For millennials in particular, having grown up with an economic crisis, fear of unemployment and the likelihood of change, restructure or redundancy never far from home, it seems intuitive that money cannot, in any simple way, buy happiness. Millennials have grown to value experience over a promise of a pay rise, and to live more in the moment than previous generations. And yet, logically, we need a certain amount of money to meet our daily needs, and now, more than ever, we have become accustomed to such luxuries as great holidays and travel, exciting experiences which require cash.
So money can’t buy happiness, and yet we need it to avoid boredom, stagnation and misery. It’s certainly a balancing act to figure out the best salary to shoot for to be happy without being so tied to the job that you don’t have the time to enjoy it. Luckily, someone has done the research to help you narrow down your perfect salary for optimal happiness.
In 2010, Daniel Kahneman of Princeton University, put forward research to show the level at which salary most positively influences our happiness. Using over 450,000 responses to daily happiness surveys, he was able to evaluate which income groups were happiest, on a day-to-day basis, in terms of how they evaluate their life overall, and in terms of their emotional well being. From his findings, Kahneman splits happiness into two aspects - life evaluation and emotional wellbeing.
Life evaluation is how you might describe your life if asked, whilst emotional wellbeing focused instead on the day-to-day experience of life. He found that an increase in salary and education leads to a corresponding increase in life evaluation - meaning that the wealthier you are, and the better educated, the better you might say your life is. However, the really interesting part is in relation to emotional well being - the daily emotions we experience, which feels a truer reflection of happiness than what we might tell others.
When it comes to emotional well being, Kahneman found that there was an initial corresponding increase as salary increases - but then the impact of greater wealth wore off. The magic number? Kahneman found that the optimal salary for happiness was around $75,000 per year - beyond that, greater earnings simply don’t make you happier.
What to make of it
Kahneman found that low incomes were inextricably linked to both low life evaluation and low emotional wellbeing - if you’re on a particularly low salary, you’re likely to struggle emotionally day to day, and also when asked to evaluate life, you are likely to be somewhat negative. So, earnings are important - the key is that they should not be the most important thing. Earning at an even higher level comes with its own problems - loss of work/life balance and difficulty in relationships spring to mind.
So, perhaps the best approach is to choose a career that will keep you stimulated, allow you to grow personally and professionally, and keep your work/life balance sensible. Make sure your career is rewarding in ways other than financial to keep you satisfied in the long term. Shoot for the magic number of $75,000 per year, but remember that salary should be a secondary consideration if you really want to be happy.