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How Much Money Do You Need to Be Happy?

by Marianne Navada

The US reached a record number of unemployment claims and parts of the world face threats of global famine. More than ever, we need a conversation about money, wealth, and well-being. Research shows that the relationship between money and happiness is not so simple or linear. More money doesn’t always mean a happier life. But money helps. Moreover, there are various ways researchers measure happiness. Have you thought about how you measure your own happiness?

Two Ways Researchers Measure Happiness

Emotional Well-being: a person’s everyday feeling or experience measured by the intensity and frequency with which they experience joy, stress, sadness, anger, and affection.


Life Evaluation: thoughts one has about their life when they think about it.

The main difference between the two is that emotional well-being measures daily feelings, while life evaluation is one’s overall view of their life.

Imagine if you recorded how you felt daily, vs. someone asking how satisfied you are with your life currently–how would your answers be?

Your Money Your Happiness

Does money buy happiness? This is the exact question a study by Princeton’s Center for Health and Well-being tried to answer. Researchers found that the more money you have, the more you’re satisfied with life in general. However, the relationship between emotional well-being and money is not so linear. The study shows that the positive effect of money on your everyday wellness is only relevant until a certain amount: $75K yearly salary. After that, the effect plateaus. Meaning, someone making $100K a year, does not experience more happy days than the person making $75K. But someone making $75K yearly, experiences more happy days than someone making $50K.

Imagine if you recorded how you felt daily, vs. someone asking how satisfied you are with your life currently–how would your answers be?

Is $75K the Magic Number?

Although insightful, we need to take into account that the data used was for 2008-2009. With inflation, cost of living considerations, we can’t take $75K at face value. However, the study shows that our emotional well-being doesn’t necessarily increase in tandem with the amount of money we have. There IS a magic number, but that is for each one of us to figure out.

The Lessons

The takeaway for me in this study is that in our quest for a satisfying life, we need to understand how much money we think we need in order to alleviate stress, promote happiness, and maintain calm in our daily life. The answer depends on the type of lifestyle we want and the financial security we expect. Asking this question forces us to sit down and deal with our financial truths and needs. It’s being prepared and controlling what you can.

One can argue that there is no such thing as financial security–stock markets crash, accidents happen, pandemics occur…we just can’t prepare for everything. True. But one of the things that keeps me at ease during this time is knowing that my husband and I haven’t stretched ourselves too thin with the mortgage and daily expenses and that we can weather this storm for some time.

Of course, achieving our idea of financial security currently didn’t happen overnight. I have to thank our twenty-something selves for that, and some luck. This also doesn’t mean that our definition of financial security won’t change over time. We keep on reevaluating it.

Online education platforms such as Khan Academy offer free courses that teach financial literacy.

Meditation, yoga, eating well–these are all helpful in living our best selves, but so is checking our bank account, keeping track of debt, and accepting what we can and can’t afford. Knowledge in this case is not only power, but peace of mind. For my family, knowing we can’t afford something doesn’t make us unhappy. It just allows us to figure out a way to achieve our goal.

Did You Know?

The Program for International Student Assessment (PISA) measures 15-year-olds’ ability to use their reading, mathematics and science knowledge and skills to meet real-life challenges, which also includes an optional financial literacy section. This test is organized by the Organization of Economic Cooperation and Development.

In 2018, US students scored behind Estonia, Finland, Canada, Poland, and Australia in the PISA. Experts believe that part of the issue is that American students are not taught basic financial literacy in school. Rather, they learn it from their parents. Luckily, online education platforms such as Khan Academy offer free courses that address this problem.

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