The Secret To Perfect Happiness Revealed! Make Over $500,000 A Year

Are you interested in learning about the secret to perfect happiness? The answer is to make over $500,000 a year, a top one percent income. Earning $500,000 is the start of the top 1% income threshold in America.

In an amazing Gallup poll highlighted by the Wall Street Journal, it says that 100% of those who make more than $500,000 are “very happy”! That's right. Not 98%. Not 99%. But a pure 100%.

Wealth And Happiness Chart

This is a breakthrough research finding that has amazingly received little publicity. When you find perfection, it must be revealed!

Surely this study is more earth-shattering than a University of Alabama PhD finding that those who ate more fried chicken had a higher chance of a stroke. More money, more delirious happiness, not more problems, silly Biggy.

Read: Evidence Making Money Has Never Been Easier

Perfect Happiness Will Save The World

The simple solution to eliminating wars and eradicating all levels of sadness is to make over $500,000, a top 1% income.

Folks like Bill Gates, Larry Ellison, Mark Zuckerberg, Michael Bloomberg, Li Ka Shing, The Walmart clan, Ray Dalio, and anybody who just inherited a bunch of money can make a difference in the lives of so many. All they have to do is donate $425,000 a year to median families given the median household income is roughly $75,000 in 2023.

I want to see a tag-team cage match between Princeton economist Angus Deaton and Princeton psychologist Daniel Kahneman who say that $75,000 is the ideal income for maximum happiness vs. Michigan Public Policy professor Betsey Stevenson (currently serving as a Member of the Council Of Economic Advisers) and Michigan economist Justin Wolfers who conclude that $500,000 is the magic number. Don't you?

If what Kahneman says is true, that $75,000 is the ideal income for maximum happiness, then why aren't all Americans truly satisfied with what they have? Ah hah! The Nobel Prize winner was wrong, and admitted so by raising his ideal income figure to $500,000 thirteen years later!

How Do The Researchers Know What Income Provides Max Happiness?

Chances are high that Deaton, Kahneman, Stevenson, and Wolfers have never made much more than $200,000. Take a look at the chart below of income levels for professors and instructors at the highest paid schools.

The best schools must pay academics a competitive wage to retain and attract the brightest minds, otherwise, they'll lose out to research institutes such as Pew, Gallup, the World Bank, Wall St. and so forth. 

Older professors like Deaton and Kahneman might earn more due to consulting gigs, but I can't imagine that much more.

That said, with Stanford professors Bankman-Fried, parents of Sam Bankman-Fried, buying $15 million vacation properties in the Bahamas, perhaps professor do make way more than we realize! But this was in 2022, not in 2010, when Deaton and Kahneman came out with their study.

Source: The American Association Of University Professors (2013)

Given the upper limit is ~$200,000 a year, my immediate question is how these researchers with their fancy PhDs can speak so conclusively about their findings if they've never known what it's like to earn a higher income?

Everything they are doing beyond their income level is just conjecture. That said, good research scientists analyze data, remove biases, and come up with a conclusion.

How Did Deaton And Kahneman Come Up With Their $75,000 Figure

So what did Deaton and Kahneman do to come up with their $75,000 figure? They analyzed Gallup surveys of 450,000 Americans in 2008 and 2009 about their happiness levels.

That's fine, yet here are two other professors from Michigan who've come up with this new finding in a 2013 study analyzing Gallup surveys. In other words, everybody is just coming to different conclusions from a similar source. Here's how these Nobel Prize winners got their estimate so wrong.

I don't have a hundred thousand dollars in funding and a full-time job to come up with such findings like my esteemed colleagues do. But what I do have is the experience at one point of actually earning the full range of income in the relevant polls (less than $10,000 to more than $500,000).

I've also got friends who make over $500,000 who aren't very happy, but stressed out of their minds. One fella made over $10 million the other year and is trying desperately to quit his hedge fund job and teach again.

Personal Perspective On Income And Happiness, Analyzed

level of happiness in America over time

Let me start off by providing my “steady state” happiness level. From 0-10, with 10 being deliriously happy all the time, and 0 being suicidal, I'm about an 8. I hardly ever fight with my loved ones, and if we do, we make up within 30 minutes and laugh it off.

The only times I remember really feeling sad over the past three years was when I lost a tough doubles match, which ended up being the decider in my team's 2-3 loss. I was in a funk for a week. Then my pet of nine years died by my side, and I was thoroughly depressed again. Oh yeah, then my daughter and son rejected my love. That brought me down to a trough of sorrow.

But for the most part, I'm pretty happy. Many people have asked me randomly over the years why I'm smiling, when I have no idea I was smiling in the first place. It's my default predisposition.

I define Gallup's “very happy”  as somewhere between 8-9. The following is a brief chronicle of various stages of income and happiness in my career to provide some personal insight. My happiness figure with regards to money basically will revolve around an 8.

Earning Less Than $10,000 A Year Was Tough

Life kinda sucked financially. I was making $4.25/hour and getting beat up by a power-tripping boss at McDonald's. My back hurt a lot due to moving heavy boxes at my other job. I rode a bike to school because I couldn't afford a car.

When I finally did buy a car, it was a POS Corolla hatchback. The muffler was loud because there was a hole I could not afford to fix. It scared a lot of girls away. At least I was fit and full of hope. Happiness level: 5

Making $30,000 – $50,000 A Year Felt Better

Everything was exciting in Manhattan. It felt like the future had unlimited potential. Unfortunately, my job came at a price. I gained 15 pounds in a matter of six months due to all the work hours (5:30am – 7:30pm+) working in finance.

My allergies were debilitating, I had chronic lower back pain, and I tore my plantar fascia by simply walking around the office one day. That's how stressed I was.

I lived in a studio with my high school buddy for $1,800, maxed out my 401k, and lived like a student for two years. The studio was simply a slightly more luxurious dorm room. Who needs to sleep in luxury when all they're doing is working?

With a first year base salary of $40,000, I had to live pretty frugally given I already had dreams of financial independence

Happiness level: 7.5 because I was so thankful to find a job.

Happiness Level Making $100,000 – $250,000 A Year

Hello wonderful San Francisco! I felt like I escaped prison given how grueling everything was in NYC. The weather is depressing for five months a year given the grey skies. It's sweltering hot and muggy for at least three months of the year as well. Meanwhile, everything is so expensive in NYC. But it was really the complete focus on money, money, money that started to get to me about Manhattan.

San Francisco provided a much more balanced lifestyle. There's wine country an hour north. There's amazing skiing/snowboarding in Lake Tahoe. I was sold on the city when I went snowboarding in two feet of powder on a Saturday and played tennis in 72 degree and sunny weather on a Sunday.

Besides finance, there's a great tech/internet, healthcare, and arts industry as well. San Francisco is the best city in the world to buy real estate.

I shared a crappy 2/1 with a random roommate for $1,600/month in SF ($200 less a month than the studio in Manhattan), but I was making 2-3X more. The place was at the edge of noisy Chinatown, but at least it was close to work.

Lifestyle inflation was kept well at bay as I worked very hard my first several years to prove my worth at my new SF firm. After a couple years in SF, I saved up enough to buy my first property. It felt more meaningful to finally work for something more than just savings. 

Happiness level: 8.5 because I felt I finally found a place where I could live forever.

Happiness Level Making $250,000 – $500,000 A Year

Life is hectic, but good. I got a promotion  and felt like I was on the steepest portion of the career growth curve. Lots of responsibility was handed to me as my Director left to become a client. But the pressure was immense because it was the first time I was fully responsible for a multi-million dollar business.

It was tempting to spend money on fancy clothes, cars, and toys. Instead, I just raised my savings rate from 50% to 75% in my continued quest for financial freedom. I used my savings to buy a single family house at the end of 2004 and moved in early 2005. I finally felt like I had arrived because there were no HOA neighbors who could tell me what to do.

Going to business school part-time was a real ass-kicker. But it felt great to graduate in 2006 and have so much free time on the weekends again (no more 8-10 hours every Saturday). I drove around in a 1997 Honda Civic for a year until I decided to live it up by buying a six year old BMW M3 for $15,000. It was a fantastic car that I drove for two years until it began having transmission problems. Happiness level: 8.2 because I got used to the earnings and savings, but the stress increased.

Happiness Level Making More Than $500,000 A Year

The bull market felt like it could last forever until it came crumbling down in 2008/2009. 2007 bonuses were paid in 2008, and receiving the money always felt like a great big high for about two months. After that, it was back to the pressure cooker of trying to generate more revenue and rank better with institutional clients. It was a never ending cycle that finally halted.

Every day I felt fortunate to have a job during the downturn. Compensation was slashed in half as banks tried to avoid the fate of Lehman Brothers, Washington Mutual, and Bear Sterns by preserving capital. Because I lost 35-40% of my net worth at one point, I did a lot of soul searching. I was scared I'd lose it all due to leverage in real estate, despite having 25% of my net worth allocated in FDIC-insured CDs.

Being in the finance industry during a financial crisis really made me feel absolutely useless. Something had to change so I started Financial Samurai as a way to cope with the financial loss. Helping real people with their financial problems felt very rewarding so I continued on this unlucrative hobby while slowly losing interest in my day job until I finally left in 2012

Happiness level: 7.5 due to financial loss, disinterest in my occupation, and fear of the unknown.

Happiness Level Back to Making $100,000 – $250,000 A Year

Although I'm making several hundred thousand dollars a year less now, I don't miss it. I'm very happy because I'm doing what I love. I used to love working in finance for the first 10 years (1999-2009), but I was getting bored and the financial crisis quickened my disillusionment. Furthermore, I've got so much more freedom now, which is probably the biggest reason for a bump in happiness.

My ideal income for maximum happiness is $200,000 $250,000 because it feels right to pay roughly $55,000 a year in taxes based on the services and redistribution efforts the government provides, as opposed to paying more than $150,000 a year in taxes. Nobody is angry anymore for folks in this income range, even in super liberal San Francisco where two bedroom rentals average $3,700 a month.

The Best Income Is Around $200,000 Per Person

At $200,000 a year per individual, you can still save 30%+ of your income, which for lifelong savers like me is an important thing to do.

You'll never have to worry about where your next meal will come from. You won't worry about the gas station is gouging you for 25 cents more a gallon. Nor will you have to fret about spending $20 on a cab home versus waiting 40 minutes for the bus.

You can combat inflation with the best of them while making $200,000. I truly believe around $200,000 is the most tax-efficient and best income to earn in 2024 and beyond. Most the income faces a 24% or lower marginal federal income tax rate.

2024 Income Tax brackets - year-end financial moves to make

The feeling of making a large sum of money is like getting into a college of your choice, passing a difficult exam, or having someone you've liked forever reciprocate their interest. But that feeling dissipates very quickly, especially if all you're doing is saving it in a bank or investing it in the stock market.

Eventually, you're no longer too worried about starving on the streets. This is the reason why turning funny money into real assets feels so much better. You can actually see and touch your earnings.

Happiness level: 8.9

What Does Real Happiness Mean?

Real happiness is spending time with family and friends. Real happiness is experiencing new and exciting things. My one word definition for happiness is “progress.”

Even if I wasn't making big bucks during my career, the thrill of a promotion with new responsibilities was good enough to make me happy. Going from a win-loss record of 6-4 in tennis to 7-3 the next year makes me happy. Watching Financial Samurai grow bit by bit every month makes me happy.

For researchers to say $75,000 a year is the maximum income level for happiness is absurd, because it doesn't take into account where one lives and many other factors.

The other financial variable to factor in for calculating happiness is net worth. After a certain net worth, there is a sense of financial calm and serenity. You no longer worry as much about money once you have a certain net worth.

Personally, I gain an even greater satisfaction having a higher net worth because it can generate passive income. Active income requires effort, passive income does not.

Inflation Makes Earning More Income Required For Greater Happiness

The $500,000+ income level where everybody is “very happy” also is silly. Nothing is 100%. Although, once you get really rich, you'll gain a lot of benefits, like a 2.2X greater chance of admissions to elite colleges for your kids!

When you are making this level of income, the pressure is generally immense. People may be counting on you to pay their bills. You might be under a constant magnifying glass to perform by superiors. Or you might experience a lot of guilt too. You can't just kick back and earn $500,000+ a year.

Most all of us have been financially poor once, unless we were just born to wealthy parents. Focus on progress instead. Money will eventually come. I truly do not believe we fluctuate more than 1.5 points +/- from our steady state happiness level, no matter how much or how little we make.

How much money do you need to make to always feel "very happy"?

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To Get Rich, Track Your Finances Carefully

The best way to become financially independent and protect yourself is to get a handle on your finances by signing up with Empower. They are a free online platform which aggregates all your financial accounts in one place so you can see where you can optimize.

Before Empower, I had to log into eight different systems to track 25+ difference accounts to manage my finances. Now, I can just log into Empower to see how my stock accounts are doing and how my net worth is progressing. I can also see how much I’m spending every month.

The best tool is their Portfolio Fee Analyzer. In runs your investment portfolio through its software to see what you are paying. I found out I was paying $1,700 a year in portfolio fees I had no idea I was paying!

There is no better financial tool online that has helped me more to achieve financial freedom. It only takes a minute to sign up.

Planning for retirement when paying for private grade school
Are you on the right retirement path?

Invest In Real Estate To Build More Wealth

Real estate is my favorite way to achieving financial freedom because it is a tangible asset that is less volatile, provides utility, and generates income. Stocks are fine, but stock yields are low and stocks are much more volatile. 

The combination of rising rents and rising real estate prices builds tremendous wealth over the long term. Meanwhile, there are more ways to invest in areas of the country where valuations are lower and net rental yields are higher thanks to crowdfunding. 

Take a look at Fundrise, my favorite private real estate platform that invests predominantly in the Sunbelt region. Fundrise invests in residential and industrial commercial real estate in various funds. This way, investors can earn more passive income and diversify their portfolios.

Fundrise has been around since 2012 and manages over $3.5 billion for over 500,000 investors. Financial Samurai is a six-figure investor in a Fundrise fund and Fundrise is a long-time sponsor of Financial Samurai.


Another great private real estate investing platform is Crowdstreet. Crowdstreet offers accredited investors individual deals run by sponsors that have been pre-vetted for strong track records. Many of their deals are in 18-hour cities where there is potentially greater upside. Crowdstreet is a solution where you can build your own select real estate portfolio.

I've personally invested $954,000 in real estate crowdfunding in various funds to take advantage of lower valuations in the heartland of America. My real estate investments account for roughly 50% of my current passive income of ~$230,000. 

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94 thoughts on “The Secret To Perfect Happiness Revealed! Make Over $500,000 A Year”

  1. Dang. So 500k? Does that all have to be in wages and passive income? What about earnings and growth in your portfolio? Sale of real estate?

  2. Wow 100% on that stat is fun to see! And good to strive for. My happiness has definitely risen with more income, more freedoms, and more financial independence. And it helps to look back and reflect on how things have changed in my career, lifestyle, housing situation, opportunities, etc. I am very thankful for all the insightful and enlightening things I’ve learned from your blog over the many years!

  3. 200k is the average across all full professors.
    Economists are very well paid, probably the names you cited earn between 400-600k per year.
    For example, it is publicly know that Acemoglu receives 800k per year from MIT.

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  6. In this case, the question answers the answer. What I mean by that is, the question completely taints the user’s mindset and lends itself to a sliding scale with the highest number at the very top of the happiness ladder. Studies have been done extensively to reveal this as true.

    Think of it this way: When a question focuses on but one variable, you only think of that lone variable when it comes to your happiness. In money’s case, it’s simple: the more you got, the better you ought to feel, right? Nonsense! I bet you another question, say: “what’s your level of happiness when you think of your relationship with your family?,” I bet my bottommost dollar that more than a few of the SAME respondents who claim they make over $500,000 per year won’t say “Very Happy.”

    In his book “Thinking Fast and Slow,” Daniel Kahneman discusses this topic. I believe it’s that book. I read too much so often I can’t remember the source!

    Bottom line is this: your frame of mind is shaped by the question more than you’d care to think…

  7. Happiest year of my life was my first year in the dorms at college. I made $20/week. Of course all my expenses were paid by my dad. Can I still count that?

  8. Interesting article and love your personal touch on the different levels. I think making over $100k would be a good place if you’re frugal and do not accumulate unnecessary things. $250k would mean you’re living pretty comfortable.

  9. I do think that happiness increases with money because financial stress is painful and eats away at you every single day. How much the happiness actually increases once you pass a certain income level…I’m not too sure. I think we all want to believe that if we made x times more, we wouldn’t have x times more expenses and desires, but lifestyle inflation is not always easy to avoid. Having more money also makes one a bigger target for people to try and steal from or overcharge and that can’t feel good. Whatever income we make I think it’s good practice to regularly monitor our personal finances and make sure we’re spending our money wisely and not forgetting to save as well.

  10. Louise @ Good Financial Choices

    Interesting article – loved the title, and I think $500k a year could easily solve (i.e. throw money at) most of my problems that cause unhappiness, but would it make me truly happy?

    I’m happiest now, and I make most now but I don’t think there is a direct link between these – as I’ve previously been happier when I’ve had a reduction in income.

  11. We’ll see man. WE’LL SEE!!!

    Seriously, this is one of your best blog posts. I guess my caveat would be to enjoy the journey as much as possible – on the way to one’s financial destination. Sorry to sound new agey on you all.

    1. Steve, do you have a bit of Jekyll and Hyde in you mate? One minute, my posts suck, next minute “best post ever!”

      Thanks though. Id love for you to write a post one day. You have a lot of aggressive opinions!

  12. Hmmmm…. So there happened to be one person in their polling sample with an income above $500,000. And it just so happens, they were happy!

  13. Money can’t buy anyone happiness. It is a tool that buys you peace of mind, security and allows you to do things that make you happy but it won’t buy happiness. Having said that I’ve been dirt poor and have had years just a little shy of the “magic” number and it is more fun having money.

    My wife and I have spent the last few years at or above $500k and we are not happy 100% of the time ( I’d say 8 on avg?) Like a few previous posters have said, our incomes come from very stressful corporate jobs. I was part of a small group that founded what has now turned into a $500 million company and as exciting and fun as my job is, there is a lot of pressure & responsibilities that comes with it. One of the biggest drawbacks to a higher happiness number is the pull between family and work for both of us.

    I think as I read here previously if you have good relationships with family and friends and enough money to peruse things you enjoy, your happy factor is going to be quite high regardless of income as long as your income covers basic needs.
    Just my perspective.

  14. I’m fascinated by all these 500K+ earners in your commenters, Sam. They don’t seem that ecstatic to me. Like Krants says, and you’ve experienced, the level of expectation is very high and at some point the money becomes not worth it, hence the happiness level deteriorates. I think true happiness is actually being healthy and having the ones you love around and healthy and good relationships with them. When any of those factors are compromised or you start losing them, the top happiness factor diminishes a bit. Although you can still be mostly happy, because you then know the relative importance of money versus relationships versus spirituality.

  15. Another Reader

    Sam, I think you nailed the sweet spot of $200k income for an individual. Not sure if you are referring to gross income, AGI, or taxable income, though. I know I don’t like the consequences of going above $200k in AGI or taxable income and being pecked to death by the foolish chickens in Washington and Sacramento. I like to be able to write off as much real estate expense as I can and I don’t have earned income, so I avoid a lot of the tax traps.

    I don’t have a problem paying for government, but I do object to pouring money down the rat hole that is the government we have today. $50,000 a year in income tax on top of all the property and sales tax I pay? Not if I can help it. Staying in the sweet spot keeps my taxes reasonable.

    1. Yes sir. Based on my tax and public policy research, having an AGI of around $200,000 is the perfect number due to many arbitrary tax penalties that occur at levels higher.

      At $200k or less, you can protest with the masses, not feel like you’re constantly being attacked by everybody, and get some wealth distribution by richer people.

      Even better is to have a $5 million net worth max to avoid a 50% death tax on monies ovet and a $200k passive income

      Latest for 2017: Passive Income Update 2017 – Finally Made It!

  16. I’m currently at a 7/10. This is with a decent income but not even close to $75k.

    For me, happiness IS about opportunity and progression like you said. I think I will be far happier when I move to a city where I have opportunities to progress.

    I really can’t imagine anyone seriously paid for this research to be done. It’s so personal, subjective, and location based that it is meaningless.

  17. Wow, that survey result shocks me. Not because I don’t think the $500k itself can’t bring you happiness, but I can’t possibly understand how you cannot be incredibly stressed out earning that sort of money. Although if a majority of that income was passive income, then yeah – I’d totally agree with the results!

    From my current position (earning less than a third of that benchmark), I can’t see how I’m going to be much happier following my current career path to earn more money, primarily due to the additional stress and pressure. If I was earning the same, but had slightly less pressure, worked slightly less, a little more time for family, creative pursuits, and a couple of golf games during the week, then I’d be pretty close to a 10 :)

    1. $500K passive income would be amazing! You’d need about $12-$20 million to make that kind of money.

      10s are unicorns! But I think we all have brief moments of 10s in the past.

  18. I think it’s not that how much you make, it’s how much you save and have. If you make 500k and spend 490k, you will be stressed out.

  19. The Alchemist

    Maslow’s Hierarchy of Needs, baby. Move up the pyramid. Once you’ve achieved everything on the pyramid, how much more do you need? I think most reasonably intelligent humans understand that money is just one facet of happiness; you need a certain amount to cover your true NEEDS in life; once you have that much, the rest of what one needs to be happy is stuff that money cannot buy.

    I actually think that a lot of folks with excessive amounts of money are more unhappy because, with all the world at their disposal, they’re in a position of saying to themselves, “Wait— this is IT? I have all the money in the world, I can have anything I want…. so what’s left to strive for?” Of course, the smarter ones realize the principle about stuff that money can’t buy being the source of true happiness, yadda yadda, so they’re probably ok.

    Personally, I’m Security Gal; I definitely believe that you’ve gotta have enough to cover your needs and have solid financial security as a starting place for happiness. I find the prospect of financial insecurity hugely stressful. Many other people don’t seem to have that limitation, however; there are a lot of folks who are poor but happy.

    If I had, say, $5million in the bank and could quit my job and begin pursuing a life that felt more “authentic” to me, would I automatically be happier? Possibly, but I’d need to take advantage of the opportunity that freedom afforded me to line up all the other elements of happiness. To me the key elements of happiness are financial security, meaningful relationships, physical health, purpose in living, and mastery of something challenging and worthwhile. Financial security provides the base upon which to build everything else, because it provides the freedom and time to pursue those other elements.

    1. “If I had, say, $5million in the bank and could quit my job and begin pursuing a life that felt more “authentic” to me, would I automatically be happier? ”

      Answer: 100% absolutely. It is at least 1 point higher on your happiness scale.

      The point of contention is how can 100% of people making over $500K say they are “very happy” and not be contested unless they’ve got some type of incentive to say so, or some threat against not answering so.

  20. Although $500k a year would make me happy, I don’t think the additional responsibility would be worth it. I am happy with considerably less! It helps that I have a really big nest egg to satisfy all my wants. The additional money would probably just go to the tax man and possessions that I do not really need such as a more expensive car, home etc. For me, happiness comes from doing something worthwhile with my life. I may even do it for free after I retire!

  21. It’s unfortunate the study didn’t further break down the $500,000+ category because I bet it would show 150% of the folks making $10mm+ are happy.

  22. I don’t think making over 500K is the end all to happiness, I think every situation differs with debt, where you live, how hard you are working for your salary, if it is passive income, etc. I’m not sure what my number is but it’s not 500K.

  23. Where I live, anything above $150,000 is enough to live a full life and save enough to feel “secure”. Above that, I believe there is declining marginal utility and you have to weigh heavily the costs. Personal example, giving up a little in salary in exchange for living in the mountains and being able to ski or bike every weekend (and summer evenings) – best decision ever! That said, if I had a $500,000 income, but with the same amount of stress and work commitments that I have now, of course I’d be happier! Who wouldn’t?

  24. I’m perplexed by all these articles lately about happiness. I agree that happiness is important and a very pleasant feeling, like joy and gratitude. However, what is happiness really and isn’t it different for every person? I’m most happy when I’m having fun, playing tennis, traveling, hanging out with family and friends and playing and writing music. To the extent that money can help me do those things, awesome. .otherwise what’s the point?

    I’m a strong believer that when you choose happiness, money will come. And if it doesn’t, who cares . .you’re happy!

    1. I like that last line! I have a loved one who is a little manic depressive. I want to sincerely tell her that I hope she finds happiness, but I’m afraid she’ll get very mad.

  25. I think these studies are such a waste of time. They provide no real benefit by grouping a diverse population into a view that only considers one variable. If income is the only thing people get happiness from than they are shallow and will probably be miserable regardless. I also think it’s kind of like the bully in high school who picks on other kids to boost his own self worth. Income is simply the adult version.

    I know people who are happy and depressed at all wages. Yes, life may be easier with a higher income but studies also show the higher your income the more likely you will be a bad parent. We can skew any study to show what we want to show, but in reality most things follow an inverted U-shaped graph. At a certain point too much of something good becomes burdensome. Does every $1000 more I make bring me the same amount of happiness as the previous? I doubt it. Give your pizza delivery guy a $1000 tip and then give your financial advisor the same bonus. Who is more appreciative? (I’m kidding about giving your FA a bonus, he is already probably robbing you blind).

    1. I wonder why such studies are funded and conducted if it’s such a waste of time. This is part of the reason why I’m optimistic that many people can make good money doing a lot of random things in America.

  26. The First Million is the Hardest

    Shocker, but I think it all depends on your lifestyle. When I was 16, making $7/hr stocking grocery store shelves I was amazingly happy because I had enough money to go out and do all the things I ever wanted to do at that age. I’ve also been completely miserable making $45k/yr because I felt stuck in my position and knew I could be doing and earning a whole lot more. So I think the actual salary is only a cog in the happiness equation. That said, if any researchers want to start paying me $500k/yr to study how my happiness level changes…consider me a willing lab rat.

  27. Thomas @ i need money ASAP!

    Geez, if $500k is required to be 100% happy then I guess I’ll have to resign to bouts of sadness. I think these polls are silly. When I started working I made $25k and was just happy to have a job. Now I make more than double this but I’m not significantly happier. You always adapt to your income level and happiness is really based on the constants like family, friends, self worth, motivation, outlook etc. These things don’t change much with income.

  28. If I had all my needs met (i.e. fully owned home, paid for car, no other debt), it really doesn’t take a ton for me to live and have some leisure budget.

    I see many executives around me who probably make over $500k all in (base, bonus, stock, deferred whatever, etc), but I also believe they are generally happy. At that point, you should probably be financially well off enough to choose a job/company/role that excites you or challenges you in a way that you enjoy. Of course, some of these people may be income rich and asset poor, so you never really know.

    Personally, if I can have the basics met (owned home and car), then assuming I’m not yet drawing on retirement accounts, I could probably be very happy (with a spouse) in the 75-100k range. Most needs are met and I could afford a nice life in a mid-size city (Dallas/Atlanta/Charlotte). Perhaps a bit more if I lived in a more expensive metro (DC metro/SF/LA) in the range of 100-125.

    After that, I’m sure the level of luxury may increase, but I doubt my happiness would… at least in the sense that I could do things that make me happier (not just pricier excursions).

    Needs and wants are ever-changing though. When I was just about to graduate, I thought I could never be happy unless I had a 40k car in the next 5 years and was able to start living it up. Today, I still drive the same Acura I bought 5 years ago as I realize very keenly how much money cars really drain and don’t think a more expensive car would really make me HAPPIER… beyond the first year or so of having a sweet ride, plus the whole babe magnet thing. :)

  29. My wife and I are engineers and together bring in about $200k and live in OK. We have two kids and one on the way. While the family life has put a damper on my hobbies and social life, I’m still the happiest I’ve ever been and while it would be nice to get a big pay boost, I’ve decided that I’m not willing to put in more hours or increase my work stress substantially to get it.

    Sometimes I think about how much I enjoyed working at a pizza joint more than any job I’ve had since. But I have to remind myself that I was a single teenager with no concerns greater than finding friends to hang out with after I closed the kitchen on Saturday night and doing that at 42 just wouldn’t be the same:)

    If you’re ever poor again, a few big hose clamps and aluminum from a cut up Coke can will seal that muffler hole for about a year. That got me through college.

    1. Thanks for the muffler tip Paul. I think I’ll just ride a bike or a bus next time, cuz it was too embarrassing driving that crappy car. This way, I can say I’m all about “going green”! :)

  30. In my view, it’s impossible to gauge other people’s happiness level and correlate it to income level after their basic economic needs are met. People’s thought process and brains are wired differently and their environment, life experiences will shape an individual differently. Someone whose natural disposition is cheerful, carefree & easygoing will be happy at $75k and probably happier $200k and probably more happy at $500k. However the converse of that type of person who is mostly a miser and a cynic will feel empty, depressed, hateful, or cynical regardless of their income level. Many wealthy people from all walks of life take their own lives, abuse anti depressants or other drugs to numb themselves, see therapists, or purposely do other self destructive things.

  31. I think age & maturity matters too – like if I had earnt more than 150K in my twenties vs 40s, I would have partied like a rockstar, so much money and no responsibility. But if I were to earn the same 150K in 40s then family and responsibility comes in and it makes no difference if it is 150 or 250K – there will always be an emergency and money is never enough! Also in my 20s my needs would differ greatly from 30s or 40s. So my perception of money and happiness differs. I am a single mother of 2 kids, no spousal support and bust my butt going to work and keeping my family life stable – scale of happiness 9! I don’t even earn 150K for that….let alone 500K. Having money helps but at one point empytiness creeps in and your scale can go down as fast as it takes to do a blood pressure reading!

    1. That is awesome. Good job g!

      Emptiness… I know what you are talking about wrt money. At a different point in everybody’s lives, it doesn’t matter how much money you have or make, emptiness eventually creeps in.

  32. SavvyFinancialLatina

    It has to do with the personality and how financially stable you are. Making $500K a year and having no savings is stressful. I’m more of earning more, saving more. I hope the progress we’re making in our 20s will pay off when we are in our 30s.

  33. Romeo Jeremiah

    I’d argue that happiness is not a static state. It’s an emotion which has to be linked to an event. In this case, I suppose that the event is “happy…with your financial situation” not “happy…with life all the time.”

    If you lose your legs in a car accident tomorrow you’ll likely be pretty damn depressed that you can no longer play tennis, despite your income and FI status. Yet, you’ll likely come out of the slump and be happy that you’re still alive and are able to continue blogging and enjoying your family.

      1. Romeo Jeremiah

        Sorry. My point is that happy is relative to each individual’s experiences, culture, environment, and desires; and can only be linked to an event. Of course you already understand this because you’ve experience beyond your cultural “box.”

        If these studies are taken at face-value, one would start believing that the majority of the world is unhappy just because they don’t earn more than $75,000.

        1. Well, they do have PhDs and all studied at the best Universities. So….. does this mean perhaps their education isn’t as good as perceived, and the money spent funding them could be better used to help people?

          1. Romeo Jeremiah

            haha. Correlation does not imply causation. I’m sure someone values this study. I hope it’s the people that funded it.

  34. Sam,
    I think once you have a big enough nest-egg then you’d stress less about money and therefore have more mental capacity to enjoy and appreciate life more. That being said, if you’re not goal-oriented and focused on reaching that big-goal, then you could enjoy life right now without stressing (I am not one of these people). I want to reach that “goal” asap and in the process I end up missing the beauty that is the journey. My 2-cents. Thanks for the post, love reading your blog. V

    1. True. I guess each person’s nest-egg is different. In SF, you might need at least $2 million to generate $60,000 a year in income, or $5 million + for $150,000 in income to support a family.

      The journey truly is the most amazing time period.

    2. mysticaltyger

      To your first point, I agree. The nest egg thing matters a lot. I don’t have a great income, but my total liquid net worth is now approaching 7X my gross income. That’s not “early retirement” money…but it is “I have room to maneuver if I lose my job, or they jack up my rent 10%, etc.” money.

      To your second point, I would say the happy-go-lucky, live payday to payday (or close to it) non-goal oriented types will most likely end up paying a very high price down the line. I see this with an older friend of mine. Blithely assumed he’d have good paying employment until 65 or older. Lost good paying employment at age 49 and has struggled with low paying and/or unstable employment in the ensuing decade since then. Not a pretty picture and definitely something I want to avoid like the plague if at all possible.

  35. Stefanie @ The Broke and Beautiful Life

    Haha, sure, I’ll just make 500k a year, that’s easy ;) What happened to 70k? I thought that was the magic number for happiness?

    So far to go….

  36. I think the more money you make the happier you will be. There was another study that showed millionaires were by far the happiest people in the study. I need to find the article, but it shows a huge difference in the way polls were taken to account for the study that showed $75,000 was the happiest level. In that poll the questions were asked in a way that didn’t really show true happiness but hypothetical. I also think that study was pretty old and needs to be adjusted for inflation.

    My thoughts on your happiness is it is related to the set up of your life and not the money you are making. Most people making over a million a year run their own business and are able to have a similar life to you without working constantly. The people you now that make over $500k sound like they are corporate workers and under a ton of stress. If they were making that much money with their own business they would be much happier. I don’t think it is the money that is causing the stress but the job or work environment. In my field (real estate) I know quite a few making over $500k and they are quite happy. Deliriously happy in fact, but they have teams that do most the work. They aren’t stressed.

    1. There’s definitely a different/higher level of satisfaction running your own business, as it’s yours and whatever you do feels amazing for the good of your own livelihood. Making $500K making another corporation money is still fine, but it doesn’t feel as good as making it for yourself.

      That said, it’s pretty damn stressful running your own business as well. Never know what the next revenue figure will be.

  37. I think that while income does affect happiness, it seems implausible that the relationship is 100% as the researchers attest. It does make sense to me that having a higher income allows one to have more options and less stress. Grueling poverty is stressful and reduces ones’ options. A higher level of income allows for reduced angst as the bills can easily be paid, travel and hobbies are available etc. so long as one still lives within their income limits. If one is determined to save and is frugal, having a higher income would allow for financial independence at a younger age which could be a happiness producer.

    That said however, research has shown that people seem to have a happiness set-point, so whether they win the lottery or are paralyzed in an accident, within a few years they return to their previous levels of happiness.

    So no, I don’t think that making $500,000/year will automatically make us happy. It’s doubtless easier to be happy at that salary than $15,000 but it’s way more complex. Having loving relationships with family and friends, good health, engaging activities and a reason for getting up in the morning are all needed for happiness.

    1. I do wonder why there is not more scrutiny on the 100% happiness level the researchers from Michigan have found. Or maybe it’s because it’s so ludicrous that it’s being ignored? That said, Stevenson was asked to join the Council for Economic Advisers by the White House… so what does this mean for our country?

      There has to be something to the report that I’m missing. I hope someone can explain.

  38. I know plenty of $500K+ earners who are miserable. Victims of overwork, stress, divorce, etc…. One colleague just got done writing his ex-wife a 7-figure check to buy his way out of 20 years of spousal support. Now he’s back near $0 NW, and he’s not happy at all.

    Anecdotes of course, but it doesn’t take very many anecdotes to make that 100% number look like baloney. A large paycheck doesn’t magically make other life stresses (trouble with spouse, trouble with kids, trouble with parents, trouble with drugs) go away, in fact in many cases it exacerbates them.

    So I’m not buying that number. I’d say that my spouse and I are happy, and we’re in the $500K+ club, but we’re no more happy than we were a few years back. I’d Around $200K was the point where money ceased to be something that worried us. But it’s still effort to avoid letting life’s other stressors get you down.

      1. Typically, I believe it’s split 50/50! However, if the woman made a lot less the man could be forced to pay alimony. Sounds like he paid the 50% and the alimony upfront to not have to alimony in the future! Alimony is a load of crap!

        1. Alimony is an antiquated concept. When it was instituted women did not work at all, and being an unmarried women was stigmatized. Therefore she needed some income to survive the year or two until she remarried and alimony would stop being paid. Now people can cohabitate and face little stigmatization so a women receiving alimony has incentive not to remarry when she otherwise would.

  39. My wife and I for the past 7 yrs we have made $500k plus combined income and have started a family with our 2nd child just born 2 weeks ago. My wife in sales and highly stressful position makes $300k to $700k a yr is thinking of giving it up to be a stay at home Mom. I make $125k a yr much less than her. We live in OH and never changed our standard of living. I believe my wife and I who are happy probably a 7.5 but will be happier probably 8.5 when we finally stop the 1 more year syndrome and she walks away this next year. Large savings helps make that decision easier. Also knowing what is important to us.

    1. I completely understand the one more year syndrome. I struggled with it for about 3 years until I finally had enough. Check out this post:

      $500k is huge in OH! That’s like $1.5 million in SF. Good job keeping lifestyle inflation at bay. I’m sure you guys can live a comfortable lifestyle making your $125k a year alone there. Have you guys been saving aggressively for the past 7 years?

  40. Prior to marriage and kids, I was saving quite a bit and spending much less. From a financial standpoint, I was very happy as I had plenty of money and never worried about it. Of course, personally, I knew something was missing and that I wanted a family, so I was less happy on that front.

    Now that I am married with kids, I am saving less and spending more. So from a financial standpoint, I am much less happy than before. However, from a personal standpoint, I am much happier as wife and kids bring a different kind of happiness.

    I am hoping to get to a point where I am fully happy on both fronts. Though I think for many of us, you are never fully happy with respect to your finances.

    So to answer your questions, during your single years I think it takes a lot less to fully make you happy. And I suspect in retirement it will take less. But during the early family years, it takes more. Plus there is simply the added stress of needing to be a provider for a whole family as opposed to just one person. I think this added stress is good for you and is something man has faced for all time. But it is definitely an added stress.

    If I could give my single self some advice, it would be to save much much more. I thought I was saving a lot, but I could have saved more and wish I had. I think any newly graduated college student should strive to save at least 50% of their income (adjusted if you have college loans to payoff – though paying down debt is a form of savings). If I had started that when I was 21 and kept it up through marriage, I think I would be much less stressed right now about finances.

    That is where I think your blog and others are so helpful. Years ago you couldn’t find this specific advice so easily. Yes you heard live below your means and save, but you really didn’t hear about aggressive savers like you, MMM, and others. I think these blogs would have resonated with me in my younger days and motivated me to do more. At least I like to think that.

    1. Thanks for your perspective. Fantastic!

      The stress to provide for a family must be immense, and something not enough people talk about, especially since so far, that responsibility has been shouldered by majority men.

      I think you have the exact goals most Americans have: happiness in finances and happiness in finances. Best of luck to you!

    2. mysticaltyger

      Yes, I absolutely agree with that last comment. I wish I was 10-15 years younger, because while I’ve always been frugal, I definitely would have ramped it up more in my 20s even more if MMM, ERE, & Sam had blogs back then. MMMs post on “The Shockingly Simple Math Behind Early Retirement”….Oh, how how I’d give anything to have seen a chart showing the relationship between savings rate and how many years to took to reach financial independence back when I was 25!!!!

  41. Clearly not true. My wife and I make well more than $500,000 and up until recently, I was miserable. Income certainly affects happiness, but it is probably not the biggest factor.

    1) If you spend more than you make, you’ll be miserable at every level of income.

    2) If you don’t like what you do, you’ll be unhappy at any income.

    3) If you don’t have good relationships with family, friends, etc., you are not likely to be happy unless you are a sociopath.

    My happiness level improved significantly when we cut our spending to the point that we only live off of one of our salaries. The other salary (after our huge tax bill) goes into the nest egg. No worries now. I go to bed at night knowing that we don’t need to work like dogs forever to maintain our lifestyle. In the next few years we will achieve true financial independence. We don’t need to work any harder than we are right now, just stay on track.

    That’s happiness and we could be just as happy on half the income.

    1. Good stuff Phil. Sounds like money actually got in the way of your happiness? Seems like you guys have a good system going now. Tough to pay that big tax bill to the government, but I thank you for the support!

      What is that you two do for a living? Thx

  42. Very interesting research. I think you’re right that there’s a threshold of earnings one needs in order to live happily. I think this is particularly true in relation to having base needs met–I consider lower-order needs a requirement for rudimentary happiness (food, shelter, safety). When I too was making $10k/year in NYC (what is it about that city?!?), I was sort of happy but incredibly stressed. It was difficult to simply exist and get through a day.

    In that sense, more money certainly has made me happier. But, like you, I don’t calibrate my happiness to my wealth. I suppose my approach is convoluted because I arrive at happiness by not needing to worry about how much money I have. I am happy, though, knowing that our combined incomes enable my husband and I to save 80% and thus retire earlier (and continue to not think about money). This was a thought-provoking post–thank you!

  43. 100%…really… how dumb do you have to be to actually publish that 100% of people are happy over $500k/yr! So currently I’d rate my happiness pretty darn high, say an 8.5 or so…I’d fall in line with the WSJ findings as I’m one of those higher income earners. I would say though that if I look back at my career/life and rate the happiness vs. earnings, I was probably at the peak of happiness when I made maybe $130k/year busting my butt when I left a big company to go to a small company…the fear of the unknown and the desire/drive to prove yourself is a great time in one’s life. It also helped with me and all my friends being in their late 20’s (without wives and kids) traveling, having fun, not enough time in the day to actually get stuff done…

    The low water mark of my happiness scale actually coincided when I started to make the really big bucks. The first time you get a bonus/distribution and the taxes alone you pay on it is larger than what Obama considers to be rich is a great day, but it also comes with a ton of pressure. Rinse and repeat a few years and you can definitely lose sight on what truly makes you happy. Figuring out that balance is the real key, you cannot buy more time with all of those dollars.

    1. Dumb enough to have a PhD and be invited to join the Council for Economic Advisers!

      Surely none of us could reach such lofty levels. So it makes me wonder: perhaps money and time could be better well spent.

      1. Too funny…and that’s really all you need to know about what it takes and how selective it is to get a phd these days.

  44. Lance @ Healthy Wealthy Income

    I have never made that much so it is hard to say. However I live in a part of the country where your mortgage is 1,000 a month on a large home so you don’t have to earn as much to have what others have to work much harder for. A lot of times we focus on the money for happiness, but if you can find happiness at 40-50,000 a year then you are set for life once your income and wealth increases. You have already mastered happiness despite any income level. I am happier to have full control and autonomy at my work and an extremely flexible schedule. I value that more than my salary.

    I have met plenty of miserable multi-millionaires so of course the study is flawed, but it does leave everyone else thinking if only I made more money and had more stuff I would be happy which is the wrong thought process that has driven so many in to incur a lifetime of debilitating debt. Great read and topic.

      1. I would say most Americans can make much more than $50k. We have all the time, resources, and support in the world to do as much as we want in a country booming in opportunities right now.

  45. Jay @

    Haha that’s really funny that professors don’t make enough. But that is simply their school salary. Their grant work adds a substantial amount to their income. (Source: My brother in law is an associate chair of a department at a large university)

    I really hate these studies in general since the value of a dollar varies so much. I’ll pay $10 for a drink in NYC but never in Omaha!

    1. Cause the drink tastes better in NYC!

      I do wonder how much more professors make as consultants during the summer or throughout the year.

      Stevenson went to serve the President. Unlikely she is making more than $200k.

      1. Jay @

        As a department chair, my brother in law doesn’t teach but one or two classes a semester now and is largely focused on research. He easily brings in another 50% of his salary as grant income (poorly worded, take the salary * 1.5).

        I agree with your assessment of Stevenson but you have to think of how much money she made as a reputable professor. Granted it’s not banking money, it’s still very good money.

  46. Very interesting! It sounds like you might be generally an optimistic person, though, given your positive levels of happiness even at the lower income levels. Plenty of people would be a 3 on the happiness scale when making under 10K, if they feel they cannot meet their basic needs or they choose to focus on the negative. And I know many who are making around 50K but feel like they should be getting compensated more based on their skills and what is expected of them at the job.

    I guess that’s where the fuzzy logic of emotion and perspective comes in. As you pointed out, if someone’s 10M/year doesn’t allow them to spend their time in the ways they love, they won’t be happy. If someone makes 200K and their peers/colleagues are all at 400K, they’ll likely feel it’s not enough. Having a 20K/year job that you’ve chosen is very different than having a 20K/year job that you’re stuck in and feel like there’s no possibility for advancement.

    Thanks for the post!

    1. Hi Shanya,

      Thanks for sharing. I really think we hover closely to our steady state happiness level no matter how much we make.

      Being stuck is the worst. Having a choice really does make a big difference.


  47. As you spoke of in the last section, real happiness encompasses so much more than money. For me I am finding my enjoyment in experiencing new things and conquering new challenges which makes me excited to wake up every day. I do love having enough as it makes my life easier but besides having enough which is something each person needs to define for ourselves and not use some abstract study, I find money plays less and less of a role in my decision making.

    Your last paragraph is very accurate and I can attest to that personally ‘focus on progress and the money will eventually come’.

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