How Much Income Makes a Person Happy? | Let Science Speak

Let’s not kid ourselves. Money makes a person happy. Money helps us buy things we need to have more life satisfaction. It helps us buy not just the things we need but also want. But how much income makes a person truly happy? What salary makes a person happy? Does a higher salary lead to happiness? I’ve gathered some research papers to find these things out.

An income of about $75,000 per year makes a person happy, according to well-known research from 2010. However, due to inflation and changing environment, a newer study has found that an income of $60,000 to $75,000 is ideal for emotional well-being and $95,000 for maximum satisfaction.

This blog post will talk about the scientific literature that discusses the relationship between happiness and money. Furthermore, I would like to discuss this topic more straightforwardly as I know that not everyone can understand scientific terms.

What salary makes you happy?

According to research from Nature Human Behavior, a $60,000 – $75,000 salary makes a person happy since it is enough to satisfy their emotional well-being. However, the research also reported that the peak happiness from money happens at an income of $95,000 per year.

When we talk about research papers, one famous research gathered data from 450,000 responses to the Gallup-Healthways Well-Being Index. ^[1]

The research concluded that money could indeed buy happiness but only to a certain point.

That specific point is $75,000. Happiness goes up with more income, but happiness levels plateau or even decrease once it reaches $75,000.

This is quite surprising, considering that the median personal income in the US is far from that amount.

According to the Fred Economic Data, the actual median personal income in the US is $35,977 per year.

So, it seems like it’s still far off from the ideal in terms of the median income.

But take note that the study said that the peak is $75,000. This means that the more you earn, the happier you’ll be.

The reason for happiness increasing with money is that it allows a person to buy their basic needs.

It is hard to be happy if your basic needs such as food, shelter, and clothing are still not met.

Furthermore, we have emotional needs such as security, peace of mind, and health.

These are needs that need to be met to make a person happy.

To explain this, let’s look at Maslow’s Hierarchy of needs.

We will not have a class about the Hierarchy of needs here, but what I want you to check are the two lowest parts: security and basic needs.

These are things money can buy. You feel secure when you purchase insurance or investments because these offer security.

The research found that the maximum salary is $75,000 to satisfy everything from basic to security needs,

But there is a problem.

While the research has 450,000 respondents, which is big enough to have a good set of data, the problem is that the study was conducted in 2010.

The thing is, if you’re familiar with inflation, we know that the prices of products rise with time. Furthermore, our needs change.

A perfect example of changing needs is that we didn’t need the internet decades ago. Imagine not having access to the internet in this age.

The internet is an addition to our needs.

That’s why a newer study was made, and this time, it has polled 1.7 million individuals across 164 countries.

The study gave a series of questions regarding life satisfaction and emotional well-being.

Not only do we have an immense amount of polls, but it is also newer.

The research published in Nature Human Behaviour found out that the maximum amount of salary that satisfies emotional well-being and satiation to life evaluation is now $95,000. ^[2]

However, the older study is still relevant as they also found that $60,000 to $75,000 is enough to satisfy a person’s well-being.

This means that a salary level of $60,000 to $75,000 still makes a person happy, but the peak is now at $95,000 compared to $75,000 before.

Now that we talked about the amount of money and happiness it gives let’s discuss why a higher salary leads to joy.

Does a higher salary lead to happiness?

A higher salary leads to happiness simply because it helps people meet their basic needs and conveniences and even pay up their loans. However, happiness from money plateaus at a certain point. Research from Applied Research in Quality of Life found that people who derive their satisfaction from only money are less satisfied and unhappy with their lives.

Let’s have a small recap on why money buys happiness.

The most straightforward reason is that money helps us get our basic needs. It is hard to be happy and contented with life if our basic needs are not met.

Furthermore, money buys security. Security doesn’t always mean having people guarding you. It also means securing our assets like insurance, income like investments, securing our future like paying loans and securing our family like education.

These needs are essential to make a satisfying life.

However, there is an upper limit to these needs.

Once these needs are satisfied, the research found out that happiness plateaus, or worse, happiness starts to go down.

Whether happiness stays the same or goes down entirely depends on the person.

It depends on where they derive happiness.

Research published in Applied Research in Quality of Life found that people deriving happiness from wealth or material possessions tend to be less happy with their life. ^[3]

These people are unhappy with their standard of living and aren’t satisfied with their social life, health, family, and many more areas related to happiness.

However, people who view their money not as a source of happiness but only as a sign of success were happier and more motivated.

These people are more satisfied with their lives and have a better standard of living.

This means mindset plays a huge role in how money affects our lives.

This is correlated with my explanation in my other post about the paradox of happiness.

In simple terms, the more you chase happiness, the less you’ll feel happy.

Here is my video on YouTube explaining the phenomenon.

I make self-improvement videos on YouTube, and I gladly invite you to check my Channel to learn more about personal development. You can find my Channel by clicking here.

Here is my point.

Chasing only money ultimately makes us feel like we don’t have enough.

That’s why you’ll see many insanely rich people, but they always feel like it’s not enough.

It is all in the mindset. If you only see money as a sign of success and not your sole source of happiness, you’re fine earning more.

So earning more than $95,000 per year is a good idea if you have the correct mindset.

Furthermore, the type of happiness rich and poor people get are also different.

Research published in the journal Emotion found out that people who earn a lot tend to get happiness within themselves. People who make less tend to get happy relationships and the ability to connect with others. ^[4]

Later, this research was also published in the American Psychological Association.

Paul Piff, Ph.D., the researcher, questions the notion that higher income is associated with happiness. While higher income improves health and life satisfaction, it might not be associated with greater happiness.

“Higher-income has many benefits, including improved health and life satisfaction, but is it associated with greater happiness?”

Paul Piff, Ph.D., University of California, Irvine

The research surveyed 1519 people with questions about their income and emotions such as amusement, awe, compassion, contentment, enthusiasm, love, and pride.

The result was the participants who earned more money tended to focus on themselves with having more emotions such as contentment, pride, and amusement.

In contrast, people who make less experience more emotions such as compassion and love.

The research means that money doesn’t correlate with general happiness but only specific parts of happiness, particularly contentment, pride, and amusement.

What I mean by including this study is that while a higher salary improves happiness, there are other sources of happiness that money can’t buy.

Let’s go back to Maslow’s Hierarchy of needs.

The one above security is love and belonging. But, unfortunately, love and belonging are things money can’t buy.

Love, compassion, and belonging are essential to happiness.

A study from the Journal of Happiness Studies found a clear relationship between compassion and happiness. [5]

The same study was also published in the American Psychological Association.

While happiness is related to money, not all forms of happiness are related to money.

Someone who earns less can be happier since they can have more things money can’t buy.

Is $75000 a good salary?

A $75,000 salary is good enough for a person to satisfy their wants and needs. Furthermore, it is enough to meet a person’s emotional well-being. However, another research found that a person can be happier by earning more than $75,000.

We are now near the end of the post.

We now know that a salary of $75,000 is good enough to satisfy all our needs. Thus, it is enough to make us happy.

But remember that a $75,000 salary is not the peak nor the minimum.

Remember that research has found that $60,000 – $75,000 is enough to satisfy our emotional needs.

While we still have some challenges since the median income is $35,977 per year, it can be enough to satisfy a person’s needs depending on where they plan to live.

Furthermore, the new maximum salary for happiness is $95,000, which we will discuss next.

Why is $95,000 the New Good Salary?

$95,000 is the best salary since it peaks the amount of happiness money can buy. This includes all the basic needs and wants to satisfy emotional well-being. Furthermore, research from Nature Human Behavior found out that the maximum satiation of life evaluation occurs at a salary level of $95,000.

The newer maximum salary to get the most happiness is now $95,000.

While it might seem too big, it is essential to note that not all types of happiness can be bought with money, as we’ve discussed earlier.

Love and compassion are things money can’t buy, and it is by no means an inferior source of happiness compared to cash.

So, always live your life the way you want it to be and if you’re already satisfied with your current situation, then so be it.

Frequently Asked Questions:

What salary are people happy with? The salary that makes a person happy is the amount of wage that can satisfy their basic and emotional needs, which were found to be around $60,000 to $75,000 based on research conducted on 1.7 million individuals across 164 countries.

Is 50k a year good? Earning 50k a year is good if it can satisfy both your basic and security needs. The purpose of money is to provide security by having food, shelter, safety, clothing, and many more. However, a 50k a year salary might not be suitable in some areas with a high standard of living.

Sources:

1. “High Income Improves Evaluation of Life but Not Emotional Well-Being.” Proceedings of the National Academy of Sciences, vol. 107, no. 38, 2010, pp. 16489–93. Crossref, doi:10.1073/pnas.1011492107.Jebb, Andrew T., et al.
2. “Happiness, Income Satiation and Turning Points around the World.” Nature Human Behaviour, vol. 2, no. 1, 2018, pp. 33–38. Crossref, doi:10.1038/s41562-017-0277-0.
3. Sirgy, M. Joseph, et al. “The Dual Model of Materialism: Success Versus Happiness Materialism on Present and Future Life Satisfaction.” Applied Research in Quality of Life, vol. 16, no. 1, 2019, pp. 201–20. Crossref, doi:10.1007/s11482-019-09763-8.
4. Piff, Paul K., and Jake P. Moskowitz. “Wealth, Poverty, and Happiness: Social Class Is Differentially Associated with Positive Emotions.” Emotion, vol. 18, no. 6, 2018, pp. 902–05. Crossref, doi:10.1037/emo0000387.
5. Mongrain, Myriam, et al. “Practicing Compassion Increases Happiness and Self-Esteem.” Journal of Happiness Studies, vol. 12, no. 6, 2010, pp. 963–81. Crossref, doi:10.1007/s10902-010-9239-1.