midlifeguy
Dryer sheet aficionado
From The Wall Street Journal yesterday: http://blogs.wsj.com/wealth/2010/09/07/the-perfect-salary-for-happiness-75000-a-year/
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Day to day happiness peaks at $75k?
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walkinwood
Thinks s/he gets paid by the post
Financial plans -oh, they need to be customized for each individual situation! But happiness? No problem. One size fits all.
They should poll boat owners as to their day to day happiness AFTER they sell their boat. Maybe above 75k you have enough to buy things that are a pain in the neck.
As belonings increase so do the responsibility and unanticipated expenses that go along with those things. Maybe above 75k people become able to accumulate things that they become ambivalent towards.
Maybe above 75k people finally start to save, which feels great (I read somewhere that at 50k most people go further into debt each year).
Maybe below 75k people simply do not feel "above average" and its all about how we feel we compare to others.
In the last dozen or so decades people have become increasingly able to improve their financial state throughout their life (good), but have also become increasingly tending to accumulate throughout their life (bad). Maybe decades from now the norm will be to make your money and save a large percentage of it over the first 1/3 of your life, and then live the next 2/3 of your life in peace and happiness with minimal expenses.
As belonings increase so do the responsibility and unanticipated expenses that go along with those things. Maybe above 75k people become able to accumulate things that they become ambivalent towards.
Maybe above 75k people finally start to save, which feels great (I read somewhere that at 50k most people go further into debt each year).
Maybe below 75k people simply do not feel "above average" and its all about how we feel we compare to others.
In the last dozen or so decades people have become increasingly able to improve their financial state throughout their life (good), but have also become increasingly tending to accumulate throughout their life (bad). Maybe decades from now the norm will be to make your money and save a large percentage of it over the first 1/3 of your life, and then live the next 2/3 of your life in peace and happiness with minimal expenses.
Khan
Gone but not forgotten
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My income of my last year of w*rk was ~$75K (2004).
The way it made me happy was that I was saving almost half of it.
It would be nice to have $75K income now, but I'm not sure what I would do with it.
The way it made me happy was that I was saving almost half of it.
It would be nice to have $75K income now, but I'm not sure what I would do with it.
ziggy29
Moderator Emeritus
In reality, higher income wouldn't make me less happy -- it wouldn't significantly change our lifestyle, it would merely mean accelerating the path to FIRE.
I suppose a lot of us here are wired differently since I suspect that's not an uncommon attitude here. Many folks out there add more stuff and introduce more complications into their life with more money in their pockets. I think many of us would simply be inclined to save/invest more rather than do that. And I think it's that "more stuff / more complications" angle that can make people less happy with more money.
I suppose a lot of us here are wired differently since I suspect that's not an uncommon attitude here. Many folks out there add more stuff and introduce more complications into their life with more money in their pockets. I think many of us would simply be inclined to save/invest more rather than do that. And I think it's that "more stuff / more complications" angle that can make people less happy with more money.
So happiness can be bought.... $1.875M with a 4% SWR seems to be the price.
I'm a little short of the 1.875M but the PT work puts me over the top. I'm Happy!
travelover
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Maybe I'm being too literal, but it would seem that plateaus at 75K would be a better description than peaks, which to me implies that more money = less happiness.
That said, I certainly experienced that once all my needs were met and I could save a little I was about as happy as I ever was. I'm sure what one needs depends on a number of factors and that 75K is only an average.
That said, I certainly experienced that once all my needs were met and I could save a little I was about as happy as I ever was. I'm sure what one needs depends on a number of factors and that 75K is only an average.
ziggy29
Moderator Emeritus
Yeah, I'd agree that "plateau" is probably a better word. At some point there are "diminishing returns" with respect to more money improving your quality of life.
Andre1969
Thinks s/he gets paid by the post
In reality, higher income wouldn't make me less happy -- it wouldn't significantly change our lifestyle, it would merely mean accelerating the path to FIRE.
I'm pretty much the same way. Any additional income would probably just get invested, or pay down the mortgage, so that my eventual FIRE comes at a sooner date.
Currently at my job I've reached a threshold. My salary isn't going to advance much more than 4-5% per year, unless I decide to "invest" in my career. That's going to mean money for training, business association dues, a nicer wardrobe, plus, any advancement at this point would make me more "chained to my desk", plus extra hours devoted to that training and such. It would require some sacrifice right now, but with the ultimate goal of perhaps moving FIRE up a couple years. But, I don't know if I want to do that.
I don't really like my job, but I don't hate it, either. Trying to advance, with my attitude on work, might make me end up hating it, regardless of the boosted income.
Plus, I'm at the point now where I'm fairly comfortable. If I can afford to max out my 401k, Roth IRA, AND do a little after-tax investing, I guess I shouldn't whine, right? Plus, right now, for every extra dollar I make, once you figure in federal taxes (25% bracket), state/local (~7.6%), SS and medicare (~7.65%?), I'm bringing in just under 60 cents on the dollar.
Right now, I make $65K per year. Would I like to make $75K? SURE!! But, not if it came with a lot of extra responsibility and aggravation. Or, if it caused some kind of effect where I had to work more hours, so my hourly rate suffered.
I wonder if $75K might be some sort of magical figure, simply because it falls half-way between $50K and $100K? While $100K per year isn't what it used to be, I think it's more of a psychological thing, just like $1M is. Or, back in the old days when the idea of paying $10,000 for a car just seemed unthinkable.
Anyway, if you're making $50K per year, you're only half-way to making $100K, and that seems like a far off, lofty goal. But, once you get to $75K, it seems like it's more within grasp. And maybe that's one thing that makes people feel more content with that cutoff.
I'm pretty much the same way. Any additional income would probably just get invested, or pay down the mortgage, so that my eventual FIRE comes at a sooner date.
Currently at my job I've reached a threshold. My salary isn't going to advance much more than 4-5% per year, unless I decide to "invest" in my career. That's going to mean money for training, business association dues, a nicer wardrobe, plus, any advancement at this point would make me more "chained to my desk", plus extra hours devoted to that training and such. It would require some sacrifice right now, but with the ultimate goal of perhaps moving FIRE up a couple years. But, I don't know if I want to do that.
I don't really like my job, but I don't hate it, either. Trying to advance, with my attitude on work, might make me end up hating it, regardless of the boosted income.
Plus, I'm at the point now where I'm fairly comfortable. If I can afford to max out my 401k, Roth IRA, AND do a little after-tax investing, I guess I shouldn't whine, right? Plus, right now, for every extra dollar I make, once you figure in federal taxes (25% bracket), state/local (~7.6%), SS and medicare (~7.65%?), I'm bringing in just under 60 cents on the dollar.
Right now, I make $65K per year. Would I like to make $75K? SURE!! But, not if it came with a lot of extra responsibility and aggravation. Or, if it caused some kind of effect where I had to work more hours, so my hourly rate suffered.
I wonder if $75K might be some sort of magical figure, simply because it falls half-way between $50K and $100K? While $100K per year isn't what it used to be, I think it's more of a psychological thing, just like $1M is. Or, back in the old days when the idea of paying $10,000 for a car just seemed unthinkable.
Anyway, if you're making $50K per year, you're only half-way to making $100K, and that seems like a far off, lofty goal. But, once you get to $75K, it seems like it's more within grasp. And maybe that's one thing that makes people feel more content with that cutoff.
BigNick
Thinks s/he gets paid by the post
A colleague once had this on his office wall:
"Money doesn't bring happiness. People with 10 million dollars are no happier than people with 9 million dollars."
Wise words indeed. His other sign was:
"To err is human. To forgive is not company policy."
"Money doesn't bring happiness. People with 10 million dollars are no happier than people with 9 million dollars."
Wise words indeed. His other sign was:
"To err is human. To forgive is not company policy."
GusLevy
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"Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery." - Wilkins Micawber (Charles Dickens)
I read the study the other day and felt that the Researchers' conclusion was prob in the ballpark. For the majority of the general U.S. population today, $75k per yr would sufficiently keep a good roof over the head, good food on the table, clean clothes on the back, a good car in the driveway, cable tv plugged, Internet hooked, a few leisurely trips along the way while leaving a bit to sit in the bank: The minimal "needs" and "wants" to fulfill a basically happy and stress free life. Anything less would potentially create a desire to fill a basic need or want while anything more simply allows one to have a better roof, better hood ornament, better animal logo on their shirts, etc.
I read the study the other day and felt that the Researchers' conclusion was prob in the ballpark. For the majority of the general U.S. population today, $75k per yr would sufficiently keep a good roof over the head, good food on the table, clean clothes on the back, a good car in the driveway, cable tv plugged, Internet hooked, a few leisurely trips along the way while leaving a bit to sit in the bank: The minimal "needs" and "wants" to fulfill a basically happy and stress free life. Anything less would potentially create a desire to fill a basic need or want while anything more simply allows one to have a better roof, better hood ornament, better animal logo on their shirts, etc.
Andre1969
Thinks s/he gets paid by the post
I've noticed a lot of people on that WSJ website whining about the article, but that does seem like the in-thing to do. Lotta people whining about how if they got their incomes cut to $75K, they couldn't make it. However, I don't think that's the point of the article.
The way I look at it, is that as you were starting out in your career, with each boost in income, it brought more happiness. However, once you hit $75K, your happiness probably started to plateau. Sure, each additional income boost after that was nice, but it probably didn't add that much to your happiness.
Of COURSE, if you're making $150K, $200K, or some other vast amount of money, and had a lifestyle to match, and got cut back to $75K, you'd be miserable! But, that's not the point.
Personally, I think one of the happiest times in my life, from a financial standpoint at least, was Tuesday, November 30, 2004. That was the day I went to settlement on my condo, and I walked out of there with a check for $94,154.11. That was a wonderful feeling to have that burden off my back. The check was nice, but so was the fact that suddenly, roughly $1100 per month in expenses was taken away. Plus, less than two weeks before, I made the final payment on the car, so that was another $347.66 per month that was off the books.
The feeling around that time was downright euphoric! I don't think I'd ever felt so financially free in my life!
Somehow, I felt more free back then than I do now, even though I'm in a better place financially. If I had stayed in the condo, its monthly cost would have been close to what the house is now, once you factor in the rise in utilities. I'm sure the condo fee would've gone up by now as well, not to mention property taxes. Factor in the fact I still have no car payment, and my total expenditure is still a good deal less now than it was, six years ago! But, that euphoric feeling of freedom is gone now.
I guess just like the old song says, kicks just keep getting harder to find!
The way I look at it, is that as you were starting out in your career, with each boost in income, it brought more happiness. However, once you hit $75K, your happiness probably started to plateau. Sure, each additional income boost after that was nice, but it probably didn't add that much to your happiness.
Of COURSE, if you're making $150K, $200K, or some other vast amount of money, and had a lifestyle to match, and got cut back to $75K, you'd be miserable! But, that's not the point.
Personally, I think one of the happiest times in my life, from a financial standpoint at least, was Tuesday, November 30, 2004. That was the day I went to settlement on my condo, and I walked out of there with a check for $94,154.11. That was a wonderful feeling to have that burden off my back. The check was nice, but so was the fact that suddenly, roughly $1100 per month in expenses was taken away. Plus, less than two weeks before, I made the final payment on the car, so that was another $347.66 per month that was off the books.
The feeling around that time was downright euphoric! I don't think I'd ever felt so financially free in my life!
Somehow, I felt more free back then than I do now, even though I'm in a better place financially. If I had stayed in the condo, its monthly cost would have been close to what the house is now, once you factor in the rise in utilities. I'm sure the condo fee would've gone up by now as well, not to mention property taxes. Factor in the fact I still have no car payment, and my total expenditure is still a good deal less now than it was, six years ago! But, that euphoric feeling of freedom is gone now.
I guess just like the old song says, kicks just keep getting harder to find!
Midpack
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I'd always heard anything over $50K was gravy WRT happiness, but inflation has probably pushed the number to $75K.
Money won't buy you happiness, but it makes being miserable a whole lot easier.
“Money can't buy you happiness, but it can buy you a yacht big enough to pull up right alongside it.” David Lee Roth
Money won't buy you happiness, but it makes being miserable a whole lot easier.
“Money can't buy you happiness, but it can buy you a yacht big enough to pull up right alongside it.” David Lee Roth
traineeinvestor
Thinks s/he gets paid by the post
$75K pa would make me happy.....so long as the person at the next desk is only getting $74K pa
I'm with walkinwood and fail to understand how one number works for everyone. The theory of financial relativity should apply - income relative to things like previous income, living expenses, wealth, other people etc affects whether or not people would be happy on a given level of income.
I'm with walkinwood and fail to understand how one number works for everyone. The theory of financial relativity should apply - income relative to things like previous income, living expenses, wealth, other people etc affects whether or not people would be happy on a given level of income.
W2R
Moderator Emeritus
I think the article completely misses the mark, at least for me:
Last year I was making more than $75K while w*rking.
This year I have retired on less and I am 1000% happier.
For me, the size of my income while w*rking was trivial compared with the freedom of FIRE with a decent income.
Last year I was making more than $75K while w*rking.
This year I have retired on less and I am 1000% happier.
For me, the size of my income while w*rking was trivial compared with the freedom of FIRE with a decent income.
Onward
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I am far more content in FIRE (with well under $75k/yr) than I was in the w*rking world (with well over $75k/yr).
IMO it's not about salary. It's about freedom to spend your life the way you choose.
IMO it's not about salary. It's about freedom to spend your life the way you choose.
Double the average persons income and 50% more than the average household income might be a better way to look at it than basing it around number of zeros
Definitely agree plateau is the word they should be using
For me, so long as I can cover daily living expenses I'm happy. If I can enjoy my hobbies and still have a few thousand left over, that will make me even more happy. Even more than that and it's even better, but the returns diminish. Despite such irrational spending, think that is true for most people. Guess the over spending just makes that number $75k rather than $25k
MasterBlaster
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The Happiness Step Function
For me my happiness peaked at $83,432.21.
Oh sure income beyond that was fine but the thrill was gone.
when I was below that amount my life was wretched and I was miserable.
For me my happiness peaked at $83,432.21.
Oh sure income beyond that was fine but the thrill was gone.
when I was below that amount my life was wretched and I was miserable.
Midpack
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
No lower threshold on annual spending once you're RE? You may disagree that it's $75K/yr, but happiness and FIRE vs working is a separate discussion...
ziggy29
Moderator Emeritus
Having thought on this a little more, if my salary suddenly doubled I *would* be a lot happier. Not because my current quality of life was any different but because it would enable me to set enough aside to retire several years sooner. The knowledge that the FIRE math was going to work many years sooner would certainly add to my happiness.
aaronc879
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Having thought on this a little more, if my salary suddenly doubled I *would* be a lot happier. Not because my current quality of life was any different but because it would enable me to set enough aside to retire several years sooner. The knowledge that the FIRE math was going to work many years sooner would certainly add to my happiness.
That's my thought exactly. In my case $75K/yr would be a 37% increase in pay so I would be very happy being able to save so much more and retire sooner.
My comment was directed towards the working stiffs (seems to be the target audience of the article) hence the FI notation, not FIRE
People can be financially independent & still work but day to day I'm sure it's different knowing you are covered minus getting hit by a bus
nisiprius, on the boglehead forums, has this quote in his signature:
Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
I think it sums things up pretty well.
edit: oops GusLevy already mentioned this!
I like johnoh's observation. I never thought how money could lead to a more complicated lifestyle. But, I believe that the money isn't the problem but the lifestyle itself.
Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
I think it sums things up pretty well.
edit: oops GusLevy already mentioned this!
I like johnoh's observation. I never thought how money could lead to a more complicated lifestyle. But, I believe that the money isn't the problem but the lifestyle itself.
