Money Can’t Buy Happiness. Or Can It?
While Patrick Dempsey showed us that money can’t buy love, it does appear to buy happiness.
The magic number you ask?
$50,000 per year.
In a new study by Marist Institute for Public Opinion, researchers found that folks earning $50, 000 or more were significantly happier in general than those earning less than $50,000.
The $50,000+ group was significantly happier in some obvious areas (finances, housing) but also in less expected ways. Folks earning under $50k were also 10% less happy on average with their friends, health, work, and how their days are spent.
Does this mean we should bury our unhappy little heads until we bring home that $50,000 pay check?
The LYL answer: not so fast.
The principle represented in this study is accurate: we feel great happiness when we’ve crossed financial threshold of being able to afford all basic needs as well as a few luxuries. But $50,000 isn’t the magic number for all of us.
You may, in fact, already be at your magic number even if you’re earning 10% or 25% less. $50k was the average magic number for the people studied. But, given that we all live unique lives, our financial needs are also unique.
For example, a women kids in an expensive urban areas with students loans might need $80,000 to reach that same level of comfort as a single man in an affordable town gets from $27,000.
If Money = Happiness, Then More Money = More Happiness?
No again, mon ami.
It turns out that while US incomes have nearly doubled since the 1970s (accounting for inflation), happiness levels have stayed stagnant. The truth is that after that magic threshold has been crossed, money has little to no effect on our happiness.
Part of this is due to the increased hours we work here in America. You see, work is the medium through which we exchange time for money. We then later trade this money for things, ie: cars, houses, sunglasses, shoes, etc. Time –> Money –> Stuff.
The old adage, “time equals money,” is only conditionally true. The total truth is a bit more nuanced:
Money > Time when basic needs are not met
Money = Time at the magic money threshold ≈ $50,000
Money < Time when we’re accruing excess stuff
Isn’t It Ironic?
The great irony of modern American society is that we are convinced we can buy our happiness. This works for the first $50,000 or so. Thus we push forward with our “more is better” ideals. Commercials confirm this, letting us know that true happiness is just one perfect dress, big tv, or brand of laundry detergent away. Yet the more we spend, the more we work, the less happy we are.
Michael Ellsberg, author of The Education of Millionaires, mentioned in a recent interview that the millionaire and billionaire business people he interviewed for his book were still unsatisfied with their incomes. Even as the wealthiest 1% in the world, they believe that happiness is just beyond their means. If they can only amass another million or 50, then they’ll be happy.
If the definition of insanity is trying the same thing and expecting different results, then we Americans are insanely searching for happiness in stuff. We are instead, buying our own unhappiness.
The Bottom Line
Until we hit the threshold of meeting our needs, these trades of time for things are very much worth it. Beyond that point, we have to decide for ourselves if these are even trades.
When I look back on my life, will I wish that I owned more pants? Or will I be glad to have spent my time on people and experiences I love?
What is your magic money threshold? How could you tell when you reached it?