There is some research out there showing a magical drop off point where making more wont improve your happiness. My Initial reaction is that’s a bunch of bull. If more money isn’t making you happy, you are doing something wrong.
Before the pitch forks and lanterns come out, I am not taking aim at early retirees that defined how much is enough and retired. I am looking at people who are still trading their time for cash. And since I have a feeling this is coming – if you love your job and took a pay cut to do it, I still think more would make you happy if you are doing it right.
Research with the magic number:
“A new study by Princeton University researchers puts a figure on happiness: $75,000 a year “
“at the national level, making more than $75,000 per year won’t significantly improve your day-to-day happiness“
Glad the second article at least took cost of living per state into account. There is a pretty big gap between Mississippi ($65,850) and Hawaii ($122,175). I guess sandy beaches, ocean access and year round fresh sushi comes at a premium.
So, after $75K the happiness meter starts dropping and I have a few theories why that extra cash isn’t putting a grin on people’s faces.
Reasons more money wont make you happy
You are giving it away
Not to charity or family, but to money hungry corporations that have convinced you to buy their crap. Lets take a quick quiz to see if you are giving it away:
Do you own one of these?
Please no. Not This?
We passed! Their isn’t a fruit specific cutting tool, sweatshirt pillow or face toast in our house! Plus one happiness check in the AE household for not giving our money away!
Serious side. Money can be given away on practical items just as easily as the nonsense I found above (it was really easy to find stupid shit to buy if you are wondering). It can come in the simple, but extremely common interest payment on a credit card. The golf clubs sitting in the corner of the garage that haven’t been used in 3 years. Or even the piles of food you are wasting week in and week out.
Purchases that seem practical, but only provide short-term jollies should be exterminated.
Money is not serving a purpose
If you are stuck in an Earn, Spend – Earn More, Spend More – cycle I can see how you more money wouldn’t make you happy. Money needs to serve a purpose beyond its ability to buy stuff, or as Miss Mazuma puts it “Know your Why”
Take some time to sit down and write out what is important to you and start taking action. It’s not enough to just think about what you want to accomplish, start moving towards it by changing your habits. I wrote about our why a few months ago, we used an exercise from the book Smart Couples Finish Rich to help us figure it out (recommended if you don’t know where to start)
Regardless of how much you make today, be it $30-50,000 or a $150,000, if you are deploying money in a way that brings you happiness, you are on the right path. There are people making a ridiculous amount that THINK they will be happier with more, but still feel empty when that milestone passes.
For those of you just building a stock pile of cash without any thoughts on how to use it, Remember the 7 levels of Frugality, don’t be a cheap skate hoarder!
I feel like I can weigh in personally as I recently crossed this exact threshold. If you are wondering, my face did not start going from this 🙂 to this 🙁 as the ticker crossed $75,000. The exact opposite happened. Knowing every extra dollar is split across happiness, financial independence and security puts a big smile on my face and I don’t think that will ever change. The more we make, the closer freedom becomes. Simple.
Again, this is about earning, not about your nest egg (right now, more in my nest egg would make me happy though). Know when you have enough and start allocating your time to things you love. There is one very easy way to turn money into happiness. Use it to help people, there are people in need and if I learned anything from the Rockstar Community Fund Page – helping people can put a smile on your face.
What do you all think? Would more money make you happy? Do you think there is a magic threshold or is it all about how you use it?
Take Action – Mr AE.