Is $75,000 Really The Pinnacle Of Happiness?
First off, I would like to start by saying that this isn't a post about what is and what isn't a lot of money. $75,000 isn't just some small sum of money; a great majority of people would be happy to make that. This is more along the lines of a discussion on the happiness incurred by salary increases after $75,000. Apparently, after this amount, more money doesn't correlate to more happiness. In my opinion, it would take more than $75,000 for the marginal benefit to be 0. I feel like almost any person would be happier if their salary was increased by $75,000 to $150,000. This increase allows for many new purchases that were previously unattainable. Now lets take someone making $300,000. They are less likely to be happier with a $75,000 increase because they are likely already able to afford most things that the $75,000 increase would bring them. My argument is that money stops bringing happiness right around the value needed to enter the top income tax bracket.
According to a study focusing on 450,000 Americans and how they evaluate their happiness, a salary of $75,000 a year is the magic number after which people's day-to-day happiness no longer improves.
So, according to their numbers, you won't be any happier on a day-to-day basis if you're making $75,000 or $750,000—though you'll likely feel like you've got a better life overall. (Of course, your results likely vary depending on your regional cost of living.) Knowing that, however, may help you appreciate the salary you have, especially if you're pulling in over the magic number.
Once again, this isn't an argument about what is and isn't a lot of money. Money certainly isn't everything; there are many things more important. And different people in different regions are happy with different amounts. So what do you guys think? Where does the marginal benefit of a salary increase equal zero?
I am bankrolling my sister through her legal and other costs in her post-divorce property settlement with her shitty ex. This makes me happier. It makes her happier too. It does not make her ex happy.
I would not be able to do this on a salary of $75k pa.
Maybe for the average person. I don't think money is the be all end all, but adjusted for cost of living it could be somewhat accurate.
Let me put it this way, anyone who says "well it's just money" is talking out their ass. Money is food, shelter, tuition etc. Imagine you are out of work for 1 years- that's 75,000 extra you need to have in your checking or savings account, and that's before you even start to put away for investments etc.
I REALLY forgot where I was going with this post, oh well they can't all be winners.
I think those who are struggling may be the most happy to receive more money. They truly appreciate the value of a dollar. These are the people who need that food, shelter, and tuition. I feel like someone who already has enough money, is more likely to say "well it's just money." They already have what they want/need and more money offers them little satisfaction.
Of course the marginal benefit of 75k gets less the more you earn. one should rather look at the marginal benefit of the same % increase. going from 75k to 150k is huge and makes a world of difference, perhaps more than going from 2 million to 4 million, even though the latter increase is 1925k more. I think that the marginal benefit of an increase will rarele equal zero, but considering opportunity cost, for sure for many people it won't be worthwhile working harder for more pay at a certain salary. For me I think that'd be around 500k per year, the best day of my life was when I stopped dreaming of yachts and private jets and became satisfied with the possibility of freedom to do what I want within a reasonable limit.
It really depends on where you live. Lets assume $75k works out to about $4k post tax per month. If you live in NYC, you can easily blow all of that on rent and still be in a dingy place. However, if you are out in say Salt Lake City/ Dallas/ etc. then you can find a fantastic townhouse for about half that.
The general idea is that people dream, just not too big. Most people live in an area with others of similar income, so when you make 90k, you dream of making 100k because your neighbor has 100K and he has "x" more things than you do.
For the 75k, that means for every one person happy with 100k, someone would be happy with 50k. For people making 40K (probable a good amount of ppl in the country), that extra 10k goes a long way.
In the end, it's more of an "illusion" then anything else, as normally ppl making 40K don't dream (think they can accept) of yachts and lambos, but just a "nice" car. Similar to how most americans believe they are "middle-class":
https://www.theatlantic.com/politics/archive/2013/08/why-americans-all-…
Happiness is relative wealth. They've studied this. People would rather have less, but more than their peers vs. more, but less than their peers.
End of the day, happiness is psychological and money can only help in this, not create it by itself.
BTW- this topic has been mentioned a number of times before.
*$750k. Typo fixed.
Wathced the minimalist documentary yesterday and it talked about this.
All I would say is that people have different definitions for success, some want money, others want health & family, etc. I think it's a problem of wanting more and more every time. If you are making 50k and get bumped to 75k you'll be happy as hell, but then you'll want 100k and so on.
As Bob Marley said, “Money is numbers and numbers never end. If it takes money to be happy, your search for happiness will never end.”
Again, as many people said above, money is also freedom.
All of this is misleading if one does not live within their means. The average joe will buy a more expensive car or move into a more expensive apartment upon receiving higher compensation. Thus expenses offset (or often even exceed) the higher income. Thus, happiness is never attained. It's a rat race for most
$75,000 goes a lot further in Arkansas than it does in San Fran.
If we're talking about 75k in disposable income (after tax, 401k, insurance, rent/mortgage, etc), I'd agree with that statement somewhat.
there are so many variables here this isn't even worth discussing
Well considering that 75K/year is more than the median family in America makes. I can see why.
Has anyone commenting actually read the study referenced. Full disclosure... I have not.
To the OP's point, I don't think it was delta in levels of happiness after salary was raised from $75K to $150K. I think the finding was that there is no significant delta in the happiness of people earning $75K vs people earning $150K...
Money will come and go. Quality of your relationships are the one and only key determinant of your happiness. Period.
I think that all other things being equal, more money = more happiness. Of course if a guy gets a raise from say $75,000 to $150,000 but other aspects of his life turn to shit, his happiness is going to decrease. But not because the $ increase is meaningless. He is still less unhappy at $150k with life misfortunes than he would be at $75k with those same misfortunes. And even happier at $150k vs $75k with things going well in other aspects of life.
Money is resources and flexibility. Of course it will make an individual happier to be able to pay back student loans than not. To take more vacations, purchase a home(s) than not...etc. This changes of course if we're talking about someone going from $75 million to $150 million yr. At this level it is no longer about necessity nor even luxury, but sheer financial & business competition for its own sake.
When you look at lottery winners, it does seem like more than $75K could do more harm than good. But, how cool would it be, if one patriarch (or matriarch for that matter) in each family, had half a billion in worth, or some crazy number like that. Not everyone knows how to make solid earnings last, or even what allocation of resources means. But for those that do, 75K is not enough, because it's extremely limited in today's money, whereas more money will always increase that ceiling of limitation.
Propaganda to keep the middle class aiming low. Be happy with your $75k salary, $100k student loan, $300k mortgage, and 50 years of servitude!
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