One of the things that always shocks me is when rich people are unhappy. You hear about celebrities that go through bouts of depression. You look at tragic cases like Robin Williams, Anthony Bourdain, and Kate Spade and wonder what went wrong. It could be said that their internal chemistry played a big role. However, I have always wondered, “wouldn’t enough money simply solve their problems?”
Well, it seems like all the money in the world can’t make you happy if you have clinical depression or if you don’t have the right train of thought.
You can look at many poor people around the world who have never had a bout of depression in their lives. Maybe they can’t afford to be depressed.
However, doesn’t money play a big role in overall happiness?
From personal experience, I know that I am less anxious and generally happier when I have more money. Sure, there are times when I am miserable when I have money. There are also times when I was broke and pretty happy. However, I want to seek a definitive answer.
Well, according to researchers money equals happiness to a certain point. After that point, more money makes you incrementally happier. However, you do get diminished returns.
Consider that the average salary in the U.S. is about $58,000. Therefore, if you make about 80% more than the average salary in your area, then you should be “happy” when it comes to money.
What I find fascinating is that researchers found that making $950,000 a year won’t make you ten times happier than making $95,000 a year. Therefore, if you are looking for a target income, then $95,000 a year is a great place to start.
So does that also mean that we shouldn’t reach for the stars and go for big money? Actually, I think people thrive when they have goals to hit. However, it occurs to me that people should not try to make more money with the express purpose of finding happiness.
One of things that hurt people is that they set a goal of “buying a Lamborghini” or “buying a mansion.” Then when these people actually buy the item, they get depressed. That’s because the joy came from pursuing the goal rather than actually getting the prize. Therefore, I think the idea here is to go for a goal that doesn’t have a huge price tag. For instance, one should set a goal to write a book, learn to play an instrument or reach a certain weight or muscle mass. I think achieving these goals will naturally make a person more successful – financially and otherwise – because achieving goals will eventually become easier.
Since I have heard of this research, I have learned to be less focused on purely making more money and more focused on gaining more skills and reaching more financial goals. I have found that reaching these goals have made me more confident. In turn, becoming more confident has helped me increase my income because nothing seems insurmountable.
Well, that’s good news. We don’t have to waste our lives just to singerly pursue a number on a bank account. I think being able to focus on things beyond money can lead to a richer, more robust life.
The bottom line: How much money can make you happy? Science says that making about $75,000 to $95,000 is the sweet spot. However, how you spend that money also plays a big role.