How Much Money Does It Take to Be Happy?
|Author: John D. Thomas||13 August 2017||Copyright 2017|
They say that money can't buy happiness. And yet, when you don't have enough money to make ends meet and the bill collectors are calling... you can feel pretty miserable. On the opposite end of the financial spectrum, you've seen countless stories about wealthy people who never seem to be happy with their riches. They go from one personal crisis to the next pursuing that elusive state of happiness. Is there really any correlation between money and happiness? And if so, how much money does it take to be genuinely happy?
In a 2010 study conducted by Princeton economist Angus Deaton and psychologist Daniel Kahneman, 450,000 Americans were surveyed. It turns out that an annual salary of $75,000 seems to be the ideal number. Earning more than $75,000 doesn't seem to bring much additional happiness to the average person. Research indicates that after $75,000 most people's level of happiness hits a plateau. *(See caveats below.)
This study examined two types of happiness:
1) Day-to-Day Contentment (emotional well-being)
2) Life Assessment Contentment (satisfaction
The conclusions reached in this study clearly indicate that incomes beyond $75,000 per year do little to increase an average person's day-to-day happiness.* However, higher income beyond $75,000 does tend to increase an individual's personal satisfaction with their place in the world.
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Having an annual income in excess of $75,000 allows an individual to acquire more and better material things. While having greater material possessions may increase your personal sense of success and achievement, this doesn't automatically mean you'll feel happier. The Princeton study reveals that having great personal wealth doesn't, in itself, make a person happy. A person can be perpetually irritable and despondent regardless of their wealth. In fact, research indicates that the more possessions one has, the more they have to worry about. Things break, get stolen, depreciate, need maintenance, and of course, they get taxed. The more you have, the more you have to worry about. And worry is one of the biggest reasons people don’t feel happy.
The good news is that your day-to-day happiness is independent of significant wealth. In fact, great wealth can often have the opposite effect. The old saying is right, “Money can’t buy happiness!”
*There are a few caveats to the Princeton study. First, there are regional differences that will cause the number $75,000 to vary. If you are living in an area where the cost of living index is high (e.g. San Francisco, New York, London, etc.) then the $75,000 number must be increased to compensate for the higher cost of living. Second, the number of dependents is also an important factor to consider. A single person with no dependents will have far more disposable income than someone supporting a family on $75,000. This must be taken into consideration. And finally, debt must be considered. A person earning $75,000 who is debt free tends to be far happier than someone on the same income with a heavy debt load.
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