How Much Money Buys Happiness?

If you want to enjoy life... make more than $75,000 a year.

Did you ever get a job offer, promotion or pay increase that brought you up another level in status and made you feel really good about yourself? Maybe you went out and bought a new car or splurged on a few electronic gadgets or took everyone out for a night on the town. It sure felt good for a while. And you gladly said goodbye to the days of brown-bagging your lunch.

But what happened a year later? You felt pretty much the same way you did before the big jump in pay. Your income was up, but so were your expenses. You’re really not that much happier or unhappier since you started making more.  

What's That All About?

It’s called the hedonic treadmill, and it means that we humans have a tendency to revert to a normative level of happiness even after undergoing major positive or negative life changes.

Psychologists Philip Brickman and Donald Campbell (who coined the term in a 1971 essay, “Hedonic Relativism and Planning the Good Society”) claimed that as people increase their income, they also increase their expectations and what they want out of life. The result: The giddy feeling you had when you first got the bump up in pay doesn’t last forever.

How Much Money Buys Happiness?

But we thought money doesn’t buy happiness. That’s true after achieving a certain income threshold — $75,000 per year, that is."If you want to enjoy life, focus on relationships and health once you make more than $75,000 a year," wrote Edward Diener, Ph.D., a University of Illinois psychology professor who studies well-being. Of course, $75,000 might not give you financial security if you live in New York City or L.A. or if you have a wife and three kids to support, but you get the idea. Everybody at least needs to keep the wolf away from the door.
Reversed, a lack of a certain amount of money or financial security can buy you terrible unhappiness. A recent Princeton University study shows that financial security is important (that is, people with very low incomes are unhappy because of their lack of security), but once you reach a certain “comfortable” threshold, factors other than your finances become more responsible for your happiness. 

And If You Don't Make More Than $75,000?

Are we doomed gerbils senselessly running on a giant spinning wheel? Is there no point in our trying to “get ahead” and strive for that big promotion? Maybe not. But maybe there are a few things you can do to get off the treadmill and out onto the open road, where at least there is fresh air, and the view is a lot better.  

No. 1 - Stay Positive

If you feel like you’re not getting ahead, you might try focusing on the good things you have — though it’s more powerful to imagine what life would be like without something you value very much (a relationship, your family, your legs).

No. 2 - Give Gifts

Don’t you get annoyed when people tell you it’s better to give than receive? You’ll be even more annoyed to discover that those people are right. Studies show that happiness is less dependent on things like your income and more dependent on day-to-day activities. That means giving gifts makes you feel better and strengthens relationships.

No. 3 - Don’t Compare Yourself To Others

“Compare and despair," goes an old saying. People really do make themselves miserable when they focus on their “relative” well-being. That means how they think they’re doing compared to everyone else.

By Nick Kenned