Three Keys to Happiness

SELF-DETERMINATION THEORY posits that we have three basic psychological needs: the need for competence, relatedness and autonomy. These needs—when satisfied—lead to greater motivation and the experience of well-being.

To this, you might respond, what the heck are we talking about? To me, self-determination theory provides a framework for thinking about the connection between happiness and money.

We tend to be happier and more enthused about our daily lives if we’re engaged in activities we feel we’re good at (competence), we’re doing them because we want to rather than because we’re being forced to (autonomy) and we aren’t socially isolated (relatedness). Along the same lines, I believe that, if we’re smart in how we handle our finances, we can use money to boost our happiness in three ways.

First, it can ease our financial worries and help us achieve a sense of financial freedom (autonomy). Second, money can allow us to spend our days doing what we’re passionate about and what we think we excel at (competence). Third, it can make it possible to have special times with friends and family (relatedness).