Yes, money can 'buy' you happiness! But invest in experiences, not things

There's also a magic number beyond which more money doesn't equate to more happiness, says personal finance guru Warren Ingram.

People think you open the money tap and happiness flows... Is that true ?

Bruce Whitfield, The Money Show host

Or is it rather the tired old saying "Money can't buy you happiness" that's the reality?

Bruce Whitfield explores the tricky relationship between moola and your state of mind with Warren Ingram (personal financial adviser and executive director of Galileo Capital).

Judging by decades of research and his own observation, the old adage about money not buying happiness is simply not true says Ingram.

What we find over time is that there's a huge jump in your happiness as your earnings rise from the time your earn your first rand, up to round about R1.2 million.

Warren Ingram, Personal financial adviser and executive director - Galileo Capital

As you earn more and more to that point you actually do start to enjoy life more and you have more choice and more freedom.

Warren Ingram, Personal financial adviser and executive director - Galileo Capital

While there is a correlation, there is that point where you can earn more money than will make you happy.

Fortunately or unfortunately, after that the more your income rises over that R1.2 million level there is no real difference in your level of happiness.

Warren Ingram, Personal financial adviser and executive director - Galileo Capital

The important thing once you've reached that magic level is to decide how you spend your money, he emphasizes.

This "second" step has a huge impact on our happiness.

For example, going out to buy a new phone or a new car or handbag... whatever, gives us moments and minutes of pleasure but thereafter it goes away. Often it leaves us with a psychological hangover, especially if we've bought something expensive we find we haven't got much joy out of it and now we have this thing just upsetting us...

Warren Ingram, Personal financial adviser and executive director - Galileo Capital

Ingram contrasts buying things with spending money on experiences.

The second option offers joy in the time leading up to and during the chosen experience as well as long afterwards in the form of memories.

It could be anything from a music concert, a meal with friends to a holiday, travelling... Those kinds of experiences certainly make us happier.

Warren Ingram, Personal financial adviser and executive director - Galileo Capital

It could be an experience for yourself, but the more experiences you share with people that are close to you... the greater the level of happiness.

Warren Ingram, Personal financial adviser and executive director - Galileo Capital

Listen to the in-depth discussion on The Money Show:

More from Personal Finance with Warren Ingram