We all know that money can’t buy happiness. It’s an idea that’s drilled into our heads from childhood to help us understand that we need to find satisfaction from the non-material things in life.
But as it turns out, there is a connection between money and happiness, and social scientists at Princeton University were even able to name a specific dollar amount for optimal happiness: $75,000. The lower your salary is below that benchmark, the unhappier you feel, whereas the more you make over $75,000 does not add to your day-to-day happiness.
The authors of this study theorize that $75,000 is the dollar amount at which you know you have enough to cover the necessities with enough left over for discretionary spending. But each extra dollar you add to that discretionary spending does not equal more happiness.
This study can bring about two very distinct reactions. For some people, it may seem as though the money-happiness connection is now attainable. Where once you thought you’d need to be as rich as Warren Buffett to really feel money happiness, it can be comforting to know that you could get to that optimal place without being a multi-millionaire.
On the other hand, $75,000 may still seem like an impossible ideal for many workers who are struggling from paycheck to paycheck. Learning that this amount is where the sweet spot lies can be very depressing for those who just want to make a good life for themselves but are in low-paying careers.
However, even if $75,000 is far beyond what you can see yourself making any time in the near future, there are some ways to recreate the beneficial aspects of that level of wealth without having the money itself:
1. Start an emergency fund. Part of the reason higher salaries generally equal more contentment is because potential financial problems are not stress-inducing at that level of income. If you know how you’ll pay for it when your car breaks down, your stress level is much lower. One way that you can give yourself that peace of mind at a lower income is by starting and maintaining a healthy emergency fund. It will provide you with the same level of calm in the face of life’s inevitable hiccups.
2. Donate, even if it’s just your time. One of the best ways to appreciate your own life is to give freely to others. Even if you can’t afford to give money to your favorite causes, you can certainly find ways to help through volunteering, walking for fundraisers, etc. This will help you to count your own blessings and feel good about your choices.
3. Spend money on experiences. Behavioral economists have found that we get much more pleasure out of experiences than we do out of material things. So when you’re considering how to spend your tax refund or even your weekly fun money, remember that you’re likely to think back fondly on your night out with friends, but a new purchase will eventually just become part of your stuff.
When it comes to finances, it may be true that mo’ money means mo’ happiness. But you can still reap the rewards of security, charity, and wise spending even at a lower pay grade.
Photo credit: sarah …