Recent research suggests the story is a lot more nuanced—and, in many ways, the old saying doesn’t hold up.

Why People Believe It

This myth sticks around for a few reasons. First, we’re taught from a young age that the best things in life are free—think love, friendship, and health.

There’s also a cultural suspicion of wealth, as if chasing money means you’re shallow or missing out on what really matters. On top of that, older studies suggested that happiness only increased with income up to a certain point (famously, $75,000 a year), and then plateaued. 

This led many to believe that after your basic needs are met, more money can’t make you any happier.

The Reality

New research is rewriting the script. Multiple large-scale studies now show that happiness and life satisfaction keep increasing as income rises—there’s no hard cap where money stops mattering. 

For most people, more money means more choices, less stress, and a greater sense of control over life. In fact, recent studies have found that wealthy individuals report significantly higher happiness levels than those with lower incomes, and the difference is even more pronounced between the wealthy and the middle class.

How you spend your money also matters.

Research shows that spending on experiences, gifts for others, or time-saving services (like house cleaning) can create lasting boosts in happiness, especially in wealthier countries. 

What else?

Here are several research-backed examples of how spending money can actually buy happiness:

• Reducing Daily Stress: Having more money allows you to pay for conveniences that save time and reduce daily hassles—like hiring a house cleaner, using grocery delivery, or paying for reliable transportation. These purchases free up your time and lower stress, which directly boosts happiness.
• Enjoying Experiences: Spending on experiences, such as travel, concerts, or special outings with friends and family, tends to create more lasting happiness than buying material things. Experiences build memories and strengthen relationships, both of which are strongly linked to well-being.
• Gifting and Generosity: Using money to help others—whether through gifts, charity, or supporting loved ones—has been shown to increase the giver’s happiness. Acts of generosity create a sense of purpose and connection, which are key ingredients for a happy life.
• Security and Peace of Mind: Higher income and savings provide a safety net, reducing anxiety about emergencies or unexpected expenses. This sense of security protects against true despair and supports a more stable, contented life.
• Greater Autonomy and Control: Money gives you choices—where to live, what work to do, and how to spend your time. This increased sense of control over your life is a major factor in overall happiness and life satisfaction.

Even after basic needs are met, having more financial resources can reduce anxiety, open doors, and provide a safety net in tough times. While money isn’t the only ingredient for happiness, it’s a powerful tool that can help you build a more satisfying life.

However, it’s also critical to understand that money doesn’t guarantee happiness. It also doesn’t even mean you’re rich. For some, more money also means more stress, and money should never be your sole purpose.

Expert Tip

If you want your money to bring you more happiness, focus on how you use it.

Spend on experiences, invest in your relationships, and consider ways to buy back your time or reduce daily stress. Giving to others or supporting causes you care about can also deliver a meaningful happiness boost. In short: it’s not just having money, but using it wisely, that makes the difference.

Bottom Line: The old myth that “money doesn’t buy happiness” just doesn’t fit the evidence anymore. While money isn’t everything, it absolutely can increase your happiness—especially when you use it to improve your life and the lives of those around you.

So, don’t feel guilty for wanting more financial security; it really can make a positive difference.

The post Earning more money doesn’t buy happiness first appeared on Money Unrated.

But is there any truth to the idea that a pay raise could actually leave you worse off after taxes?

Let’s break down where this belief comes from and why it simply doesn’t hold up.

Why People Believe It

A lot of the confusion comes from how tax brackets work in the U.S.

People often think that if a raise bumps them into a higher tax bracket, their entire income will be taxed at that higher rate, wiping out the benefit of the raise—or even making them take home less.

For example:

If I get a raise and my salary goes from $95,000 to $105,000, I’ll move from the 22% tax bracket to the 24% bracket. That means all my income will be taxed at 24% instead of 22%, so I’ll actually take home less money even though I’m earning more!

This misunderstanding is widespread and gets repeated by friends, coworkers, and even some ignorant media personalities, fueling the fear that earning more could somehow backfire financially.

The Reality

Here’s the real deal: The U.S. uses a marginal tax system, which means only the portion of your income that falls into a higher bracket gets taxed at the higher rate.

The rest of your income is still taxed at the lower rates for each bracket.

For example, if you get a raise that puts just a small part of your salary into the next tax bracket, only that extra bit is taxed more—not your whole paycheck.

So, a raise always means you take home more money, not less. 

No matter how much your income increases, you’ll never lose money because of moving into a higher tax bracket.

Let’s say you have a taxable income of $60,000 in 2025. Here’s how your federal tax is calculated using the marginal rates:

• The first $11,925 is taxed at 10% = $1,192.50
• The amount from $11,926 to $48,475 ($36,550) is taxed at 12% = $4,386
• The amount from $48,476 to $60,000 ($11,525) is taxed at 22% = $2,535.50

So, your total federal tax would be:

• $1,192.50 (10% bracket)
• $4,386 (12% bracket)
• $2,535.50 (22% bracket)
• Totaling $8,114

Only the portion of your income above $48,475 is taxed at 22%—not your entire $60,000. The rest is taxed at the lower rates for each bracket.

The 2025 U.S. Federal Tax Brackets

Expert Tip

If you’re offered a raise, don’t let tax myths hold you back.

Use a reliable paycheck calculator or consult a tax professional to see exactly how much more you’ll bring home. Understanding how marginal tax rates work can help you make the most of your income and plan for your financial future.

Bottom Line: Getting a raise is always a win for your wallet. The myth that you could end up with less money after taxes just isn’t true—thanks to the way marginal tax brackets work, more income always means more take-home pay. So, go ahead and celebrate that raise!

The post Getting a raise could mean paying more in taxes first appeared on Money Unrated.

Let’s explore why this myth persists, what the real relationship between income and wealth looks like, and how you can build true financial strength—no matter your salary.

Why People Believe It

The belief that a high salary equals wealth is rooted in a few common ideas, misconceptions and assumptions:

• Visible Lifestyle: People with high incomes often have the means to afford luxury cars, large homes, and expensive vacations. This outward display of spending is frequently mistaken for genuine wealth.
• Cultural Narratives: Movies, television, and social media often equate high-earning professions with financial success, reinforcing the idea that a big paycheck is the same as being rich.
• Confusing Income with Net Worth: Many equate what someone earns (income) with what they own (net worth), not realizing that wealth is measured by assets minus liabilities—not just annual salary.
• Assumption of Good Financial Habits: There’s a widespread assumption that if someone makes a lot of money, they must also be good with money, saving and investing wisely.

These beliefs make it easy to conflate earning power with actual wealth, even though the two can be very different.

The Reality

A high salary can help you build wealth, but it’s not a guarantee.

Here’s why:

• Lifestyle Creep: As income rises, so do expenses. Many high earners fall victim to “lifestyle inflation,” increasing their spending on homes, cars, dining, and more, leaving little left to save or invest.
• Lack of Savings and Investments: Studies show that a surprising number of high-income earners live paycheck to paycheck. According to a 2023 LendingClub report, over 40% of Americans earning $100,000 or more annually still struggle to save.
• Debt Burden: Higher earners sometimes take on bigger mortgages, car loans, or credit card debt, which can erode their net worth.
• Wealth Is Net Worth, Not Income: True wealth is measured by what you own minus what you owe. Someone with a modest salary who saves and invests diligently can be wealthier than a high earner who spends everything.
• Unexpected Setbacks: Without savings and investments, even a high earner is vulnerable to job loss, medical emergencies, or economic downturns.

A high income earner may not be wealthy if they spend most or all of their earnings instead of saving and investing—a phenomenon often called the “wealth paradox.”

For example, HENRYs (“High Earners, Not Rich Yet”) are individuals who make substantial salaries but focus on spending rather than building net worth, leaving little set aside for the future despite their impressive paychecks.

Hint: There are a LOT of HENRYs out there.

Lifestyle inflation is a common trap for high earners: as their income rises, so do their expenses, with larger homes, luxury cars, and frequent vacations quickly consuming their earnings. Even with a six-figure salary, living paycheck to paycheck is possible if spending outpaces saving and debt accumulates, resulting in a low or stagnant net worth.

Ultimately, wealth is measured by net worth—not income. Without disciplined saving, investing, and debt management, a high salary alone won’t translate into lasting financial security or true wealth.

Research Example:
A 2022 Charles Schwab survey found that many Americans define “wealthy” not by income, but by net worth and financial security—such as being debt-free, having emergency savings, and being able to retire comfortably.

Expert Tip

Focus on Building Net Worth, Not Just Income

Financial experts agree: The key to lasting wealth is what you keep, not just what you earn. Prioritize saving and investing a portion of every paycheck, regardless of your salary. Track your net worth regularly to see your true financial progress.

Bottom line:
A high salary is an opportunity, not a guarantee. True wealth is built through smart money management, disciplined saving, and a focus on growing your net worth—no matter how much you earn.

The post If you earn a high salary, that means you’re wealthy first appeared on Money Unrated.