Studies Find A Connection Between Happiness And Income
College graduation speeches come in all lengths and styles. Some are truly remarkable; most, however, are instantly forgettable even when they're being delivered by a well-known celebrity. One thing you can almost always count on hearing in every such oration is some version of this supposed wisdom: “Follow your dream, because money can’t make you happy.”
But that wisdom is not always widely accepted among new grads. Financial writer Michael Schramm, himself a college student, has a real problem with that advice. His critique of that adage in Money Magazine provides great food for thought as one college class enters the job market laden with student debt, and another ponders how best to invest their time and effort over the next four years.
Can Money Buy Happiness?
Schramm says the suggestion that money doesn’t buy happiness is, “a half-truth at best, a lie at worst.” In his personal experience, money and happiness are closely tied. Schramm grew up in a household where home foreclosure was a real threat, a gaping hole in the roof went unrepaired, and the smallest food purchase could result in a screaming, stressful argument over money.
“When bills arrived that couldn’t be paid, money became a monster that tormented me,” Schramm says.
All that changed for Schramm when he earned both a college scholarship and an allowance that allowed him to meet his basic needs. Schramm felt anxiety wash away and was able to focus on things other than money, which he came to view as a friend, not a monster.
“Simply put, more money did buy me happiness.”
Measuring the Link Between Money and Happiness
Schramm’s argument is more than anecdotal. He cites recent studies that indicate a connection between happiness and income – up to a point. Negative emotions decrease at a steady rate until income reaches about $80,000, according to a June 2016 paper from Case Western Reserve University. Those negative feelings start to drop further as income nears $200,000. A worldwide study by the University of Michigan found that income and well-being consistently rise together.
Yet students are still bombarded with the message that striving to make a good living puts one at risk of living a dull, colorless life. Schramm thinks that’s a dangerous mindset.
He cautions students and job seekers to instead seek a realistic balance between fulfillment and income. Further, Schramm urges grads to think carefully before pursuing a dream or passion that will leave them struggling with their bills over the long term.
“Enjoying your work certainly increases your happiness, but that will be mitigated if your passions can’t pay for food, water, shelter and utilities – if you can’t put money in a savings account… if the occasional splurge is entirely outside your reach.”
While passion pursuits may be emotionally rewarding, they could leave students with a gap in their financial plan if they're unable to manage a financial emergency or plan for larger investments, such as the purchase of a home.
The Takeaway: Focus On Achieving Both In Equal Measure
Schramm suggests students research job prospects and salaries in their dream profession and honestly assess whether they can live a decent life on that income. If not, he suggests, they might consider some sort of compromise. For example, a new grad in computer sciences with a passion for helping the poor could volunteer to oversee an anti-poverty group’s information systems. This type of arrangement allows them to enjoy the best of both worlds, to a degree.
“It may not seem as fulfilling as following your dreams, but here’s the calculated truth: It will provide happiness.”
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