Can money buy happiness? It’s an age-old question that many people, particularly those with little wealth, answer with an emphatic “yes”. It’s also a concept that’s been explored in popular media for generations, including books like The Great Gatsby and in movies like Citizen Kane. While it’s debatable as to whether you can be a millionaire or billionaire and still feel that you’re lacking, the vast majority of Americans would be happy to be able to pay their rent, buy dinner, and not have to feel like they’re constantly under the gun. Financially speaking, of course.
The next logical question, if you think that money can buy happiness, is “how much does it take“? That’s trickier to answer. It’s subjective — everyone has different wants and needs, and satisfying them would require drastically different dollar amounts. And, as it turns out, the more money you already have, the more difficult you are to please.
In other words, if you’re already relatively wealthy — say, a millionaire or billionaire — the price of happiness may be much higher than it is for the average American.
There are approximately 11 million millionaires living in the United States. That’s around 3% of the total population. How much does it take to satisfy these people, who, relatively speaking, already have so much? The number might surprise you. And what about everybody else? What does the average American need to feel “happy”?
We’ll get into all of it. But we’ll start with the normies — the average Americans. Here’s what the typical American needs to earn or have saved up to feel good.
First up: What it takes for the average American to be happy
What the average American needs to be happy
- The short answer: Around $75,000 in annual income.
Remember, this is subjective. But when asking what it takes for the average American to find happiness, the answer appears to be around $75,000. That’s in annual income, mind you, and it’s a figure that varies depending on where you live. It’s an average. And there are more pieces to the puzzle, too. But if you’re looking for a starting point, this is it — and you’ll need to consider that the average American worker only earns around $45,000 per year.
Now, with that for some perspective, we get to the real question: Why does it take for a millionaire to be happy?
Next: What it takes for millionaires
What millionaires need to be happy
- According to a new study, the magic number is ~$8 million.
Millionaires are always striving for more, just like middle and lower-class Americans. A new study from researchers at Harvard Business School attempted to figure out what the magic number was for America’s seven-figure crowd. By asking more than 4,000 millionaires to rate their happiness, they found that there was an apparent “tipping point” at the $7.9 million mark. So, if these millionaires had $8 million, they were substantially happier than those with less than $8 million.
Next: It’s more than just the money, however.
It’s more than just the dollar figure
- Other factors in boosting millionaires’ happiness include how they came by their wealth and whether they can grow it.
The headline $8 million factor is, again, a starting point. There are a couple of important elements in generating happiness among the millionaire class that HBS researchers uncovered, too. First, these millionaires say that it’s important that they’re able to grow their wealth — they want to be richer, in other words. If incomes rises in income tend to boost happiness, millionaires apparently aren’t immune.
The second factor is how these people came into wealth. From the study: “millionaires who have earned their wealth are moderately happier than those who inherited it.”
Next: Exploring the link between income and happiness
Does happiness really rise with income?
- There is evidence that earning more money leads to more happiness. To a point.
Those millionaires who feel that they need more money to be happy aren’t crazy. We do know that there is a link between earning more money and increasing feelings of happiness and well-being. That’s how we get the $75,000 figure, too. It comes from a 2010 study published by researchers at Princeton which found that increasing levels of wealth improve day-to-day moods and happiness until you hit a certain level — then, there’s no measurable impact.
That doesn’t mean that you won’t be happier earning $250,000 as opposed to $75,000, but at that point, your basic needs appear to met.
Next: What about the tipping point?
The tipping point
- Why $75,000? Or $8 million?
Another question: Why $8 million? Or, for average Americans, why $75,000? There isn’t a clear answer at the upper-echelons. For the lower-income group, the $75,000-mark appears to be where needs are met and people can relax a bit. But why $8 million for millionaires? Why is that the magic number?
There isn’t a clear answer, unfortunately. It may be a psychological boost, of sorts. But in terms of this study, we don’t actually know.
Next: If you’re poor, should you just give up?
So, are you screwed if you’re poor?
- If you’re nowhere near that $75,000 level (or not a millionaire), should you just accept a lifetime of frustration and despair?
Obviously, there are plenty of people who live fulfilling lives without coming near the $75,000 threshold. As mentioned, the average American worker earns around $45,000 per year, and while we all have our frustrations, most people aren’t melting down with despair. But the question of whether or not relatively poor people can be happy is something that’s been explored before. If you’re truly struggling to pay the rent and put food on the table, then you’re probably going to suffer under the stress and frustration associated with finances. But if you’re doing okay, and are living in the present (according to some researchers), happiness, or contentment, is within reach.
Finally: Becoming a millionaire isn’t impossible.
It’s not impossible to hit seven-figures — but it ain’t easy, either
- 88% of the population will earn at least $900,000 over the course of their career.
Finally, it possible for the average American to become a member of the millionaire club? Of course — but it’s not easy. The average American will earn around $1 million in their lifetime — more depending on their education level. It’s what you do with that money that counts. Strategic saving and spending will go a long way, and if you’re young, you can put the pieces in place to all but ensure your millionaire status later in life.
There are a lot of big expenses — houses, weddings, children, vehicles, etc. — but if you keep your eye on the prize, you, too, can hit seven figures.
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