Ask any Indian parent what they want for their child, and the answer is often delivered with warmth and simplicity: “Bas khush raho beta” (Just be happy, my child). But behind this seemingly universal wish lies a more layered reality. In many families, happiness isn’t just about emotional well-being—it’s closely linked to financial milestones. A good job, a home of one’s own, a stable future. But here’s the million-dollar question: Does money lead to happiness, or does happiness lead to better financial outcomes?
The chicken-and-egg problem of money and happiness
For decades, economists and psychologists have tried to crack this mystery. The relationship between money and happiness isn’t as straightforward as we once thought. Yes, financial stability can reduce stress, open doors to better healthcare, and provide access to education, all of which contribute to a higher quality of life. But happiness can also shape financial behaviour—happier people tend to make better financial decisions, take calculated risks, and even earn more over time.
A study by Nobel laureates Daniel Kahneman and Angus Deaton (2010) suggested that while higher income improves emotional well-being, this effect plateaus around some amount. Beyond that, more money doesn’t necessarily translate to more happiness. However, a recent study by Matthew Killingsworth challenges this, arguing that happiness continues to rise even at higher income levels.
Back home, research on Indian families suggests that money and happiness are deeply intertwined, but not always in predictable ways. A well-off business family in Delhi may still be stressed over maintaining its wealth, while a middle-class family in Ranchi may find immense joy in small celebrations.
Also Read: The wealth trap: Why more money doesn’t always mean more happiness
Indian perspective: Money as a social currency
In India, money isn’t just about survival; it’s about social standing, family honour, and future security. Unlike Western cultures, where financial independence is a goal, Indian families often operate on a model of financial interdependence—where earnings, savings, and wealth are shared across generations. This creates a paradox. While financial success brings social respect and stability, it also comes with pressure. A high-earning young professional in Mumbai might feel obligated to support extended family, fund younger siblings’ education, or contribute to family weddings—expenses that often go beyond what Western financial planning models account for.
Moreover, happiness in Indian families is often tied to giving rather than accumulating wealth. Studies have found that spending money on others, particularly within close-knit family networks, enhances happiness more than spending on oneself. This aligns with research by Elizabeth Dunn and Michael Norton, who found that “prosocial spending” (spending on others) leads to greater happiness than self-spending.
Also read: Delayed gratification: The formula for wealth creation and happiness
Does happiness influence financial success?
While the traditional belief is that financial stability breeds happiness, there’s growing evidence that happiness itself can drive financial success. Happier individuals are more likely to be optimistic, build stronger social networks, and approach their careers with enthusiasm—all of which contribute to higher earnings over time.
A Harvard Business School study found that people who reported higher life satisfaction in their early 20s earned significantly more by their 30s and 40s. This suggests that cultivating happiness early in life might be a financial strategy as much as an emotional one. In India, this raises an interesting question: Are we raising children to be financially successful at the cost of their happiness?
Many parents push their kids into high-paying but stressful careers (think medicine or finance), often prioritizing stability over personal fulfilment. But if happiness itself can lead to better financial outcomes, shouldn’t we be focusing on well-being as much as wealth-building?
Also read: The wealth effect: How perceived prosperity drives spending—and how to stay in control
So, what’s the verdict? The truth is money and happiness share a bi-directional relationship. While financial security can reduce stress and enable life’s pleasures, happiness itself can be a driver of financial success.
For Indian families, the takeaway is simple: Balance is key. Prioritizing financial well-being should not come at the cost of emotional well-being, and vice versa. Instead of obsessing over paychecks, investments, or societal expectations, perhaps it’s time to redefine wealth—not just in terms of assets, but in terms of contentment and fulfilment. After all, isn’t that what most Indian parents want for their children?
Hardeep Singh Mundi is assistant professor, Institute of Management Technology (IMT), Ghaziabad. Simarjeet Singh is assistant professor, Great Lakes Institute of Management Gurgaon. Views are personal
