Happiness = $75,000 a year!

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Finally, there is a study that equates money to happiness!

The Wall Street Journal reports a study by “the Princeton economist Angus Deaton and famed psychologist Daniel Kahneman”, which states:

As people earn more money, their day-to-day happiness rises. Until you hit $75,000. After that, it is just more stuff, with no gain in happiness.

Let’s assume you want to retire in 20 years on the equivalent of $75k p.a. – after adjusting for inflation (roughly double your required income every 20 years) and applying the Rule of 20 (equates to a 5% p.a. drawdown on your money), this means:

Your Optimal Happiness Number = $3,000,000

None of my readers are chasing less – otherwise, why would you be reading a blog called How To Make $7 Million In 7 Years (?) – but, the point of the study has been taken by the press and the pf blogging community to mean that it’s pointless to chase more than $3 million … seemingly making my uniquely positioned blog redundant by half 🙁

Well, it’s quite interesting because there’s a second part to the study that the media and most other bloggers are conveniently ignoring:

That doesn’t mean wealthy and ultrawealthy are equally happy. More money does boost people’s life assessment, all the way up the income ladder. People who earned $160,000 a year, for instance, reported more overall satisfaction than people earning $120,000, and so on.

“Giving people more income beyond 75K is not going to do much for their daily mood … but it is going to make them feel they have a better life,” Mr. Deaton told the Associated Press.

I don’t know about you, but I like to be happy ($75k p.a. happy) and have a better life ($250k p.a. better life)!

How about you?

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5 thoughts on “Happiness = $75,000 a year!

  1. I see both sides of the equation, but lean toward more money giving you more confidence that you’ll be able to continue to afford your desired lifestyle even if things change dramatically in the future. I don’t think it can hurt to aim higher, at any rate!

  2. Unfortunately, there are also studies which show that your wealth/income compared to others around you has a bearing on your happiness – which I find both understandable and sad.

    Of course if you don’t know when to stop then you really need some therapy. Figure out how much you need to “live your life”, add a margin for safety and stop when you get there.

  3. My husband and I were dirt poor for many years, but have grown our business to the point we’re grossing over $300k/year. I’ve found that the more money we have, the more stressful life is. We have investments, real estate, business concerns, import issues, taxes, etc., and it is a weight on our shoulders. So, although our money gives us security, happiness I think is pushing it. One of these years we’re finally going to have enough money to get the thing we’re really working toward – free time. Yay!

  4. Your Number might miss the mark,therefore, I think obtaining more year after years is a smart thing to do. It isn’t greed,it is survival instincts.

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