How much is enough? On average, $75,000 per year is a good salary

A few weeks ago I wrote about how money really can buy happiness, but how much money is enough?

A big-screen TV isn’t a ticket to happiness, but a vacation might be. Giving your money away can boost your well-being, and so can investing it in time with your family.

A new study from Princeton hangs a price tag on that happiness: $75,000 [PDF summary]. That’s the annual household income that gives you the most joy for your buck. People with incomes below that magic number report less happiness, overall, than those at or above it.

The effect levels off after $75,000, though. As your income increases, your cheerfulness also increases, but the good cheer plateaus around $75,000. Another $25,000 a year — or even another $100,000 a year — will make you richer, but it won’t make you much happier.

Related >> Money CAN buy you happiness

The Magic Number?

It’s not that $75,000 is enough money to let you buy anything you want. Anyone supporting a family on that salary knows you still have plenty of careful budgeting to do. Rather, it’s that Stuff doesn’t make you happy. A bigger income buys you more Stuff, but the emotional satisfaction of having it wears off quickly.

Why $75,000? Because that’s the magic number at which most Americans can pay their basic living expenses and have a little something left over for the good things they want in life. Or, as the Nobel-prize winning research team who ran the study put it:

More money does not necessarily buy more happiness, but less money is associated with emotional pain. Perhaps 75,000 dollars is a threshold beyond which further increase in income no longer improve individuals’ ability to do what matters most to their emotional well-being, such as spending time with people they like, avoiding pain and disease, and enjoying leisure.

They’re talking about the sense of day to day joy that comes into your life when you have Enough. If you’ve read Your Money or Your Life, you surely recall their graph of how money affects our moods. From poverty up through plenty, they chart a curve. At the peak, you have Enough: your living expenses are covered, your future is secure, and you have some fun money to spend on the things you enjoy.

Beyond Enough, the curve dives downward into clutter, stress, competition and an array of other sorry outcomes.

Fulfillment curve
Note: This is J.D.’s representation of the Fulfillment Curve from Your Money or Your Life.
This new study’s findings would seem to contradict this curve.

Sadly for us frugal types, the researchers didn’t find that to be true. Accruing more money won’t make you happier on a day-to-day basis, but the super-rich do score higher than the middle class on another axis of happiness.

Life Assessment

The technical term for this one is “life assessment”, and it simply means how satisfied with your life you are overall. The wealthy see themselves as more successful than the middle class do even though their wealth doesn’t bring them joy.

Partly that’s because wealth allows them to achieve more of their dreams. I’d bet that part of it, too, is simply the high value our culture places on being rich. If everyone around you is striving to die with the biggest bank account, and you have it, you feel like a winner.

You don’t have to be super-rich to achieve your dreams and be satisfied with your life, though. Many people do that even on a fraction of the $75,000 it takes to get most of us to the Enough place.

They do it by knowing what they want, being disciplined with what they have, and celebrating their achievements. They’ve stepped far enough out of the cycle of consumption to stop wanting More More More all the time. They have Enough, at whatever salary they’re earning.

How do you find your own personal money Enough?

How Much Money is Enough?

Knowing where you are is, as Your Money Or Your Life makes clear, essential. You need to know how much you earn, how much you have in assets and liabilities, and how much you’re likely to make during your career. You need to know this because without it, you can’t get clarity about what you want.

Knowing your net worth doesn’t automatically get you that clarity, though. You need to set an intention. For me, that process started with a brainstorming session with my partner. We laid out three categories of financial priorities:

  • Laying a foundation. These are the essentials of good financial hygiene: being out of debt, providing for our future, covering all our basic living expenses.
  • Quality of life. This category included things we value but don’t need to survive, like a good education for our children. We’d be unhappy if we couldn’t pay for our Quality of Life priorities, but not in danger of homelessness.
  • Beyond the basics. This was the daydream category. It includes things like travel and giving to charity. All the things I love to do, but often can’t because I’m putting my dollars into those first two layers of financial life.

Once we’d created this blueprint for managing our money, we got real specific. We want to fund our retirement. Great. How much do we need to retire on? What resources do we have to create that nest egg? We want our kids to have a great education. Great. What kind of education? How much will that cost?

By being specific about what we wanted, we were able to put a price tag on each of our goals. An overall picture emerged of what Enough would mean for us. In the parlance of this research I’ve been discussing, we were able to see what it would cost to buy our vision of happiness.

About $80,000 a year. Since we live in a fairly high cost-of-living city, so this number is well within range of the $75,000 Princeton’s scientists came up with when looking at the whole country.

The number is beside the point, though. What matters is the exercise of understanding your priorities, and knowing what your dreams cost. Whether you do this and discover that your personal Enough is $30,000 or $300,000, you’ll be better off for having a clear sense of what you’re striving for, financially.

I distilled all that complex brainstorming and math into a single index card. I keep it on my desk. It says, “My money Enough” at the top, and then lists the goals I’m working towards. It’s an inspiration when I’m tempted to slack off on my saving or my career.

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There are 115 comments to "How much is enough? On average, $75,000 per year is a good salary".

  1. Nicole says 16 September 2010 at 04:15

    As Grace from Graceful retirement pointed out, it is ironic that the Princeton professors who wrote the study are making a heck of a lot more than 75K/year. Maybe they’re just making 75K per person in their household.

    Or maybe they just feel more successful. Or they’re above average in their enough.

  2. uncertain algorithm says 16 September 2010 at 04:24

    I found the study fascinating, but lacking. Although an increase in income is nice, accruing money in the bank deflects a ton of stress. I would love to see a study compare wealth amounts (millions of dollars in assets and so on) and fulfillment.

    As far as happiness is concerned, provided that happiness is not the goal, one will be happy.

  3. Bananen says 16 September 2010 at 04:31

    That number probably changes according to the general wealth in society. In 1990 10,000 inflation-controlled dollars would have been more than enough.

    Besides, the 75,000 is an average and most possibly varies between people. Some are satisfied with much less, while others need millions to be happy.

    • David Lolley says 30 June 2019 at 00:52

      I survive on le$s than 800.00 a month. You do not absolutely have to have every single thing that you see hear of or read about that’s just an illusion that commercials want you to believe

  4. leslie says 16 September 2010 at 04:42

    I am pretty sure someone making $75,000 raising a family of 4 in a high cost of living local like San Francisco if far less “happy” with that number than a single person making the same amount in Iowa.

    There are so very many variables in the discussion of money/happiness that I tend to disregard these sorts of studies as only marginally valuable. They bring up interesting points for discussion but the numbers they come up with really mean very little when applied across the board to a large, diverse population.

    • David Lolley says 30 June 2019 at 00:58

      The richest 1% of the world have 99% of the money in America, that leaves only one single percent to spread across the board of all the rest of us the 99% of us one of these days 99 people out of a hundred are going to end up doing something that could have been prevented it is very sad that these movie stars and what politicians take their millions and hundreds of Millions and more for granted completely and misuse the money to commit crimes to steal more money it’s this entire government is based on keeping the poor poor so the rich can stay Rich Forever their family will always be rich and my family will always be poor that is their objective!!!!!!!

  5. Laura says 16 September 2010 at 05:00

    “It’s not that $75,000 is enough money to let you buy anything you want. Anyone supporting a family on that salary knows you still have plenty of careful budgeting to do.”

    Do you really?

    I find it incredible that you’re even discussing whether $75,000 is really that much. Heck, my annual white-collar salary (without taxes) is around $30,000, I support a husband and kids on that amount and that, I’d say, requires ‘careful budgeting’.

    I simply cannot imagine the careful budgeting supposedly required of a similar family on $75,000. Unless you buy a limo and a polo pony for all the kids and an olympic-size swimming pool for yourself, of course.

    • April says 22 January 2014 at 12:01

      I thought the same when we made $25,000 9 years ago. I thought if we could only make $30,000 a year that would be perfect. But frankly we now make $80,000 and we are only a little less tight on regular day to day things than we always were. If you are RESPONSIBLE with a larger income– things are NOT luxurious, but they are comfortable. I tend to look at a high income like $80,000 NOT as a luxury anymore but as means to be comfortably frugal, generous with the church and poor, and life long sustaining (save a lot for retirement $800 per month–but this will only afford a $60,000 inflation adjusted income. In other words we shouldn’t Need the government to be forking out tons of money on our high old age health care costs, and we hope to be able to serve a few missions for our church as empty nesters.)

      For a family of 5 we spend $750 on groceries, $200 on gas, $150 for health/dental/optical, $150 on clothing, We have paid for older cars and sometimes wear shoes with holes in them and shirts we wish we could send to Goodwill.
      It is amazing how much we pay in taxes ($11,000 comes out of our pay check) The government used to send us a check that would compensate for some of those FICA taxes, now we pay about $900 per month to state and Uncle Sam. Then tithing plus retirement savings take out 25% of that additional income. Plus we typically feel responsible to share with those less fortunate about $200 per month. The luxuries we have added into our life include piano, sports, and swimming lessons for our 3 kids. The only thing left is that we did buy a $140,000 2100 square foot home, but it is in quite bad shape. Basically everything needed to be replaced or updated from the dry wall to the roof. We can’t afford to replace flooring or fix things up nice. We can barely scrape together money for paint, but we hope to slowly perhaps over 10 years get it into good condition.

      We are tight. We have $200 a month for miscellaneous spending. That’s for car maintenance/repairs, school photographs, birthdays, and anytime we need money for something other than groceries. We also set aside $40 for a once a month restaurant meal, and $40 for family fun activities. Our utilities are $300 per month (thermostat at 67 in winter and 78 in summer). Were we stupid to buy the home we did. Yes, we should have bought one for a little more money in better condition. We had $3,000 in medical expenses last year, and are expecting another baby this year which will be another $3,000 we have to scrape together. Were it not for these big medical expenses in addition to regular medical/dental/optical expenses we would have about $3000 to spend on luxuries such as some much needed bookcases, a couple of couches to fill up some empty space, or heaven forbid we might even take a fun vacation. Maybe someday after the house is fixed up, but for now the money will slowly be saved for flooring and drywall replacement. By then we’ll have 2 kids grown and gone.

      What frustrates me is that we would give more, a lot more to those in need if the government didn’t take and squander so much. We could care for our grandparents and wouldn’t need to bankrupt the nation caring for them instead. It is a flat out slanderous lie to claim that $80,000 a year families are living it up in selfish lives. Some do make drastically lower incomes, but perhaps are not terribly thankful for those who have made great sacrifices (lots of school, didn’t pick their dream career, tons of travel for work, and stressed out 14 hour work day for dad) and then share with others more than people think. I am thankful for my comfortable warm home, my decent clothing, and full belly, but I want to hurl confronting people who think we will ever own a pony, pool, or frankly even a flat screen t.v. or enough furniture to fill our home.

      • john says 26 January 2014 at 07:35

        Interesting break down of your expenses. That’s why only one child was conceivable for us. Not because we’d rather have good cars or a bigger home, but because there’s a lot more that most Americans pay not mentioned. If those are your only expenses, you’re doing well. There are student loans I have to pay, health insurance at 43 for me is hardly $150..you are lucky there. Mine is $420 and that’s not for my son. And most people my age also have usually above a $300 monthly premiums do, more with dependents. I’ve actually decided to do without cable or gym dues and am currently renting to save some money for a down payment, my auto is reasonable, and so is my grocery bill.

        • David Lolley says 30 June 2019 at 01:10

          The richest 1% of the world have 99% of the money in America, that leaves only one single percent to spread across the board of all the rest of us the 99% of us one of these days 99 people out of a hundred are going to end up doing something that could have been prevented it is very sad that these movie stars and what politicians take their millions and hundreds of Millions and more for granted completely and misuse the money to commit crimes to steal more money it’s this entire government is based on keeping the poor poor so the rich can stay Rich Forever their family will always be rich and my family will always be poor that is their objective!!!!!!!

      • David Lolley says 30 June 2019 at 01:15

        If you make $80,000 a year and you can’t afford a flat screen TV, I live on 8 252 a year so I have a flat screen TV it was real cheap ghosted me like $100 I think bought it from a friend you can find them anywhere for a hundred just about I think people like to pretend like they don’t have as much money as they really do so that they could don’t have to feel guilty about not giving any of it to anybody thank you for your time Rich 1%

        • Mike says 23 October 2019 at 08:02

          @David Lolley: Drop the media rhetoric about the 1%. $80,000 per year is no where near the 1%. He average 1%er earns over $1,300,000 per year, so April is also part of the 99%. Just closer to the top of the 99% Han the bottom.

  6. Janette says 16 September 2010 at 05:06

    Does the $75,000 include a mortgage? Is it in a coastal city or middle America? How many children and what ages? Cars paid off? Homebody? Public schools good? Family in the area?
    I don’t like “studies” like this. They are pretty bogus.
    On the other hand YOUR financial priorities and the idea of a card to remind you are the wealth of this posting. Nice job!

    • David Lolley says 30 June 2019 at 01:20

      Excuse me but I think if you were part of the 99% you would realize that all of everything that you talked about is included it’s always included it’s about how much you have to pay those things with see even us poor people we have lots of bills to we might end up with the end of the week with no money or owing $200 just to survive and I bet you’ve never even heard of that much less experienced it

  7. Beth says 16 September 2010 at 05:08

    I wonder if the fact that these are two-income households also slants the research? Right now, some extra income would make my life easier, but perhaps not happier. Finding a partner and having a family would make me happier than money.

  8. Jennifer says 16 September 2010 at 05:38

    Back when I was married, our joint annual income was right around $75k. We lived in a nice little Cape Cod in a good town with our daughter, and yes, we had “breathing room” so to speak, financially, which allowed us to pursue hobbies and leisure that gave us happiness. The fact is, we were pretty miserable, though, because it was not a good marriage.

    Now it’s just me and my daughter, living on my $30k salary, and we are much, MUCH happier than we ever were before. Yes, it would be nice to be able to afford some of the things we had before, but the trade off has been infinitely worth it.

    • Danny says 28 January 2015 at 00:05

      My w2’s came in , I made 51k.. My husband is automation tech making 90k. Yet we seem poor. I guess because we live in California?? Time to move I say. =)

      • David Lolley says 30 June 2019 at 01:24

        Lady I don’t care where you live you do not appreciate the blessings that you take for granted every single day that’s my opinion anyway

  9. Brian says 16 September 2010 at 05:53

    I was making over $200K a year (wife, 1 child, 2 dogs, nice house, not “keeping up with the Jonses”). I thought that an easier job( less money…$115K) would be less stressful, making me happier. Wrong. I enjoy my extra “freedom”, but $75K/yr (or $115K) is NOT enough for my small family to live comfortably and fully fund retirement. Too many variables in these types of studies.

    • Mark says 27 April 2014 at 22:41

      What kind of job do you have that you make 200k a year? I’m a 20 year old student and would like to aim my goals to land a job like that.

  10. Mike says 16 September 2010 at 05:54

    Very interesting post/article. The number of 75k does make sense from the standpoint of being able to pay the bills, “Live a Little” etc. I think it’s different for single vs. married with kids, but the point is well made.

    I think there is also a level of happiness or what I’d call peace of mind once a certain amount of living expenses are put aside. This can be referred to as an emergency fund, or simply savings. This is because you know you’re okay no matter what the economy brings.

    It’s important to know what makes you content and focus on getting there.

  11. Everyday Tips says 16 September 2010 at 05:56

    I think it is all relative to who you are. For me, 75000 would be harder because of my saving hang-ups, not because of my spending patterns. I feel content and happy when I am able to max out my retirement savings, contribute to the 529 plans for my kids, and pay extra on my mortgage. I don’t care about having an iphone or whatever. I just want my mortgage gone.

    I think most could live on 75,000. However, many people are used to a certain lifestyle, so it could be a huge adjustment for some. For others, it probably seems like a huge amount of money, and people in that category probably just shake their heads wondering why people would struggle when they make so much.

  12. Sharon says 16 September 2010 at 06:02

    Single, make under $25,000. Divorced for about 8 years. Extremely happy!

    Like some of the others, I think the important thing is not how much you have coming in, it’s how much you have tucked away for unseen things.

  13. AhmedSerag says 16 September 2010 at 06:03

    That’s really interesting… I’ll settle for higher… but it’s still interesting to know.

    Maybe 75000 just keeps you interested in terms of being able to pay the bills and “live” once in a while. Less frequent but more enjoyable.

    Whereas at a salary of 150,000 I might “live” more often. More frequent less enjoyable.

  14. Dlyn says 16 September 2010 at 06:14

    I agree with many of the posters so far: It all depends. Our dual-gross income is slightly above that but we don’t have much more than when we made less because we had to move to a higher cost of living area just to have jobs after my husband was out of work for about a year. BUT, if we had ALL of our debt gone and still making the same now we would be in heaven 🙂

  15. Vanessa says 16 September 2010 at 06:25

    What kind of job do I need to earn $75,000? I’d like to be happy.

    • Bluffguy says 07 September 2012 at 20:41

      Lots of commissioned sales jobs where you can earn $75000+, but remember, you have to produce. No sales = no income, that means if you take a vacation or weekends off, you earn 0 for that time, if you goof off and waste time at work, you earn 0. The money can be good but you have to produce every day or you get 0, puts a lot of pressure on each day. No paid vacation, holidays, sick days, personal days off, etc. There can be times when you go weeks with a blank pay check every week, so you have to be a self starter, but the money is there if you work hard at it and don’t think that 40 hours is a full work week !

    • Kasey says 01 September 2013 at 21:03

      UPS Drivers make that much. Full-time, top pay UPS drivers can make $100,000 a year.

  16. Dajolt says 16 September 2010 at 06:49

    Hey, enough with the (quote) “bigs-creen TV” bashing.

    You claim “the emotional satisfaction of having [stuff] wears off quickly.” and recommend spending on holidays and such.

    For some people the emotional satisfaction of a holiday might wear out the day after they return to work. Whereas well researched stuff-purchases can continue to spread happiness over the years. It just depends on the person.

  17. Sixtoe says 16 September 2010 at 06:53

    Having trouble wrapping my head around this one. “$75,000” is a variable figure that means two very different things depending on the zip code where you live. Would be interesting if the researchers included an “average” income city so people could use a cost-of-living calculator to see where they fall.

  18. Sean says 16 September 2010 at 06:56

    The article states “$75,000…the annual household income that gives you the most joy for your buck” – but this is incorrect, according to the summary PDF. It’s actually $75k PER PERSON.

    – – –

    Reports of studies like this should be accompanied by a box labeled ASSUMPTIONS to give the core stat some context.

    As some of the previous comments prove, people don’t automatically understand that almost all such core findings come with similar assumptions which allow people to calibrate the findings for their own lives.

    The big flaw in the study, for me, is that it relies on self-reported happiness. What people say about themselves is often completely at odds from what others say about them; I’ve seen the most miserable-looking mofos describe themselves as basically happy.

  19. Trina says 16 September 2010 at 06:58

    Vanessa — go into information technology and pick the right specialties. If demand for your specialty starts to wane, learn a new specialty. Just my 2 cents!!
    😉

  20. ajc @ 7million7years says 16 September 2010 at 06:59

    It certainly depends on your baseline: if you want to send your kids to private school; if you want to travel; etc. $70k won’t touch the sides 🙁

  21. Me says 16 September 2010 at 07:03

    As a person who budgets and lives frugally I agree with the magic “75,000” number. It is not because I have spending problems nor am I buying a limo.

    My family spends thousands of dollars a year on health care due to a pre-existing condition. Similarly my area is very high for grocery prices. Though we do put money toward retirement it is no where close to the recommended amount which is where I would like to be. Likewise I would love to add more to my son’s 529 plan. I would love to have more than 3 months emergency expenses which is where our emergency fund has sat for a year due to an addition to our family.

    I believe $75,000 is a good number to be able to do everything the money advisers tell you to do without much compromise.

  22. Moneymonk says 16 September 2010 at 07:07

    I’m in the “Beyond the basics” category. Just booked the family on a cruise to Dominician Republic—woot!

    Can’t wait

  23. prufock says 16 September 2010 at 07:19

    The commenters should try to keep in mind that $75000 is an average – that means average family size, average cost of living, etc. If you live in a higher- or lower- cost of living area, your number will be different. If you’re single or have 10 kids, your number will be different.

    Nitpick: The graph you display doesn’t appear to be a normal distribution (“bell curve”). It’s lacking the characteristic “tails” that normal distributions display.

  24. Chickybeth says 16 September 2010 at 07:32

    The interesting part to me is that in 2004, $40,000/year was all we needed to cover the basics (http://blog.penelopetrunk.com/2004/08/01/you-only-need-40000-to-be-happy/) according to research done at Harvard by Daniel Gilbert. I’m wondering what has increased so dramatically in the last 6 years to bring us to $75k? Housing, health care, childcare, food, transportation? Seems like an exponential increase which could mean soon no one will be happy!

  25. Jackie says 16 September 2010 at 07:36

    What I find most interesting about studies like this is that they attempt to quantify happiness. I prefer to aim at “enough” as well. I think Ben Franklin points out the two ways of doing that best: “There are two ways of being happy: We must either diminish our wants or augment our means – either may do – the result is the same and it is for each man to decide for himself and to do that which happens to be easier.”

  26. Alexandra says 16 September 2010 at 07:42

    Nope, that would not be enough to make me happy. Especially since I know that others doing the same job as me would be making much more.

    Garbage study.

  27. J.D. says 16 September 2010 at 07:42

    Argh! That “bigs-creen TV” thing was my fault, and it was awful. Sierra had it as “bigscreen TV”. Yesterday, just as I was finishing my edits, I put the hyphen in there, but I just clicked save and didn’t bother to verify I’d done it correctly. I mean, why would I? It’s a simple edit, right?

    sigh

    How embarrassing.

  28. J.D. says 16 September 2010 at 07:52

    @Chickybeth (#24)
    Oh. Interesting. That’s a good find.

    Like many of you, I tend to furrow my brow at studies like this. What good is knowing the “average” number for happiness? It’s so subjective.

    As many commenters have noted, the individual variation is huge, and is dependent on cost-of-living, the income of your peers, and your own financial blueprint.

    I just had dinner the other night with a woman whose income is much smaller than $75,000 a year, but she’s very happy. In fact, she and her husband are striving for early retirement, and they think they can do it because despite having a small income, they have even smaller expenditures. On the other hand, I know a family — in the same city — that used to make $150,000 a year and was never happy. They never had Enough. In fact, they went bankrupt. (And now they’re more unhappy than ever!)

    So, while studies like this are interesting because they make us think about our own situation, and they provoke discussion, I’m not sure they actually add anything material to what we know about money or about happiness.

  29. MikeTheRed says 16 September 2010 at 07:55

    My wife and I make $78,000 combined before taxes, healthcare, retirement funding etc. After all the deductions take place, we take ho0me a shade under $55,000.

    At this number, our needs are met, we have a reasonable amount of luxuries (we eat out once a week or so, go to fun events when they come up etc), have the money to do a major splurge every few years, and still put away roughly $20,000 a year into savings.

    Do we still stress about money? You bet we do. We still try to budget, buy bargains and manage our funds carefully. But we’re definitely near the peak on the money vs happiness scale. In the next 2-3 years we’ll be in the enviable position of deciding what to do with “excess” money.

    I think the 75k figure is pretty reasonable given my family income, expenses and our goals. The money covers base costs, gives us some nice “every day” luxuries, and lets us do fun things like travel once every 2 or so years.

  30. Rob A says 16 September 2010 at 08:00

    I think it makes a big difference where you live. $75-80K in NYC/NY wont get even a frugal type very far if you have a family/children and own or aspire to own a home.

  31. Nicole says 16 September 2010 at 08:13

    @24 Ha!

    Or Princeton economists just use different methodology than Harvard psychologists… there’s probably a range of numbers that people come up with. No doubt a cottage industry of papers estimating “the number” will rise up.

  32. jeffeb3 says 16 September 2010 at 08:23

    @23 You are right, it’s a parabola, not a bell curve. (maybe y = enough_fullfillment – (x – enough_money_spent)^2) 🙂

    It’s really interesting to me that someone making $30K thinks that $75Kers don’t have to budget, or are buying ponies, and someone making $150K thinks they would be unhappy if they made $75K. That is definitely interesting information.

  33. Tyler Karaszewski says 16 September 2010 at 08:29

    Why is there a giant graph in the middle of the article that’s just plain wrong? The article even says it’s wrong.

    1) The article claims the graph shows a bell curve. It doesn’t. It’s a parabola. Yes, these are different.

    2) The article describes a logarithmic curve as the actual model for mapping income to happiness. Here’s what a logarithmic growth curve looks like: http://en.wikipedia.org/wiki/Logarithmic_growth

    Note that it looks *a lot different* from what the picture shows.

    I know that the article mentions that the giant graph in the middle is wrong, but just having it there is a bit like having a wikipedia article on John F Kennedy with a picture of Richard Nixon at the top, and then putting a caption under the picture that says “This isn’t John F. Kennedy”. How many kids doing school reports do you think are going to be confused by that?

    Anyway, I can’t think of any useful action to take based on this study — you get diminishing returns in happiness once you surpass $75,000/year, or some locality-based adjustment based on that. Well, then what? Say you’re making $75,000/year right now. Are you not going to ask for a raise next year because you only get a *little* bit more happiness out of it?

    If you get 100 happiness points at $75,000/year, 120 happiness points at $100,000/year, and 130 happiness points at $150,000/year, you’re still happier with the higher salary, so you might as well take it.

  34. Jesse says 16 September 2010 at 08:46

    The chart in this article is misleading from what research shows. The research didn’t suggest that making /more/ money resulted in less happiness. It’s just that there was a point where there were only negligible gains in the indices used to measure happiness.

    Additionally, a lot of commenters are submitting their own contradictory anecdotes. The study is a statistical study of 450,000 people. It’s an average. There are bound to be thousands of people in the sample alone who deviate from the model.

    The study also controlled for a lot of known variables to affect well-being. Note that being lonely was by far the biggest (negative) impact on well-being… a person who makes $100k but is lonely is more likely to be unhappy than someone who makes $30k but has good friends and relationships. It suggests to me that “love is [nearly] all you need”. =)

  35. Teresa says 16 September 2010 at 08:54

    I dislike articles like this because I feel like it is all relative. My parents raised a family on far less than this magic number in Chicago. If you are good at making money stretch, you can do anything you want. I never felt lacking of anything because my parents raised me to not want much.

    However, in Seattle, i’ve found that a similar salary as my parents had does not allow me to purchase a house.

    Thus, it is all relative depending on where you live and your lifestyle.

  36. Money Reasons says 16 September 2010 at 09:06

    We live on a scale, and by that I mean once we have the core needs meet and we max out our 401Ks, Roths and 529s, we tend to go spend more on vacations and things that would make our life more enjoyable and fun!

    We try to keep a conservative balance. By that I means we will save more as our household income increases, and at the same time increase our spending, but we will increase our spending at a lower percentage than our savings percentage increase. 🙂

    So, if I earned 1 millionnnnn dollars a year, I’d be pretty happy!

  37. Zesty says 16 September 2010 at 09:08

    I think this is no different from Maslow hierarchy of needs, you can’t attain “fulfillment” or happiness until your basic needs are met. This study simply tries to quantify at what income level are your basic needs met. Got to love how these “new” studies recycle old ideas; like they say nothing new under the sun.

  38. Jessica says 16 September 2010 at 09:14

    I remember that 2004 study, too, ChickyBeth.

    This new study makes me feel very poor when actually I thought I was doing all right. Right now my husband make about 43K a year combined. We live in Chicago (not the most expensive country in the U.S. but certainly not the cheapest. We do definitely have to live on a budget but we have a lovely apartment, all the things we need, are able to save and even take a modest vacation (to say Michigan) each year. We are no way deprived and though I certainly wouldn’t mind a little extra money I find $75K a year per person a ridiculously large number. I understand whether or not you have kids and where you live factor in as well but are they making two SUVs, a state of the art home theater system and yearly family vacations to the Carribean requirements for “happiness” or something?

  39. babysteps says 16 September 2010 at 09:37

    I thought the study was interesting, but perhaps flawed/skewed if, like me (and a lot of us reading GRS), you are already simplifying.

    I’d actually expect the study to come up with a “high” number (vs my outlook) since the data/survey info was based on the ‘average’ (okay, no such thing, but you get the idea) American – and the average American is not necessarily focused on financial independence, simplicity, etc. in quite the same way.

    I figure it’s a *good* thing that my “enough” number may be significantly less. Also, as many have noted, this IS a US-wide figure. Can’t find it quickly at the moment, but one article on the study that I saw translated the US-avg-$75k by cost-of-living for different areas, I think some town in the Midwest was $60-something-k and NYC region was $130-something-k or so. Will post direct link if I figure out where I read it!

    LOVE the graph Sierra 🙂

  40. Todd Dunnigan says 16 September 2010 at 09:41

    Maybe they ought do a “happiness” study where the main parameter is Income vs. Expenses ratio. If you make a million bucks a year but have 1.5 million in expenses, that probably eguals unhappiness. If you make 25k but have 15k in expenses you’re probably pretty happy.

    I make about $75k and my wife took a job making about 50k. She also had to get a car + insurance, she had a soul-sucking commute, left the house early, came home late, plus didn’t get to spend time with the kids and friends like she could before. It all added up to unhappiness for her, and by proxy, the rest of us.

    @ 33 Teresa. I have a house for sale cheap in Seattle if interested. Selling it would make me very happy indeed.

  41. Elisa DiVirgilio says 16 September 2010 at 09:41

    I know immigrants that buy a house on $50,000/year and I know others that make #120,000 and cannot afford a home.

  42. DC Portland says 16 September 2010 at 09:51

    As a positive psychology practitioner, these studies, and the media’s spin of them, drive me crazy. Kahneman is without a doubt a leading thinker/researcher in this area, having won a nobel prize. Daniel Gilbert (pointed out by Chickybeth #24) is also a very distinguished academic.

    But, the problem with the media’s spin on these findings is that they often fail to highlight the most critical reason for why people feel they need a certain amount of money to be happy, namely referencing (i.e. comparison with others in society).

    As JD has pointed out numerous times in this blog, referencing is a detrimental to your psychological health, and has a negative impact on happiness. I think the reason people feel they need an average of $75,000 today, when it was closer to $40,000-$50,000 a few years ago, is that people compare themselves with images and lifestyles seen in the media. An interesting study done a few years ago compared TV character lifestyles with real American lifestyles and found a very severe discrepency. The bottom line is that people appear to have more money than you, thus putting downward pressure on your reported happiness. What do you do? Disconnect from the advertising machine. It is working against your feeling of happiness.

    Finally, the average household income in the US is roughly $62,000 (the median, which is most quoted in the media, is much less, around $40,000). If income were more equally distributed, Americans would be much happier. This is the reason why people in many European countries report being happier than Americans. Comparisons with the uber-rich will kill your sense of happiness and self-worth, particularly in a society that honors wealth even if it is acquired through greed.

  43. Christina Crowe ( @CashCampfire ) says 16 September 2010 at 10:11

    Well, I don’t know about $75,000, but here’s how I see it:

    Say you buy a couch. It’s a good quality couch and you managed to buy it at about $500. Several years down the road, you have more money. You spend it on a fancier couch that’s, say, $1,500. Do you get more pleasure from this new couch that you bought? Not really. It’s as comfortable as the last couch. It even has the same features as the last couch. It’s just fancier and you had more money to spend on it.

    That’s why I agree that you aren’t any more happier with more money than you are with “enough” money (whatever that might be according to your circumstances). You can buy pretty much the same things, but the things you buy might be a tad more expensive than what you could afford to buy previously.

    As for entertainment, you might be able to travel farther away or go to 5 star hotels (if you wanted to squander money in that fashion) with more money, but you’d really have the same amount of enjoyment as you would have if you traveled to somewhere closer or went to a 3 star hotel. It might be less glamorous, but you’d still be happy (most of the time).

    Others may disagree with me, but that’s how I see it.

    Christina

  44. Chickybeth says 16 September 2010 at 10:22

    @DC Portland #42: I really like your take on this. I think around 2005-6 is when the shows on MTV like “Sweet 16” and other garbage started which would definitely explain why people were happier with less before then. Instead of comparing my income to others, I try to remember what it felt like to be extremely poor. Anything is better than it was before!

  45. Al Czervik says 16 September 2010 at 10:30

    Why does the ‘big-screen TV’ always come up as an example of overspending? Nowadays a big-screen TV can be purchased for less than $800. Say you get 6 years of use from it that amounts to $10/month. Not really a big deal compared to cable bills of $80-$100/month!

  46. DCCT says 16 September 2010 at 10:34

    As everyone points out, there are too many other variables to take into account. I’m single, 25, and make just under 75K. You’d think I would be swimming in money! Well it’s quite the opposite. After taxes, paying my multiple school loans, my car loan, my rental payment, cell phone bill, city parking, groceries, insurance, etc. etc. etc. I have VERY little left over. If I had zero loans and lived in a cheaper city, well that would be a different story.

    • David Lolley says 30 June 2019 at 01:35

      everybody I mean everybody in the United States has to pay all of those things that’s just Facts of Life should be stuck in your head and you should know this all of us know this surely everybody knows this I can’t be the only one that knows that we all have light bills phone bills taxes so and so

  47. Caitlin says 16 September 2010 at 10:42

    Interesting. I heard a story based off the same study yesterday on NPR here in NYC:

    http://beta.wnyc.org/shows/bl/2010/sep/15/will-75k-make-you-happy/

    When adjusted for NYC style costs the number was closer to $160,000-ish. Its an interesting story, if you have time to listen to it.

  48. suzy says 16 September 2010 at 10:55

    My husband and I went from around $50K combined to around $220K combined in a 3-year period, and there’s no question that our happiness level has increased with the change. We still spend money the same way we did when we didn’t have as much to spend, we aren’t interested in “luxuries” beyond what we indulged in when we were younger (eating out, two cars, buying a modest home), but now we have almost complete freedom to do whatever we like with our lives. If we want to fly out to visit family, we can do so without stressing about the cost, and we can rent a car instead of relying on people to pick us up. If my job is making me unhappy, I’m free to leave any time I’d like. I’m amazed by and grateful for all the freedom this income has given us to focus on the things that actually make us happy… time spent with family and friends, time spent exploring the outdoors, time spent learning new things.

    • Shelly says 12 January 2016 at 13:58

      Can I ask what you and your husband did/currently do for a living to make your income increase in such a way?

    • David Lolley says 30 June 2019 at 01:43

      Thank you so much, you are the first person that is wealthy that actually admits that it makes them happy because they have more free time and more freedom they can spend more time with their family it don’t have to be rushed arguing it can be non stressful and happy around your family money changes people fur good or bad goes both ways sometimes people spend more time with their family help their family when they get money but other times people get money and pride pride sets in their head and they believe that they have to get richer and richer and richer until there the richest in the world and then even then they have to get even richer because they want their family to be the richest family in the world forever but to you that judge that made that comment out thank you so much everyone that is Rich that I know tries to pretend that they are not and tries to pretend that it makes them miserable when I can see their life is so so so so easy

  49. KMJ says 16 September 2010 at 11:00

    I dislike this article. It appears to badly misinterpret the underlying study. Fig. 1 of the Princeton article DOES NOT look like the bell curve provided above. Instead, Fig. 1 of the Princeton article shows an approximate plateau beyond 75K.

    The underlying Princton abstract said “life-evaluation” rises steadily (it did not say it comes down as income rises). As such, a bell-curve is not the appropriate graphic for “life evaluation.” As for “emotional well being” (which was evaluated separately), the research indicated “there is no further progress beyond an annual income of 75K.” Thus, again, it not be a bell curve. The research article instead shows a plateau.

    Does it matter? Yes, because the poster seems to be extrapolitng what it means at higher incomes, which is unsupported.

    To quote the original poster, “Another $25,000 a year – or even another $100,000 a year – will make you richer, but it won’t make you much happier.” Actually, earning 25K more a year might make you have a higher “life evaluation” according to the underlying research, but it doesn’t seem to have much of an effect either way on “emotional well being.” To cite the underlying article, “As this example
    illustrates, the statement that “money does not buy happiness” may be inferred from a careless reading of a plot of life evaluation against raw income–an error avoided by using the logarithm of income. In the present study, we confirm the contribution of higher income to improving individuals’ life evaluation, even among those who are
    already well off.”

    This was also pointed out in comments #33 and #34 by Tyler and Jesse. Extrapolating this study to Your Money or Your Life seems mistaken and/or forced.

    • Ryan Callahan says 12 January 2016 at 14:44

      “Note: This is J.D.’s representation of the Fulfillment Curve from Your Money or Your Life.
      This new study’s findings would seem to contradict this curve.”

  50. L R says 16 September 2010 at 11:01

    It’s all in your perspective. I make a lot less that $75000. But I have the type of job I want, doing the things that I like to do. I own a house and buy the things that are important to me. I live the way I want to and often think that I have too much. So what it takes to be happy seems to be based on individual needs.

  51. Chubbuni13 says 16 September 2010 at 11:24

    It’d be interesting if they took into account racial/ethnic disparities. $75,000 might cut it for a Caucasian American family in the midwest, but for some people of certain ethnicities on the coast, that’s not going to cut it.

    I’m Korean and growing up my parents – who usually cleared $400k in a year – were looked at as the low earners in their social group. I’m sure there are people who will say that this is purely anecdotal, but I’m just going off of what I know.

  52. JohnnyLA says 16 September 2010 at 11:26

    That has to be one of the most simplistic graphs I’ve ever seen. No inherent data points, a flubbed and opinionated curve after $75,000 to infinity. Does making $90,000 mean you’re miserable? Making $200,000 suicidal?

    Might as well put two eyes to make it a frown face, hah!

    Now this makes a little more sense.

    http://tinyurl.com/23jdtq2

  53. Chris says 16 September 2010 at 11:40

    My wife and I have definitely traded off money for time and happiness. My wife took a 75% paycut to work a much lower paying but more enjoyable and flexible job and I could probably make about double what I make now in the private sector (I work at a university instead, though there is a pension which compensates somewhat for the lower salary). Together we earn about $130K, instead of the $350K+ we could earn. We both have advanced degrees in useful professions from prestigious universities (law and engineering).

    We certainly don’t think earning $350K in the jobs we would need to have to earn that much would make us happier, in fact, it would make us much less happy. Living in the high cost SF Bay Area, $130K is enough.

  54. Briana @ GBR says 16 September 2010 at 11:50

    I think that’s a decent number, but it really does depend on the people and the lifestyle. Combined, my boyfriend and I make a little over $60,000 and we’re quite happy. We have comfortable bill payments and we’re able to enjoy luxuries like cable/internet, going out to eat, buying things we want, etc. $75,000 would definitely be able to buy us more “things” but we still have enough money to save and we’re very happy. I see the graph like marginal utility; there’s a peak at which you’re satisfied with the money you’re making/spending, and it eventually decreases. I just think it’s harder to set it at $75,000

  55. J.D. says 16 September 2010 at 12:18

    Hm. I’m confused as to why so much attention is being paid to the graph. I added it to the article to illustrate the Fulfillment Curve because I don’t think it’s an obvious concept. I think Sierra’s post is very clear that this curve is counter to the report’s findings. Where is this confusing?

    In order to provide a bit of clarity, I’m going to make a couple of edits. I hope that’ll help. The graph is meant to illustrate a secondary point, and certainly not to be the center-point of discussion.

  56. trentblase says 16 September 2010 at 12:21

    Some people really don’t get it. Comments like “well, that depends on if you want to send your kids to private school.” I see this as no different than saying “well, that depends on if you want a new ipod every year.” What the article is saying is that the new ipod won’t make you happier… neither will sending your kids to private school.

    Also, please stop playing the cost of living fallacy. I live in a very high cost of living area, so don’t chalk this up to bias. The point is that expensive areas are expensive because they are desirable. But you don’t need to live in Manhattan to be happy. Thus, you don’t need to adjust the 75,000 for a higher COL. You need to consider living in a cheaper location.

    Basically what it boils down to is that some things simply don’t make us happier in the long run, no matter how much we THINK they will. If you want to argue the truth of that assertion, then your comment will be germane. Otherwise, saying you live in an expensive area and need to send your kids to private school is not really related to the point the article is making.

  57. shawn says 16 September 2010 at 12:38

    @Al Czervik – I am with you on this one. Why is it that just about any article I read about happiness and income mentions the big screen TV, and always in a negative light?

    Shawn here, reporting from the deep trenches and middle class yuppiedom: We bought a gigantic Samsung plasma TV at the beginning of the year and I can not begin to tell you the amount of joy that this thing brings us on a daily basis. Screw your “experience spending” I’m staying home and playing Halo.

  58. Bill says 16 September 2010 at 12:41

    “Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”

  59. Elysia says 16 September 2010 at 13:06

    Sierra, I find it impressive that you could actually put a price tag on your goals and come up with 80k/year — I’d love to see those numbers if you’d be willing to share. I can’t quite figure that out. Right now I’m just trying to eradicate debt.

  60. chacha1 says 16 September 2010 at 13:15

    +1 on big screen TVs. I love my 42 inch Samsung LCD. 🙂 What *I* would classify as overspending is, e.g., a luxury-car lease.

    Having done the auto lease thing myself (once, never again) I suspect it’s nearly always a matter of paying too much, for the wrong reasons. I see ads for $300, $400, $500 monthly lease offers and I think, WTF? But it’s really *none of my business* how anyone else spends their money, as long as they’re not begging for any of MINE.

    Others, of course, will think car leases are a bargain and that something else is overspending. This is why studies of the type described in Sierra’s post are not intended to DEFINE appropriate or desireable spending. And also why it’s utterly pointless to say “the study is bogus.”

    The study contains information but it isn’t fact, and therefore cannot be proven true or false. The authors asked a bunch of people a bunch of questions and put together some conclusions based on the answers.

    The conclusion that $75K represents a sort of equilibrium point of contentment isn’t a judgement. It doesn’t imply that you can’t (or shouldn’t) be happy with less – or more.

  61. JohnnyLA says 16 September 2010 at 13:21

    Some people really don’t get it. Comments like “well, that depends on if you want to send your kids to private school.” I see this as no different than saying “well, that depends on if you want a new ipod every year.”

    I completely disagree with that statement.

    You’re ipod addiction isn’t going to help your child to be a (potentially) more intelligent, educated, productive, or contributing member to society, which a private education has a much higher chance of success to give then a poor public education. This in turn will give them a better quality of life and better change of success which in turn will give you MUCH more happiness.

    Would you rather have your child go to South Central with metal detectors and locker inspections or a private education in the country?

    “The point is that expensive areas are expensive because they are desirable. But you don’t need to live in Manhattan to be happy. Thus, you don’t need to adjust the 75,000 for a higher COL. You need to consider living in a cheaper location.”

    In my profession, the only opportunities to get a job in my field, let alone a decent paying one, is in a major city. It’s not a “desirable” location. I have to be here and that’s the way it is. You have to adjust for higher COL in that instance.

    I mean, I could be a plumber, or a school superintendent, or a nurse’s asst. and move anywhere in the country. I might be making that kind of money but then I would be miserable in a job I hate.

    Anyway, $75,000 is amazing salary in my home town in the Midwest. You could buy a house completely with that chuck of change and have some left over..but who honestly can make that money there? Very, very, few..

    If my profession were to move more to he Midwest I would take 1/2 salary off to do that…but then I would be selfish because if I wanted my future kids to have a great education there would be no way that would happen there in a 100 mile radius.

    “Basically what it boils down to is that some things simply don’t make us happier in the long run, no matter how much we THINK they will.”

    A kid’s education? I think that will. Better medical services, more healthy options for nutrition, better employment opportunities, more varied ethic groups and less monoculture, better weather. All of those are going to make people happier. I honestly think it’s not just opinion.

    “Otherwise, saying you live in an expensive area and need to send your kids to private school is not really related to the point the article is making.”

    The point is that any money over $75,000 is not going to make you much happier to the individual. I would like to see the numbers on what people would say if they had over $75,000 and a good chuck went to their children’s education. I think down the road the happiness of the family would be different. IMO, better..but I don’t know.

  62. KD says 16 September 2010 at 13:43

    I’d consider moving “Charity” into your “Quality of Life” category. EVERY financial book tells you that actively donating to charity somehow improves your financial life and probably your overall well-being.

  63. Nancy L. says 16 September 2010 at 13:59

    The conclusion of the study isn’t “You need $75K or you won’t be happy.” The conclusion is that up until $75K per person–which would be $150K for the typical married couple as Sean (#18) pointed out–the gains in stated happiness in relation to income increases are at a much greater rate than they are above the $75/$150K threshold.

    To put it another way, all things being equal in terms of social connections, friendships, etc, if you shift from having to sweat out every penny in your budget just to make ends meet to a pay level where you are comfortably able to pay for your necessities and still have money left over for savings/indulgences/experiences/emergencies, that tends to cause a huge jump in overall security and happiness. However once you reach a certain level of financial security, the upward trend slows down (though doesn’t disappear). In other words, if you go from never having a vacation to being able to take a trip to Florida, that’s going to be a much bigger impact on your overall happiness than when you go from vacationing in Florida to vacationing in Tahiti. It’ll still make you happy that you can afford to go so far away, but it just won’t be AS exciting as when you traveled in the first place.

  64. Mark says 16 September 2010 at 14:20

    We can disagree about whether its 75K or 30K or 150K but I think it all comes down to a fortune cookie message I got a few years back:

    “He who knows he has enough is truly rich.”

  65. Stu @ Pennywise2Pennyworth says 16 September 2010 at 14:29

    “The number is beside the point, though. What matters is the exercise of understanding your priorities, and knowing what your dreams cost. Whether you do this and discover that your personal Enough is $30,000 or $300,000, you’ll be better off…”

    I love this part of your analysis. The $75,000 is just a number (yes, with some research backing it) but really financial happiness is a sliding scale; in order to know your “number” a whole host of factors come into play: your history with money, where you live, your goals of course, and your drive/ambition.

  66. Mark says 16 September 2010 at 14:34

    Sean (18) says:
    “It’s actually $75k PER PERSON”

    It appears to be household income, Sean. See the first line of the caption for Figure 1 in the summary (also in the full report).

  67. Greg McFarlane says 16 September 2010 at 17:29

    I do her taxes, so I know my sister made $138,000 last year.
    Now I’m going to convince her to ask her clients to please reduce their billings by $63,000 next year and see how much happier it makes her.

    Gene Simmons: “I don’t care if you’re homeless or the Sultan of Brunei. Your answer to ‘Would you like twice as much money?’ is always going to be yes.”

  68. Julie In San Diego says 16 September 2010 at 17:47

    My take-away from this article is in the last paragraph.

    Making a family plan, with goals; living that plan; being reminded of it with an index card – that creates family understanding and happiness, now and in the future.

    Regardless of income, that’s a recipe for satisfaction.

  69. Jaime says 16 September 2010 at 17:59

    $75k sounds more than enough for me but then again I am single, no kids, and no debt, I do live in Omaha, Nebraska where the cost of living is very affordable so depending on your situation $75k is a lot to many people.

    Anyway great article SB 😀

  70. AC says 16 September 2010 at 18:19

    I find the article extremely flawed in that they do not separate gross income and net income. Is it $75K net income? People will vary a lot more on how much they make after taxes and how that relates to happiness; probably a lot more that other factors such as location, debt, etc.

  71. Nicole says 16 September 2010 at 18:26

    JD: It was my understanding that the YMoYL curve was specifically regarding Consumption, not Income. We would never expect to have too much income because we can give it away costlessly (or just leave it in a bank account and forget about it). The same isn’t true of consumption goods. I though the YMoYL section on that was that you can end up with too much Stuff that stresses you out (similarly too much travel etc.) There’s diminishing marginal utility to Income, but we might expect quadratic negative utility from Stuff if you can’t get rid of it effortlessly.

    In short… Income does not equal consumption. (It’s consumption + saving). The graphs are measuring different things.

  72. J.D. says 16 September 2010 at 18:42
    @Nicole (#71)
    You’re right. You’re right. You’re absolutely right. Mentioning the graph in the story (and then me adding the graph as an illustration) clouds the issue. I’ll leave things stand for now, but will try to make edits early next week so that googlers who find this don’t suffer similar confusion.
  73. BD says 16 September 2010 at 19:45

    I think it’s funny that it takes a Princeton study to show that.

    As someone who has made at or below poverty level for most of the their working career, I used to say (and still say) that “I’d be happy if I made around $60,000 or so per year, because that’s what it takes to lead a comfortable life and be able to pay mortgage, utilities, etc, with a bit left over to save.”

    This whole thing of “Yes, money does buy happiness at a certain point, it’s hard to be happy when you’re constantly afraid of ending up homeless” is something I try to tell people when they say smugly “Money doesn’t buy happiness.”

    (Funny thing, everyone who says “money doesn’t buy happiness” or “Money isn’t important” is usually filthy rich. Just today, I attended a speech on finances and career by a Deloitte partner who was making 6 figures, and he kept saying “Money isn’t important”. I felt like standing up and yelling “Then give me your money and your job, if it isn’t important to you.”)

  74. Jaime says 16 September 2010 at 20:29

    Just wanted to add imo buying both things and experiences make me both happy, to me its not just one or the other.

    I like having a balance of both things and experiences. I like having new clothes (stuff) but I also like being able to go to college (an experience).

  75. k says 16 September 2010 at 22:21

    The important thing that most people is missing is not the amount of money it takes to be happy, but that there is a point where money stops giving you the same returns on happiness. Stop fixating on the $75k number, that’s just used to get attention.

    For some people, the “magic number” is going to be $30k, for some people it’s going to be $130k. The point is that there IS a magic number, a point where your ROI for money lessens.

    What this study teaches us is that we should look at our lives and figure out when we need to start trading back money (which usually you can make more of by spending more and more of your life at work) for time and freedom, as the money won’t bring us enough enjoyment to be worth it.

  76. Rob Ward says 17 September 2010 at 06:03

    I agree with @chickybeth #24 – what happened to $40k being the “magic number?” The Penelope Trunk article came to my mind as well.

  77. Turling says 17 September 2010 at 08:14

    I’ve not known many rich people in my lifetime, and I’m definitely not one of them. There are four people I would consider rich that come to mind that I’ve known. Three of them business owners of the company I worked for and one a relative. Funny thing is, they were four of the most miserable people I have ever met in my life. And their misery was contagious, as if they were only happy if everyone else was miserable. So, whenever anyone tells me they will only be happier when they’re rich, I tell them to be careful what you wish for.

  78. Lura says 17 September 2010 at 10:13

    This article is funny to me because I switched jobs for a 50K/year (the level which supposedly used to bring happiness) to a 75K/year two years ago thinking I could get out of debt so much more quickly, and reduce my stress about being in debt. Job stress has increased, support has decreased on the job, debt has not significantly changed — arrgh!! — I do have two children I support and student loan debt. Lately I am feeling like where is my economic bailout??!!! — I am hopeful however that with good planning staying at my current income will make a difference within two years.

  79. Elaine Huckabay says 17 September 2010 at 13:02

    I like the idea of a magic number for happiness and contentment. It doesn’t mean that one has to stop striving when they get to that number (or that they can’t be happy if they are lower than that number)….but it’s important to know that money can’t buy happiness. Money can buy things that can make you secure and that can create happiness – and you really only need about 75k to fulfill basic needs and some luxuries.

  80. the happiness investor says 19 September 2010 at 03:52

    It’s not clear from the PDF whether this 75k/year thing applies to to individuals, or households – but I actually interpret it as more for individuals, that makes more sense to me. I’m also assuming it’s 75k before tax. 75k would be great as a single, but it probably wouldn’t leave much for extras for a family.

  81. Deb says 21 September 2010 at 16:48

    @DCPortland #42, I couldn’t agree more, I also really enjoyed your take on this.

    I was shocked to learn that in the USA, today, we are exposed to more advertising in 1 DAY than we were in an entire year in the 1950s. It’s no accident we have been brainwashed into thinking that happiness = consumption. In fact, it does not. I think it feeds discontent & disconnection from nature, spirit, family and community. The best thing one can do is turn a blind eye to that neverending pressure to consume. Don’t judge your neighbor’s level of happiness by the vehicle in their driveway.

    Hubby and I made a deliberate decision to change our lives and go against the grain. A few friends & family teased us, but overall, most were supportive and now, some even confess envy.

    We relocated to a small home on several acres outside of the city (I telecommute, he travels for work); we ditched the clutter; we do not buy anything that isn’t necessary and we buy second hand when possible; we sold the oversized vehicle for a small economic one; and most importantly, I am now able to work just 4 days a week instead of 5. I traded the stress of full time work for the pleasure of gardening, hobby farming, and cooking from scratch. Sure we’re earning $12k less a year, but our disconnect from consumerism has been more than enough to compensate!

    I know it’s a subjective issue, but digging deep inside to find your `enough’ point can be incredibly liberating. In this country, even those of us who do earn more than enough have been brainwashed and programmed into thinking that we’ll never have enough.

    Conversely, there are too many who do not have enough, not nearly. Those more fortunate among us need to practice generosity and compassion. To me, being able to donate time and money is so much more fulfilling than consuming. It’s much more integral to my emotional well being & happiness.

  82. DC Portland says 22 September 2010 at 09:39

    @Deb #81 – Thanks for your supportive comments. And, thank you for your personal story. It took nearly 25 years as a psychology hobbiest, and a master’s degree in psychology, for me to truly recognize how irrational people are. It seemed impossible to me that advertising, and the consumer culture it creates, could have such an impact on people at such a deep level. Many of us were brought up to believe that we make our own choices about how we interact with the world – that is the American way. Yet, that turns out to be utterly untrue, as we are much more influenced by advertising and others’ conspicuous consumption, than we think we are. Though it rarely gets into the mainstream media, the scientific evidence for this is overwhelming.

    It takes tremendous courage to make the lifestyle change choices that you have in the face of the onslaught of consumerism. I commend you. I’ve done the same (four years now working four days a week or less), so I can attest to how difficult it is at first. As you so eloquently point-out, however, the well-being benefits start to accrue immediately. And you wonder why you were living like you were before you made the change. It seems irrational when you’re on the other side. Indeed!

  83. SM says 25 September 2010 at 19:59

    I don’t know where this 75K figure comes from, but I don’t think it makes any sense. I am judging from my personal situation – I am a sole provider for the family of three, and I make substantially more than 75K – and it’s only just enough. I am not poor – we have decent housing (which I rent because purchase price for the same house is well out of my reach and I don’t want to spend tons of money and get an inferior house which I’d need to spend tens of thousands fixing), we can afford a week-long vacation once a year and I save some money for the retirement (because I don’t kid myself about getting anything that could sustain us out of the government entitlements when it comes to it and unlike some, I don’t have govenment pension waiting for me). We eat well (dining out 2-3 times a month), occasionally go to a movie or some other entertainment, we don’t count every cent, but we don’t splurge either. That’s basically it. No luxury cars, no yachts, no wall-size TVs, nothing of the overconsumption sorts. Ah, forgot also five-figure debts from the child’s student loans (it’s just starting, I expect those to grow as education continues) which I’m just starting to pay out.
    As I said, I make more that 75K. And by the end of the month if I have some hunderds dollars left after paying the bills, the debt payments and retirement contributions – it was a good month. If something unexpected happens I’m in the red – which eats part of what I saved from the good months. So it comes out as roughly even.
    And what if I had a small kid? Babysitters, education expenses, general expenses… I probably would have to give up that vacation stuff and entertainment (I guess the kid is entertainment enough anyway) and maybe stop or seriously cut the retirement contributions and hope for a raise eventually, or move into a worse neighborhood and cut on entertainment and dining out and other unnecessary stuff.
    Now, please understand – I am not complaining. I am good, I am happy and I consider myself lucky to have enough money for almost everything I and my family needs and even some “wants” added now and then. But if I had income of only 75K, I’d probably be in very serious trouble. I’d probably have to move somewhere much cheaper and substantially restrict my spending, and start counting every penny. Would it make me significantly less happy? You bet! So when I see that 75K is a limit after which overconsumption starts, I think it’s way, way too low.
    So money maybe doesn’t buy happiness, but the amount of money where it doesn’t matter anymore is much higher that 75K.

  84. Anna says 28 September 2010 at 17:42

    I’ve earned $13,000-$34,125 every year over the course of my working life, and my monthly expenses are currently about $1000. I often save around 10,000, or 10 months’ expenses, every year. I’m very happy (not least because I can easily see how my way of life can be sustained in the long run.)

    There’s a famous quote that goes something like: income twenty pounds, expenditures twenty pounds fifty, result: misery. Income twenty pounds, expenditures nineteen pounds fifty, result: happiness.

  85. Henry says 02 October 2010 at 12:40

    Odd concept.

    If you establish the link between material goods in terms of your income and your general happiness, then why is it parabolic? I can understand linear, exponential or logarithmic correlations, but the argument “things are nice, until you get more than 75k worth” doesn’t make a lot of sense.

    I’m so fortunate, skilled and dedicated that I’ve earned a salary level quite a bit above $75,000, and I would say it has made me quite a bit happier than I was when I was earning around 75k. Not only does it take the salary off the table with a comfortable lifestyle, it takes the salary off the table in a luxurious and accommodating lifestyle.

    I’m at a point where my net assets could support me very comfortably for the rest of my life. I could stop working tomorrow and start playing golf. That makes me happy.

    Earning significantly more than $75,000 gives you economic freedom, which gives you more time to do what you enjoy doing. How does that make you less happy?

  86. Samantha says 15 July 2011 at 19:23

    Okay, once I stopped laughing after reading this, I was able to regain my composure and respond.

    This study is total crap. I make exactly $75,000 per year, and live in a high cost of living city. Prior to my $75,000 spoon-fed salary, I owned a business for 14 years (which I recently sold for a nice sum.) I intentionally put all the money from the sale of the business into a retirement account so I couldn’t touch it without a huge penalty because I didn’t want to just sit around; I wanted to be a product member of society.

    Because I have a two-year non-compete from the sale of the biz, I decided to take a full-time job until the two years passes.

    Having lived on a six-figure income while owning my business was FAR MORE FULFILLING than living on $75,000. I never did buy a lot of luxury items (they don’t float my boat), but the pittance left over after expenses on $75,000 is barely enough to put into savings. I own a modest home (valued at $150,000) and don’t drive an expensive car. (It’s very nice, but not a luxury vehicle.) What makes me unhappy at $75,000 is knowing I would never get ahead on just earning that amount. Thank God I owned a biz and made good money all those years. There’s no way to retire on $75,000/year.

  87. Andrew says 22 February 2012 at 10:49

    Late to the party, but I believe that this study does point out that satisfaction continues rising above $75,000. And to me, satisfaction is more important than happiness.

    -Knowing that I have lots of money in the retirement account makes me satisfied.
    -Knowing that I have the extra money to fly somewhere and celebrate a birthday makes me feel good.
    -Knowing that I have extra money to send a kid to summer camp.
    -Knowing that I have the mortgage paid off and am truly.

    At least for me personally, more important than the satisfaction of a retirement account is the satisfaction from knowing that I’m doing what I’m meant to be doing and serving the need that I’m called to serve.

    Warren Buffet recently said something fascinating in TIME, basically, “Just because at home nursing aides or social workers or teachers aren’t paid much does not mean that they don’t play a very valuable role in society. And I wish that we could give them salaries that reflected that”.

    Personally, I do wish that those jobs were paid more, even though it would mean inevitably mean more taxes for me. I ultimately think that if teachers, et. al were more accountable and higher paid, the net benefits to society would justify the upfront costs.

    Anyways (and I agree with the author of the post), we should focus more on things that bring us true satisfaction: laying a foundation / quality of life / beyond the basics. And, assuming that we can keep a stable head and wise daily spending as income rises, it’s undeniably easier to achieve those three things with a larger income.

  88. KB says 01 March 2012 at 18:33

    I think something very important hasn’t been mentioned. A flaw of these types of studies is that measuring a one variable (happiness) in relationship to another variable (salary) does not equal causation.

    You can’t say that People who make 75,000 a year are happier BECAUSE of the fact that they make that. There are lots of other factors the occur when the average person moves above that salary (life changes, having kids, moving into a bigger house that costs more money for rent or paying a mortgage, etc – which actually can not only lower your net value, but add a whole hell of a lot of stress to your life).

    The only thing I get from it is that the more crap going on in your life, the more money you need to make…and all I have to say to that is.. Duh. Moral of the story, stay young, be careful who you marry, don’t have kids. Not: Go get a job that pays $75,000

  89. Eddie says 15 June 2013 at 09:14

    Good article. In my opinion, the best things in life are free or at least not very expensive: friendship, love, sex, exercise, reading, nature, music, etc. I have excellent health and energy, pursue my passions every day, and earn enough money to live very comfortably (about $72,000/yr). As long as I have enough money to pay my bills and to invest for the future, I am very happy.

  90. Emma says 26 March 2014 at 14:07

    I make 75K in Boston and I am paying off $500 a month in student loans…I cannot afford to buy, I cannot afford my own place etc. It totally depends on where you live.

  91. Mike says 10 June 2014 at 11:58

    I can agree with this article however there are so many variables with everyone’s circumstances. Location, debt, healthy and day to day living expenses is different for everybody. We lived on a budget between $50K & $60K per year while earning gross as a couple of about $110K. Needless to say we both maxed our 401”s and will retire this year with a larger budget of $65k that includes travel. No debt and income that will be in the range of $75k per yr before taking out of retirement savings. I can live on the high end by taking a small portion out of savings each year when we desire.

  92. A.L. says 08 July 2014 at 05:50

    The same findings came from a Harvard study. The research team didn’t study themselves, obviously.

  93. katareese72 says 07 January 2015 at 15:07

    Clearly these people do not live in Silicon Valley where the rents are sky high. I would assume that dual incomes in at 75K will get you enough here, but a family of Four? Are they talking about a family or an individual? For a single person with no kids yeah that would be ok.

  94. kathy capps says 10 March 2015 at 10:30

    I just wanted to ask if this $75,000 enough includes a house payment….stupid question, I guess, but I do hope for an answer. 13 years I have been “blocked off” from the world and made to believe that, well, we live in poverty. Our income (my small amount comes from disability) is roughly around $62000 a year. There is no money for clothes, shoes, eye glasses, vacations….yet he inherited his house. It’s a dump and I have wanted repairs or a smaller, decent house. I have been lead to believe that I am being selfish and ….well, you get the point. Does the $75,000 in this article include a house payment? Please do not use my name.

    I know I have bigger problems than the one I am asking about. I hope and will keep positive thoughts that a “giver”, (kind soul) will some how feel compelled to answer me.
    Blocked from the world because of cancer and stroke….no sympathy wanted…just one explanation of the reasons I have been “blocked” and locked away. Forever grateful….

  95. Jose Yuri Salazar Rosero says 30 April 2017 at 17:20

    What they proved, and i agree, is that less than 75k causes you financial trouble and, of course, unhappiness. That is it.

  96. TLJ says 06 November 2017 at 11:54

    I make $75,000 per year and my husband makes about $110,000 with a small bonus. We have one child. We live in the same modest home we bought in 1996, we drive vehicles until they are falling apart (and then buy used), and what we own is no better or more luxurious than our middle class neighbors. But we are able to save A LOT of money; we invest the maximum in our retirement savings, max in our son’s college savings, and we have readily available funds that can be withdrawn if needed, without a penalty. We live well below our means. That makes me happy, because it makes me feel secure. We don’t need to worry about how we are going to pay our bills. We’ve planned as carefully as we can for our future, and for our son’s education. We have several million saved, over 20+ years of careful investment. We are both college educated (my husband has a Master’s degree). We feel that we’ve created our own good fortune.

  97. Tony Z says 19 July 2019 at 10:49

    I am 27 and I make $78,000 a year. My Wife is 26 and she makes $85,000 a year. We feel not very comfortable while we still need to pay car loan and mortgage. We heard that some young coupe have to pay thousand $ for their baby’s day care and we are not going to have a child at this point because we don’t think we can afford that.

  98. Christopher says 27 August 2019 at 12:31

    My family is in pretty much the same boat as TLJ immediately above. I’m at $70K and my wife is at $30K. We’re a little older and I practiced law for about 25 years before taking on my present position. So…I was able to pay off our home (that we purchased in 1995), fully pre-pay college tuition through a state plan for three sons; and we have three cars (2005 VW, 2009 Subaru, and 2004 Mercedes). I save about 40% of my income in deferred compensation and a Roth IRA annually. We rent a farm house (vacation rental) that my wife inherited, and we live well below our means. No debt…wouldn’t touch a credit card. Things are okay, but it’s better to save and have a cushion and not need it than to need and not have it.

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