A good life is characterized by experiences of fulfillment and happiness. When we’re able to provide for the needs we have and additionally for some of the things we want and desire, life feels good. Of course, the opposite is also true. So, just how much money does it take to truly make us happy?
Princeton University Happiness Study
A study by Princeton University revealed that our happiness is directly linked to how much money we make. Naturally, you’d think the more money a person makes the happier he/she would be. And, to a degree this is true, but it turns out there’s a limit to how much happiness money can buy.
According to the study, the magic number for experiencing optimum happiness in the United States is $75,000 per year. Those making less than $75,000 in income experienced happiness as their income grew. However, once the income surpassed $75,000 per year, there was no measurable increase in happiness.
I must admit, this study fascinates me because I’ve always viewed lifestyle to be subjective. A person can be happy at an average wage [$55,000], while another can feel miserable at the same wage.
Because people are so diverse in their likes and dislikes, I’ve always thought that it would take different incomes to satisfy different people. The study, however, proves that we’re more alike than we think.
How Needs, wants, and Desires affect happiness
At the core of happiness is the ability to provide for needs, wants, and desires. It’s important to understand the difference between these and how money should be used to provide for them.
Our first priority is to provide for basic needs. Once we’re able to do that, the next step is to provide for some wants, and eventually we look to fulfill the things we desire. Each of these has a cost associated with it and they each attribute to our feelings of happiness.
Needs are things we can’t live without. Without basic food, clothing, and shelter, we are in danger of getting sick or dying. Other needs may not be as vital but they are needs none the less. For example, in areas where public transportation is not available, a vehicle becomes a basic need. Without it, you would not be able to go to work, get groceries, or go to a doctor.
Wants are things we can live without. They can make life more enjoyable but they’re not necessary to live. Some wants can feel like needs, especially in our culture of abundance. Any time you can buy an item at a lower price and still experience the benefit and value of that item it qualifies as a want.
Food is a great example of something that we often fulfill as a want rather than just a need. A plain meal cooked at home will satisfy the need for sustenance, and so will eating a steak at a restaurant, but at a significantly higher cost. Choosing to get what you want rather than what you need is fine when you know you’re doing so, and you realize there’s a higher cost associated with it.
A desire is something rare or should be, that when we’re able to obtain brings an extra level of fulfillment and happiness to our lives. A desire is like a want in that we can live without it. The difference is usually measured in cost because a desire will almost always cost significantly more than a want.
Why you don’t need more than $75,000 to be happy
What the Princeton Happiness Study revealed is that quality of life is affected by our perception and our ability to provide for needs, wants, and desires. When the available income doesn’t allow for choices, life, and our happiness, is negatively impacted. Having enough to provide for only basic needs is perceived as “less than” in a society where abundance is evident at every turn.
In the United States, a $75,000 yearly income can provide for basic needs very well, but it does so much more. It gives a family choices to get not just what they need but also what they want. If managed well, this income has the potential to also provide for some desires like owning a home, funding a good education, funding retirement, and many others. Is there a better definition of a happy and fulfilled life?
Our happiness and fulfillment are at least indirectly measured in dollars and cents. The amount you and your family need to experience optimum happiness is dependent on having a good understanding of your needs, wants, and desires. Of importance is having balance in fulfilling each of these with your available income.
Maintaining balance in your spending doesn’t happen by accident. You must have a plan. If you don’t yet have a written and actionable plan for how you’re going to do this, I have some free resources on this site to help you get started. If I can help you on this journey please contact me. I’m happy to help!