There are plenty of people that will say that money is the root of all evil, and that money doesn’t solve all of your problems or buy happiness. However, many people that have never had a significant amount of money don’t feel the same way. In fact, those that are in lower-income situations say that their lack of money is the biggest root of their troubles.
What does science say about the link between earning a higher salary and overall happiness, though? Do the people who say that money doesn’t buy happiness correct? Or are they simply saying that because they don’t want people working under them to ask for more money or make more than they do?
The Pain of Lower Income
There are a lot of causes for stress amongst the global population, and nothing is higher on the list than money. Nearly three-quarters of people in the United States alone have said that money is their biggest source of stress, and have had at least a minor bout of stress on a monthly basis in regard to their finances. There are many different ways in which money can cause stress, too.
Some have gotten into arguments with friends and family over money, feeling guilty about spending money on things such as entertainment, or even turning off the phone or avoiding the mailbox because bills are due. There are plenty of people who lose sleep over their finances, and anyone who has gone from a low-income situation to a higher one knows that you simply sleep better when you aren’t worrying about bills. Being able to afford a better bed doesn’t hurt, either.
What’s the Magic Number?
It should be clear to everyone that having money certainly does make you happier, but is there a sweet spot in terms of salary for happiness? There was one major study conducted by Princeton University that said that happiness topped out at a salary of $75,000 per year. However, that study was conducted in 2010, so with inflation, that number would certainly be higher today.
Also, happiness didn’t exactly drop off for those that were making more than $75,000. People who made six figures saw an almost equal amount of happiness in their day-to-day lives. Those that were making higher salaries said that they were happy because their lives didn’t have much financial stress. All of their bills were paid each month, and with no debt collectors calling around the clock, there wasn’t much stress.
More than a decade after that original study was completed, there was another study at the Wharton Business School that said that happiness continues to improve as more money comes in each year. Matthew Killingsworth is a senior fellow at the school, and he said that “It’s a compelling possibility, the idea that money stops mattering above that ($75,000 per year) point, at least for how people actually feel moment to moment.”
He added that “But when I looked across a wide range of income levels, I found that all forms of well-being continued to rise with income. I don’t see any sort of kink in the curve, an inflection point where money stops mattering. Instead, it keeps increasing.”
What Money Means
When you earn a high enough salary, money hardly does anything for your day-to-day happiness. Those that are millionaires can already afford all of the essentials in life, and can pretty much afford all of the luxuries to go on top of that. There comes a certain point when you’re rich, though, where the only difference in transactions that you make would be buying businesses, sports franchises, or yachts.
Once you’ve hit it big, your net worth is simply a high score similar to that of a pinball machine sitting inside an arcade. $75,000 shouldn’t be seen as the peak of happiness, though, as that salary still wouldn’t be able to get a lot of the luxuries in life that include a more reliable car or a large house in an expensive area.
It’s when you hit the six-figure mark that you start to be able to afford some of these things, and can feel much more comfortable about having all of your bills paid and alleviating the stress that comes with not having enough to pay those bills. Those with more money are also able to experience the world and increase their happiness through experiences that lower-income people don’t get to enjoy. As Henry David Thoreau said, “Wealth is the ability to fully experience life.”