This Is How Much Money You Need To Be Happy

And more importantly, how you should spend it.

My experience on this platform has changed over the past few months. Recently my home page has become littered with articles on how much money is being made on Medium, through side hustles, or by one of the writer’s other seven streams of income. I have cleared my reading history on multiple occasions and yet these articles find their way back to my feed every time. I understand the desire to make money for your work and the clickbait titles are hard to ignore, but I believe these articles can be unhealthy, leading people to obsess over money and constantly compare their earnings to others.

I wish I could say that I avoid these articles, but I often take the bait. While I welcome members who offer genuine tips, I am becoming exhausted by writers disappointed they only made fifty dollars in their sixth month. Most writers have copped on to the fact that articles about how to make money, or how one has made a lot of money, are often the most popular and so generate views and… money. It’s a vicious cycle.

We’re repeatedly told that money can’t buy happiness but it appears that people on this platform think it will. I want to see readers change their perspectives by actually considering how much money you need to be happy.

Distinguish Between Financial Security and Desire

I live in a capital city and am in full-time employment. I am financially stable and, although I can’t jet abroad anytime I want, I can purchase whatever groceries I fancy. I work in a pressurised environment but, fortunately, do not generally suffer from high levels of stress or anxiety. Despite this, my partner and I frequently question if we would be happier with a more laid-back lifestyle. If I moved to a small seaside town and worked in a local shop that did not provide me with substantial amounts of disposable income would my satisfaction in life be any less than it is now?

Personally, I think it depends on the person. My assumption is that I would love it in the short term but quickly realise that I have goals that may not be achievable by living a quiet, sedentary lifestyle. Or perhaps I’m completely wrong and am missing out on what could be a glorious and tranquil existence. Either way, I do not want money to be my key priority in life.

Money dictating happiness is relative to our circumstances. If you live in poverty where access to money will also equate to shelter, food, and good health then of course the more money you have the happier you will likely be. Financial security leads to stability, emotional well-being, and control of our lives. However, when we reach the point of having abundant cash reserves and how much money we need is defined by luxuries such as how many cars we want or how lavish a house needs to be it seems that we are rarely content with the salary we earn. The feeling of appreciating your car because you know it will start every time you need it to is a lot different from appreciating a car because it is an expensive model.

Double The Money ≠ Double The Happiness

My salary is double what it was five years ago but I am not twice as happy as I was then. An increased salary has given me opportunities such as purchasing my own house but having more disposable income now than I had five years ago has not increased my overall happiness substantially. More cash flow means I can impulsively buy designer clothes, the latest electronic devices on offer, and consider a new car. None of these things has made me any happier than I was previously. They may contribute to short-term happiness but can in fact lead to dissatisfaction in life over long periods of time.

Take for example purchasing a new car. You have saved up, and the time comes to pick up your new motor. At first, you are thrilled — you have a brand new car that you can show off to friends and impress strangers. Cut to one year later and you’re paying bills for oil filter changes and new tyres while your neighbour has already upgraded to a new model. True happiness does not come from material items.

Social comparison theory is the idea that individuals determine their own social and personal worth based on how they stack up against others. Stop the comparing. Whether it’s online or off, we need to focus on our own well-being and not allow our impression of others to impact how we value ourselves. We so often see and hear about the highlights in our peers’ lives — never allow inaccurate highlights to set your reference points for happiness.

“Part of us believes the new car is better because it lasts longer. But, in fact, that’s the worst thing about the new car… It will stay around to disappoint you” — Harvard psychologist Daniel Gilbert

Satiation is the act of completely satisfying yourself or a need, especially with food or pleasure. A 2018 study found that “satiation occurs at $95,000 for life evaluation and $60,000 to $75,000 for emotional well-being. However, there is substantial variation across world regions, with satiation occurring later in wealthier regions.” — Jebb, A.T., Tay, L., Diener, E. et al. Happiness, income satiation and turning points around the world (2018). I can appreciate that $60,000 is a lot of money for many people, but the study proves that you do not need to be on a six-figure salary to lead a life filled with happiness.

If you find yourself consistently desiring to have more money, stop and think about the reason why. What difference will this money bring and if you reach your goal will you feel content or will the desire for more continually persist?

The Effect of Spending Money on Experiences

Research shows that one way money can indeed bring happiness is through experiences. A 2015 study by Amit Kumar and Thomas Gilovich found that people talk more about their experiences than their possessions and derive more value from doing so. This could be kayaking across the ocean in Bora Bora but it can also be meeting up with friends in your hometown for the first time since the pandemic started. Yes, maybe Bora Bora would make you happier, but probably not as much as you think. Savour the good times and express gratitude for the memories. As Kumar and Gilovich conclude “vacations last only a week or two, but iPads, sweaters, and vases endure. Materially, that is. Psychologically, it is the reverse. Although our material goods “disappear” through habituation, our experiential purchases live on in the memories we cherish and… in the stories we tell.”

If you struggle with being happy with what you have, then reset your reference points. Think about something basic that once made you happy and remind yourself why it did. Was there a time when you could not afford to go for a meal with friends? Go back and remind yourself of that feeling. Make the habit of re-experiencing and don’t take what you have for granted. Gratitude stops social comparison and kills envy.

Here is what won’t make you happy — consistently obsessing over how much is in your bank account despite being financially stable. If you’re writing articles about money because you know they will increase your stats then so be it. If you’re reading these articles because money is on your mind from the moment you wake up in the morning until the moment you close your eyes at night then maybe you should your priorities. Why focus on money when there could be an alternative that could bring you more joy and is achievable today.

I acknowledge the irony of writing an article about money that tells people to not read articles about money but if it can help to change one person’s perspective then that is good enough for me. Focus on the pursuit of happiness and not on the pursuit of wealth.