Hey, guys. It's Chelsea from The Financial Diet. And this week's video is sponsored by Fabulous. And I've teamed up with Fabulous, the number one self-care app, to help you build better habits and achieve your goals. And the first 100 people who click on the link will get 25% off a Fabulous subscription. So as I've spoken about before on the channel, I've been on a bit of a journey to a way cut down on sugar in my life, which has always been a big problem. You may notice I'm sipping what appears to be lemonade. It is, indeed, Crystal Light. So no sugar to be found here. And it's been going on for a while. And while I can't say that it's been a perfect process or that I just don't consume sugar anymore, because neither of those things are true, I've gotten a lot more transparent with myself about holding myself accountable and really seeing where I'm being consistent, where I'm messing up, what things might be triggers for me, et cetera. And in the Fabulous app, which I personally can vouch for, there are all kinds of great tools for following along as you are staying consistent, keeping track of days for things like streaks, as well as keeping track of how you feel, what's happening around you when you make certain choices. Based on behavioral science, the app breaks down scientifically-proven, healthy habits into very small tasks that you can easily achieve every single day. And you can pick among more than 100 recommended habits or create your own. Fabulous helps you build these habits thanks to timely reminders and other features embedding behavioral science principles as well as science-backed content. Or you can use Fabulous's as dedicated habit coaching program designed specifically to help you achieve your well-being goals. Choose a journey that resonates with you and fabulous will help you navigate by receiving regular letters filled with inspiring and motivating lessons to help guide your process. At the end of each letter, you will commit to positive action for that week. Your new habit will be added to your daily routine. And Fabulous will send you gentle nudges to stay on task. Fabulous was the right app for me to help on this journey to make some lifestyle changes. And the premium version has all of the tools that I really need to keep myself accountable. So start building your ideal daily routine. The first 100 people who click on the link will get 25% off a Fabulous subscription.

And today, I am here giving you Robin Williams in the Birdcage to talk about one of my sort of biggest pet peeves in both the world of personal finance, but also the world of bogus, general, inspirational content, quasi-spiritual content, mental wellness content that is basically found everywhere from self-help books to the internet to the wine, mom-style placards that people put up in their home with various expressions. And that is the mantra that money doesn't buy happiness, which we need to just quickly clarify almost always comes from people who have money to some extent. Throughout my entire life from basically birth until now at 33, I have been in many, many different socioeconomic classes. And while it would be an oversimplification to say that my happiness has increased because I have ascended in social class, it is without a doubt two things that have been heavily correlated. And in many ways the financial access and the financial stability has subsidized and facilitated my ability to be joyful and, quite frankly, focused on other things. And while it is true that just accruing wealth endlessly is not going to necessarily make a person happy and can sometimes have opposite effects, which we cover extensively in our video about rich people being assholes, today, I want to specifically dive into why the idea that money doesn't buy happiness is fully a myth.

So first, we have to establish what actually are the contributors to happiness? So a lot of research has been done into the actual factors that go into making someone happy, what it means to be happy. And on the surface it can seem like it has basically nothing to do with money. For example, one Harvard study that has followed men and eventually their offspring for over 80 years, found that the overwhelming factor that has predicted long and happy lives has been close relationships. Close relationships, more than money or fame, are what keep people happy throughout their lives the study revealed. Those ties protect people from life's discontents, helped to delay mental and physical decline and are better predictors of long and happy lives than social class, IQ, or even genes. That finding proved true across the board amongst both the Harvard men and the inner city participants. And another study found the biggest happiness predictor to be autonomy.

According to a report by the Journal of Personality and Social Psychology, amongst all of the goodies that can make life happy, the biggest life goodie of them all was autonomy defined as, quote, "the feeling that your life, its activities and habits are self-chosen, and self-endorsed." Happiness expert Gretchen Rubin who, fun fact, was one of our first guests on the Financial Confessions-- you can watch her episode at the link in our description-- has dedicated over a decade of her life to researching what makes us happiest. And she's found that while it varies drastically from person to person, there are two main factors that contribute to greater happiness-- strong relationships and being self-aware. As Rubin put it, "knowing yourself involves knowing your own interests, values, and temperament. Once you know that, you can build your life around the things that are true for you instead of what you wish were true or what other people expect from you." and other things that have been shown to heavily correlate with happiness are things like regular exercise, practicing gratitude, learning to be present in the moment, and focusing on experiences rather than things. So, again superficially, it sounds like not a lot of this has to do with money.

But what do all of these things have in common? And I would argue that it is time and resources. For example, to cultivate close personal relationships, especially beyond a very select few people, you're going to probably need a job that doesn't have working excessive hours and have basically no time to socialize. And that's something that, for example, I've noticed in my own life in the sense that I was always a pretty social person. Being with others, entertaining, gathering, all of those things are definitely my love languages. And they were something that I prioritized even when I had basically no money. But it's important to note that becomes 10 times easier when you have more time and money to dedicate to the effort.

Not for nothing, we switched to a four-day work week at TFD last year. And let me tell you, even that alone has transformed my social life in a good way. And it was already pretty good to begin with. But time and money for most people who have to work in order to make a living, boil down to the same thing. And the more money you have generally, the more you are able to live autonomously. It's easy to talk about following your passions and doing what's right for you and pursuing your dreams and all of these other things that sound great. But if you have very little savings, very little education, which in America is also money, very little time, it's going to be quite difficult to pursue passions, especially, as is the case for many people, if those passions don't necessarily align with earning a lot of money.

And even prioritizing experiences over material things still boils down to having discretionary money to spend, period. It's fair to say that if you have a bunch of extra money every month and you're putting it all in a bunch of designer bags and belts instead of like, I don't know, traveling to see loved ones or discovering new cultures, yeah, that's probably not going to make you as fulfilled in the long term. But what if you can't afford to do either? Even things like exercising regularly require you to have the time and free space to do it. Aside from the fact that you may be working long hours, for many people, the time that they're not working has to be dedicated to raising their children, which the wealthier amongst us can afford to outsource so that they can have time for themselves. But interestingly, there has been a lot of data over the years showing that the wealthy actually work more and have less free time than those of lower socioeconomic status.

 In a paper studying data from the American Time Use Survey results from 1965 to 2003, it was found that for both men and women, more education is associated with less time devoted to leisure. A man with less than 12 years of schooling has 116.34 hours of leisure a week. And a man with 16 or more years of schooling has 101.44. Now, this paints a pretty black and white picture. But it's important to remember that the fact that wealthy people typically have less free time is not because they have to. It's because in our society, there is a strong correlation with focus on status increasing financial compensation and a form of workaholism amongst the elite earners. And it also doesn't necessarily say what this leisure time is going to where, again, for the limited leisure time that the wealthy might have they can afford to outsource basically anything they want to. Whereas lower socioeconomic classes are going to have to use that time to do a lot of stuff that isn't professional work but in many cases is still work like domestic labor. Additionally, people in lower-paying jobs are often paid hourly and limited to less working hours so that their employers can get out of paying more for overtime.

According to a blog post from HR services provider BamboHR, the FLSA regulates several aspects of employment, including child labor, record-keeping, minimum wage, and most importantly for our discussion overtime. According to the FLSA, you'll need to pay employees overtime or time and a half pay if they meet the following criteria. They work over 40 hours in a single work week, they're considered nonexempt, i.e. they're paid less than $468 per week on an hourly basis, and they don't perform administrative executive or professional duties. An interesting anecdote on the subject from my colleague, Holly, is that at her first job in NYC she was an hourly temp at a leasing office for a big property management company. They were not allowed to work overtime even if they wanted more hours/there wasn't enough coverage. Because the company didn't want to pay for it. They would literally close down an office for a day and go without seeing potential renters instead of having to pay time and a half to any employees. So even if on paper you have people in lower economic classes working less, it's often not by choice. And beyond all of this, it is literally not speculation that money can buy happiness. Because there is plenty of research out there that shows that money is a key factor in establishing happiness.

You can think of it as like a building block of happiness or a foundation in a home. It's not going to be what makes a home. But you can't really build the home without it. Studies have also shown what we sometimes refer to as the happiness threshold, i.e. a certain increased income that corresponds with higher levels of self-reported happiness, up to a certain income level-- typically somewhere between $75,000 and $100,000 a year. Of course, your personal threshold is going to vary based on the cost of living, where you live, your debt, and responsibilities, et cetera. But the point is that earning more can help make someone happier up to a certain point. Perhaps more importantly, money is also often the most pertinent or easiest answer when it comes to eliminating stress.

According to an article published by the Harvard Business School in one study, 522 participants kept a diary for 30 days tracking daily events and their emotional responses to them. Participant's income in the previous year ranged from less than $10,000 to $150,000 or more. They found that money reduces intense stress, more money brings greater control, and higher incomes lead to higher life satisfaction. And beyond what is ultimately a huge connection between the ability of more money to buy you all of the things that we described earlier like autonomy, time with people you love, exercise, and much, much more, there's also the reverse phenomenon of how damaging to potential happiness the cycle of poverty can be. In an ongoing study from UC Davis, the co-authors conducted in-depth interviews with 25 low-wage workers in the Napa and Sonoma area in fall 2012. The authors Smith and Halpin asked workers about their current job situations as well as plans for the future. All of the interviewees were first-generation immigrants who either grew up in the United States or in their home countries. They worked in several sectors, including food service, landscaping, domestic work, office cleaning, and construction. And notably, some interviewees worked in multiple sectors. The study found that low-wage work limits opportunities to learn new skills needed for better jobs. And to sustain their livelihoods, these workers keep the jobs they have while searching for additional opportunities through relatives, friends, and work networks. They patched together multiple full and part-time jobs to maximize their paid hours. And that cycle, in turn, perpetuates lower levels of happiness in those in lower socioeconomic classes as financial instability is regularly connected with worse mental and physical health.

 Worries about finances came in as the number one stressor in a CreditWise survey released in December 2020. High levels of financial stress as with other stressors can manifest itself through physical symptoms such as anxiety, headaches or migraines, compromised immune systems, digestive issues, high blood pressure, muscle tension, heart arrhythmia, depression, and a feeling of being overwhelmed. Individuals with high financial stress are twice as likely to report poor health overall and are four times more likely to complain of ailments according to Forbes. And that's not to mention all of the day just ambient, elevated cortisol levels that are like hoping that your car doesn't break down or that you don't run out of gas before you get home, because you don't have enough money for more gas or having to borrow money from people who may not be super nice to you about it or worrying about what you're going to eat or unexpected expenses coming up or not even being able to make the good choices that you should be making-- whether it comes to purchasing investment items or putting money away in savings or things like retirement-- not because you're irresponsible with money, but because you literally don't have the flexible income. That feeling in and of itself, to know what you should be doing and then know that you literally can't, is incredibly difficult to overcome. It's sort of like a self-contained cycle of depression. Because you're constantly being defeated by the circumstances around you.

 At the end of the day, the biggest reason for me to do what I do at TFD is to help people who have the ability at varying levels to improve their financial situation to earn more, to spend more intelligently, to save, to access things like the investment market, and to be able to leverage money to help them achieve their goals. Because if you're working within a certain financial range, there is a lot that we can do financially to help ourselves. And helping ourselves have financial health and stability, in turn, can translate into all kinds of happiness. But it's really important to note that is just not accessible at every income level. And while there are always things that can be done at literally any budget to improve your standing in life, we have enough data now to know that until you're able to reach a certain level of money to meet your needs and to eliminate some of those stress factors, it is going to be incredibly difficult to think about much else or to make a ton of progress. So the next time someone tells you that money doesn't buy happiness, you can link them to this video or just tell them to go [BLEEP] themselves.

 As always, guys, thank you for watching. And don't forget to hit the Subscribe button and to come back every Monday, Tuesday, and Thursday for new and awesome videos. Bye.