What is the turning point for financial happiness?
Studies from the Proceedings of the National Academy of Sciences have indicated that number is $75,000 or $80,000. A different study in 2021 put the price at $105,000. In 2022, Americans now say $122,000 is ideal.
Generally speaking, there is no specific salary or income level that will make everyone feel financially healthy and happy.
Let’s take a closer look at how you can align your worth and what you can do when you find yourself feeling no further ahead than when you were earning less money.
Are Financial Benchmarks Relevant to Happiness?
Financial benchmarks, assigned to high and low numbers alike, are largely irrelevant.
Dawn Dahlby, a private wealth advisor, said that, over the last two decades of her career, she has been around people of all income levels and has found that happiness and unhappiness may reside at any wealth level.
“While I do believe having household incomes at or above $85,000 a year is essential to living comfortably, it doesn’t dictate whether or not someone is happy,” Dahlby said. “True happiness and satisfaction with your personal and financial worth is built from within. No magic number will do that for you.”
How To Align Your Worth for Happiness
Rather than rely on a magic number or any dollar amount alone, Dahlby said building wealth and worth will provide with happiness. How can you do this?
Dahlby said she advises her clients to align their worth with the right type of income. When a person earns income that is in alignment with their worth, they find contentment in their professional lives.
Further, opportunities to grow your self-worth don’t happen strictly during traditional work hours. Self-worth extends beyond financial worth. There is even a formula you can use for better alignment: personal growth plus financial growth equals happiness.
“Insecure people, at any wealth level, live unhappy lives,” Dahlby said. “Building internal security gives us more energy to grow our financial security and live more fulfilled lives. The intersection of combining personal internal security with external financial security is the true path to happiness.”
What Can You Do To Feel Further Ahead When Making Less?
In a time of economic inflation and rising cost-of-living expenses, most people may feel it’s a struggle to get ahead financially.
Kendall Clayborne, CFP at SoFi, said more money can make life easier up to a point, adding flexibility to your budget, but sometimes people find that as income increases so do expenses. Here’s what you can do to avoid feeling as though you are falling behind financially.
Manage Lifestyle Creep
Lifestyle creep, sometimes referred to as lifestyle inflation, is when you start to spend more as you earn more.
“As you progress through your career and begin to get raises and earn additional income,” Clayborne said, “it can be tempting to purchase a bigger home or more expensive car even if you don’t need more space or a new car. Recognizing and mitigating lifestyle creep in your own life can lead to better budgeting and decisions.”
Avoid Buyer’s Remorse
An impulse buy, especially on something that you don’t necessarily need or that is expensive or excessive, may make you happy for a short period of time, only to lead to long-term regret.
Don’t give in. Clayborne recommends practicing a waiting period for any nonessential purchases to avoid buyer’s remorse. Wait a day or two for smaller purchases. If you’re contemplating bigger purchases, consider 30 days for the waiting period to better reflect and determine whether you need to make the purchase.
Things vs. Experiences
Is true happiness, from where you stand, about purchasing things or is it about spending money on experiences? Clayborne said to consider what you are spending on and what makes you happy. If you aren’t certain, you may reflect back to childhood memories.
“The things that still bring me happiness to this day are the experiences, not the things,” she said. “The memories from a trip to the local amusement park with my parents lasted far longer than any toy I received. The same applies now as an adult.”
Continue Saving and Investing for the Future
You may not know what the future will bring, but you can at least be financially prepared for it. Clayborne recommends putting the temporary satisfaction of an impulse buy toward a saving or investment account.
Just as memories of childhood experiences bring happiness today, you can give the future version of yourself the best in living comfort by putting money toward bigger goals such as retirement. As you watch your savings and investment accounts grow throughout your lifetime, you will experience great satisfaction, and true happiness, as a result.
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