With record unemployment, pay cuts, a turbulent market and an ever-widening gap between the haves and the have nots, money is at the forefront of people's minds more than ever.
But how important is money to happiness?
The answer is complicated. Research has long looked at how money affects happiness, which in psychology is defined as both emotional well-being, and how satisfied you are with the way your life is going.
Studies have pinpointed the salary that people need for happiness, looked at why money doesn't make us as happy as we expect and posited the ideal ways to spend your money to be happy. Here's what you need to know, no matter what you make:
There is a sort of perfect 'happiness' salary
A well-known 2010 study by Princeton researchers Daniel Kahneman and Angus Deaton found that people tend to feel happier the more money they make, up until a point, which Kahneman and Deaton estimated to be about $75,000 a year per person.
"After that, [happiness] kind of leveled off," Sonja Lyubomirsky, a professor of psychology at the University of California who studies happiness, tells CNBC Make It.
People's emotional well-being, or how they felt on a daily basis, didn't improve as they made more than $75,000, but their life satisfaction, or how happy they were with their life overall, did.
But more recently, a 2018 study from Purdue University used much wider data from the Gallup World Poll and found that the ideal income point for individuals is $95,000 for life satisfaction and $60,000 to $75,000 for emotional well-being.
When people earned more than $105,000, their happiness levels decreased.
But even a decade later, experts say that the amount of money people need for happiness would still be around the median income for U.S. residents, which is $63,179, according to the most recent U.S. Census data from 2018.
The idea is that you need money to meet basic needs, such as access to healthcare and a safe place to live, Lyubomirsky says. If you grow up without resources like food, clothing or shelter, then having more money really makes a huge difference in your life and overall well-being.
"But once you hit that middle class level, there really is no correlation above that," says Brad Klontz, a financial therapist and psychology professor at Creighton University. This can be challenging to comprehend, because most people operate under the assumption that money will solve all of our problems.
"At the end of the day, we're humans and we struggle with existential issues like what's the meaning of life, and who am I?" Klontz says. "And those sort of questions don't go away when you get a bunch of money."
With happiness, being rich is relative
More money doesn't make us happier but making "more relative to other people" does, according to Yale psychology professor Laurie Santos, who hosts "The Happiness Lab" podcast.
"Even the richest folks out there in the world can often look around and find somebody that's just a teensy, weensy bit richer, and therefore their money is not making them as happy as they think," she tells CNBC Make It.
This is because we have an evolutionary tendency to compare ourselves to other people, Klontz says. "We're very much wired on a survival level to see how we compare and where we stack up next to everybody else."
Studies suggest that when we feel like we can't maintain the same standard of living as our peers, it makes us unhappy.
"Essentially, how you rate yourself in terms of your subjective well-being, like whether you feel like you're happy or satisfied or not, is entirely dependent on how you see other people doing around you and what they have."
And the reason why simply getting more money doesn't make us happier is because there is a psychological phenomenon called "hedonic adaptation": "Over time, we get used to that change in our life and our expectations change and our lifestyle changes — we adapt," Lyubomirsky says.
Plus "every time we experience kind of a rise in income, our aspirations and expectations rise a little bit," she says.
"It's really critical to know that this is what's happening for you subconsciously, so that you can override it," Klontz says. "Otherwise, you're going to be really tempted to buy things. Like, when you see your neighbors have a new car, you can have an instant sense of dissatisfaction that you don't have a new car, and you're going to be vulnerable to making financial mistakes."
Purpose is more important than money to be happy
Research consistently shows that if you want to be happier in your job, you shouldn't chase a high salary. From a happiness standpoint, it's more important that your job provides a sense of meaning or purpose.
"You should focus on whether the job is meeting what we often call your own signature strengths," Santos says. "These are your own values that you want to experience in the world." For example, maybe you find that being creative or teaching other people is rewarding.
Not only does having meaning make you happier, but studies have shown that you tend to be more productive, too. When you're engaged in an activity that you find challenging and satisfying, you experience "flow," or a state of optimal experience, Klontz says.
In a 2018 survey by BetterUp Labs, nine out of 10 people said they'd trade 23% of their future earnings to have a job with meaning. So why don't more people switch to lower-paying but more meaningful jobs?
According to Santos, it's easy to get caught in "golden handcuffs," or in other words, when you feel trapped in a job you hate because it's paying a lot of money.
"I think a lot of people hate their jobs and their careers, but they do it because they need to pay for their life," entrepreneur Gary Vaynerchuk tells CNBC Make It. Vaynerchuk came from "humble" beginnings, he says. He and his family immigrated from Belarus in the '70s and grew up in middle class enclaves like Queens, New York and Edison, New Jersey.
Although he's a multimillionaire now, Vaynerchuk says that he wants to "redefine success" as being happy versus making a lot of money. "I have an uncomfortable [number] of friends who make $12 million a year and are unhappy," he says.
Luckily, anyone can make their job more meaningful, by "infusing" your own personal strengths into what you do every day, says Santos. If you love to help other people, for example, think about ways that you can lend a hand to others at the office.
Or if you're currently between jobs or not sure what your signature strengths are, you may want to spend time writing down what you value in life, she suggests.
You can buy happiness by doing this
"How you spend your money is really critical to your happiness," Lyubomirsky says.
For example, contrary to the "self-care" belief that you should splurge and "treat yourself" to material purchases, buying things won't make us very happy, Santos says. While it might feel good to shop for nicer or more expensive things, they typically aren't fulfilling once we get them, she says. This is in part because material purchases hang around, so we get used to them.
On the other hand, spending money on personal growth, connecting with people and contributing to the community, do contribute to happiness, Lyubomirsky says. Studies also suggest that spending money on experiences makes you happier than items.
"If you spend money in ways that help others, or help you connect with others, whether it's just like a dinner with friends or traveling, even if it's not very far and very expensive, that would make you very happy," she says.
Another surprising way to spend? Buy yourself time. A 2017 study found that when people paid for time-saving services — such as ordering takeout, having your home cleaned and outsourcing someone to run errands — they had higher levels of life satisfaction than when they bought material items.
At a time when our habits around money and shopping are changing, simply understanding what will make you happy is key. "Being aware of our beliefs around money, and being open to challenging them and shifting them, is going to be more important than ever," Klontz says.
Check out: The best credit cards of 2021 could earn you over $1,000 in 5 years
Don't miss:
