Money is a confusing topic. On one hand, most of us generally want more of it. Raises boost our spending power. And, our wealth has a big impact on how successful we feel.
But, does earning a lot of money actually improve our emotional well-being?
A 10-year-old study found that money only makes us happy up to a point. The study found that once we earn over $75,000 a year, our emotional well-being begins to level off. “We conclude that high income buys life satisfaction but not happiness, and that low income is associated both with low life evaluation and low emotional well-being,” the study found.
For years, this $75,000 figure has been cited as the upper threshold where a lot of us feel most content with our lives. Making more money can boost our savings and investments, but it may not necessarily improve our base level of happiness.
A study in 2018 from Purdue University found that $75,000 may no longer be enough.
The study, based on a much larger sampling of data from Gallup, found that people’s happiness tends to decrease after about $105,000 earned in the United States, and said that the ideal income point for most individuals is $95,000.
Once most of us hit the middle class, the law of diminishing returns takes effect.
Yale psychology professor Laurie Santos told CNBC that while making more money won’t automatically make us happier, making more relative to other people might.
“Even the richest folks out there in the world can often look around and find somebody that’s just a teensy, weensy bit richer, and therefore their money is not making them as happy as they think,” Santos said.
Keeping up with the Joneses and relentless comparisons keep most of us hunting for more money, higher status symbols, and greater influence.
More money helps us to keep up with the spending habits of our neighbors, but that money probably does not improve our happiness.
Having a purpose in your life is a critical component in boosting your level of happiness.
“Research consistently shows that if you want to be happier in your job, you shouldn’t chase a high salary,” wrote CNBC. “From a happiness standpoint, it’s more important that your job provides a sense of meaning or purpose.”
Santos said that instead of focusing on earning more money, ensure that your job has what she likes to call “signature strengths”. “These are your own values that you want to experience in the world,” she said. This might include autonomy in your work, or making a positive impact on your community and world.
When your signature strengths are satisfied at work, we tend to be happier and more productive both at work as well as at home.