There’s a strong correlation between wealth and happiness.

 Rich nations tend to be happier than poor nations, and rich people tend to be happier than poor people. But money’s impact on happiness isn’t as great as you might think.

If you have clothes to wear, food to eat and a roof over your head, more money has only a marginal effect on your sense of well-being. Other factors are more important.

In a 2005 issue of the Review of General Psychology, Sonja Lyubomirsky, Kennon Sheldon and David Schkade looked at years of research to determine what contributes to long-term happiness.

 They found that about half of our happiness is biological, determined by a sort of happiness “set point.” About 40 percent of happiness comes from the things we choose to do, like exercising, setting goals and building friendships.

 Only about 10 percent of our happiness is based on circumstances like age, race, gender — and, perhaps surprisingly, financial status.

Although your financial situation plays just a small role in your overall happiness, it does affect it. According to a paper published in the April 2011 issue of the Journal of Consumer Psychology, some financial habits bring greater satisfaction than others.  Read more …