PSYCHOLOGY: How Much Money Is Enough To Be Happy?

I am sure you have asked yourself a version of this question: "What's the minimum amount of money to be happy?"

That's exactly what I asked myself about a year ago.

At the time, I was in deep debt, and my life was miserable.

So my minimum amount to be happy was $0.00.

Yup, nothing.

I just wanted to break even, to pay off all my credit cards and get my rent in on time each month. That, to me, was the DEFINITION of happiness.

And then I started making money.

I won't bore you with the gritty details, but being a personal finance blogger who actually knows how to write and isn't a total dumbass -- that's marketable.

I started making good money online. I'm in my twenties, so I write about topics like credit cards and student loans in a way that young readers can relate to... because I'm in the same boat as you.

Within a few months, I witnessed a miracle.

I paid off the last of my credit cards... yes, paid off, in full. I thought I would always be in debt.

Seeing that "$0 due" on all of my accounts was a thrill. "It was better than sex," as Gordon Gekko would say.

But let's get back to the original question: how much money is enough to be happy?

I'll use another Gordon Gekko quote (if you haven't seen Wall Street with Michael Douglas as finance badass Gordon Gekko, you should Netflix it immediately. Many great life lessons in there. Between that and The Godfather, you will understand 95% of life.) 

"It's not a question of enough, pal. It's a zero sum game, somebody wins, somebody loses. Money itself isn't lost or made, it's simply transferred from one perception to another." -Gordon Gekko

You see, once you become debt free, your definition of success or happiness is no longer $0. It becomes much higher, maybe $50,000 or $100,000 in a liquid, safe bank account.

And once you hit that milestone, as you inevitably will if you work hard enough in a field you understand, you find yourself surrounded with people who have more...

Last week I was getting drinks with a friend -- a young analyst at a Wall Street investment bank -- and he was telling me without any sarcasm whatsoever that he didn't see how anyone could live in this city on less than $2 million per year. He felt sorry for me!

Everyone's "happiness amount" is different. For one of the 1,000,000,000 (yes, a billion) people on Earth in December 2009 who is currently starving or malnourished, the happiness amount may be $3 so he can feed himself for the next week. It may be $10, so he can feed his family as well.

To a successful American investor, though, $10 means nothing. Maybe $10,000,000 is his "screw the world" minimum amount, where he can buy a nice house in Cali, or travel the world, and not feel the nagging pit in the stomach that most of us experience when it comes to money.

The point I'm making here?

There is no set amount. I have read elsewhere that in most cases, in America, most of us would be happy if we made DOUBLE what we currently make.

For me, that sounds about right. I make X right now every month, and I'm certainly thankful for that prosperity -- it's good to have a day job I love, and a hobby that pays well. But am I happy? Not really. Content? Sure.

If you were to double my monthly income tomorrow, though, I would be positively ecstatic. That would free up a lot more money for new projects, it would allow me to take the vacation I have been planning a couple months earlier than otherwise, and it would just generally give me a big boost.

So this rule of thumb probably applies to you as well: happiness can be found when you double your current income. And then, after a couple weeks, you get used to that new standard of living... and you won't be happy until it is doubled again. Lol... have to love that.

(And yes, I'm a full-grown man who still uses lol.)

I think it's natural, just a part of our human competitive drive, to always want MORE. More from our experiences. More from our relationships. And more from our cash. 

You can balance that never-ending urge for greater wealth with gratitude for all of the money, good friends, and fantastic health you already have. That's likely a healthy move.

But at the end of the day, I'm all about showing you new ways to make money, whether it be a new online savings account, a hot credit card most people don't know about, or just an easier strategy to stash away 10% of your income each month. That's what I write about here at Credit Card Outlaw. Every day. And I never compromise. I'm well on my way to having $1,000,000 by the time I am 29.

Explore the site, by all means. Come in and relax -- but first, let me know in the comments section below what your own minimum amount of money to be happy is.

Come on, what's your number? Everyone has one.

UPDATE  12/26/09: Back from vacation, and I just got around to posting something about the self-made millionaires I've interviewed lately -- fascinating stuff. Check it out here: 3 things millionaires have in common. More soon, promise, I'm exhausted right now though.

Why do I run this site? (Background for new readers.) I have close to 10,000 loyal readers per day, but I am crazy growth oriented... maybe blame it on reading way too many self-help books when I was younger, or a near death experience in 2006. I always aim to improve the site, and my life, every single day I am alive.

Thank you for joining the fun, and welcome,

Outlaw

Photo Credit: amagill / Flickr

Comments

[Katie Destanza]

if I had my student loans totally done with, I would say $100,000. That's enough to travel Europe for 5 years with my fiance and start a new life.

Good luck with your blog, I love your attitude on life.

[stormtr]

$2.5 million. Would be enough to live off the interest each year without touching principle, assuming I had it in a good index fund or no load mutual.

[asdfsa]

There's more to life that money dude get off your fat ass and help other people

[Kasson]

I would say double is a good level that people strive for. Although I disagree with the necessity that your need to be happy will keep doubling.
Someone I know has doubled their earnings in the past 6 months (which I think makes for a good case study). They worked hard for the increase, and they work harder now that they have it. But, I think if you make it a point to maintain your standard of living after the double. Your life at least in regard to money will be satisfied.
The person I know has not made any living changes. They have only maintained their current lifestyle. This allows for more things to be paid off quicker (like a house or a car). As long as you aren't buying a new car because of the increase in income.
It is when you increase your lifestyle to go along with your income, is when you will never be satisfied.

[Chris]

$50,000 cash, no debts of any kind, and a steady income of $25k per year or more

[Eric]

Maybe I am cheating at this game, but I don't have an amount. My happiness has a lot more to do with what I am doing, not what I am making.

[Vitero]

I think people only want 'more' when they're not actually getting what they want - as in, trying to compensate for what they can't have by getting more of what they can have. Food, for example - you're satisfied when you've had enough food, but a lot of people over-eat because they fail to get other important things they want. When they're depressed, they eat more food to compensate.

Anyway anyway, I used to have a lot of money and most of the time, all I did was worry about it. Every day I'd worry a little about where my money was going. So not only does the money become mundane but it can be a burden.

The outstanding problem is, money is only a middle-man for getting what we want. We've learned to desire money for the same reason Pavlov's dogs salivated at the sound of a bell - we only relate it to fulfillment of desires. But it doesn't ever fulfill us.

[Tom]

"I am the happiest man alive. I have that in me that can convert poverty to riches, adversity to prosperity, and I am more invulnerable than Achilles; fortune hath not one place to hit me."

-Sir Thomas Brown

http://www.youtube.com/watch?v=LTO_dZUvbJA

[Tom]

You see just the realization that we will only be happy with twice or net income every time we settle in to our standards of living should send up a red flag. You stated here that it is a trend, that we will always want more. So why do you then go on to ask how much will make us happy? Isn't it a given that using this logic, we will NEVER be happy. I think you are looking at this the wrong way. You tie together happiness and financial worth or gain in the same package, and wrongfully. I am a student right now, my debts are going up, and by the time I graduate, I am going to owe a lot of money. But in all honesty, this has nothing to do with how happy or sad I am. As you made clear, it is all relative. If you look up the ladder, you are going to want more, if you look down, you will feel prosperous. But all in all, why should I let my financial status dictate how I should feel? I don't connect the two, and for people who do, it comes down to whether you are a pessimist or an optimist. I say that I am happy now, and will always be happy. For the simple fact that I am alive. That I have the opportunity to learn new things, and experience the world the way I do.

By linking your happiness with your financial status and situation, you allow yourself to be manipulated and controlled emotionally by things that are often out of your control. I refuse to accept this paradigm. I refuse to be controlled by the paper in my pocket (or lack thereof). As Tyler Durden put it best...

"The things you own end up owning you."

[E]

Screw money... I own a tent, a warm sleeping bag, and a fishing pole.

In all seriousness, I feel that working towards a concrete financial goal is a poor investment in my happiness, since it could all be gone in the blink of an eye, regardless of how much it is (as you pointed out). Invest your time in experiences. They can never be taken away for as long as you live.

[Sam]

I like this blog and I like you.

Right now, as in in this very moment, 100,000 would do. It would pay off student loans, rent until graduation and I could quit my stupid cocktail waitress job.

How tall are you?

[B]

Meh...

Money is... important. But if you let yourself become absorbed in it then you will be a puppet to it.

In any case, I don't mean to sound like I'm railing against what you're saying. This is a rad blog you've got here, and I like your style.

[kyle]

i would say about 150,000 would make me weak in the knees. it would cover everything i'm worrying about and have plenty of cushion to grow. i hope.

[Naught405]

I would say about 2-5 million w/ a steady income of around 300k. (I'm a student losing money at 10.5 cents a minute until I graduate in 2013).

@E That's rather short sited. The more money you have the the more experiences you can have. Ever stayed in a 5 star hotel? Flown 1st class? Taken a spontaneous trip halfway across the world? While it's true you can have an interesting time without money my point is money opens doors. And it's unlikely to be "gone in the blink of an eye" if you are smart with it.

[21stCenturyVagabond]

The issue with this idea is that studies have been done. Those with more money are chronically unhappy. The poor in El Salvador, even though the live in shit conditions, as long as they provide and survive are happy. Why is this? Why isn't know, but the effect is. Money cannot buy you happiness, it simply distracts you from the fact you are unhappy. I'm a broke writer and I feel far more happy than at any point in my life while I had money. So to those that say they pity the poor, I pity the rich.

[llamagirl]

Not gonna lie, I'm pretty happy with what I've got. I'm not hurting for anything and I can pay my bills with ease and manage to have an apartment that isn't falling apart. Sure, I make less than I spend on living expenses, but I've got about $500 saved up so I can still pay my bills. I live decently and even though a lot of my furniture and electronics are hand-me-downs I can honestly say I'm happy.

It's about living within your means and being content with what you have.

[plm]

Maybe the reason that we need to keep doubling our numbers to be happy is that happiness has become a commodity instead of a state of being. Do we even know what happiness is since it slowly became commercialized?

Great piece, though. I'll probably stop back for more...

[Melissa]

You rock. Wanna marry me?

[Ashley]

Well... currently paying off my car (10,000) and my doctor bills (12,000) and making enough to put money away for my future kid's college fund would be perfect. I just want to get by. Yes... getting a cool car or living in a really expensive house would be nice... but its not needed. I'm happy with my circumstances (minus the debt). Money only causes more problems. I remember a few years ago how I would wish and wish that I would have a million dollars... wishing did nothing but make me depressed. I try to love what I have now... not what I could have...

[www.facebook.com/profile.php?id=120600219]

There is a theory called the Hedonic Treadmill which I think may be relevant to this conversation. It is defined, as per Wikipidia, as

"The tendency of a person to remain at a relatively stable level of happiness despite a change in fortune or the achievement of major goals. According to the hedonic treadmill, as a person makes more money, expectations and desires rise in tandem, which results in no permanent gain in happiness."

http://en.wikipedia.org/wiki/Hedonic_treadmill

Money is merely a culturally agreed upon symbol for wealth, it has no value of it's own; if you crash on a desert island, a bag of money will be useless, save for finding an unconventional use, like fuel for a fire. Money only becomes valuable the instant it is used to acquire something. If you have $10,000,000 in your bank, and die before you can use it, it will have little worth to you. To be truly wealthy, is to have things which bring you happiness, which is what we as a society seem to have forgotten. Since money is an agreed upon symbol for wealth, but not wealth itself, it is easy to see how money doesn't directly equal happiness.

True wealth, and true happiness, can perhaps be more attributed to people and things which bring us happiness: Family, music, exploring this beautiful world, helping each other, art, etc, etc.

Just my two cents.

"Does it Matter", by Alan Watts explores this deeper, and explains it much better than I do. Highly recommended reading, and very applicable to this topic.

http://www.amazon.com/Does-Matter-Alan-W-Watts/dp/0394716655/ref=sr_1_1?ie=UTF8&qid=1261337191&sr=8-1

[Outlaw]

In response to the above comment: thanks, big fan of Alan Watts actually, great scholar and writer... have not read that one, I will check it out.

To lady who asked if I am tall: yes.

To marriage request: way too young for marriage, but let's touch base again in 5 or 6 years.

Kyle: you'll just have new problems when you hit $150k. And you'll want much more. Trust me.

[understanding]

Money cannot bring happiness. The desire for, and pursuit of, material possessions is, in fact, the root cause of much of the suffering in the world.

[Ruth]

I just want to be debt free. Anything more than being debt free would be an absolute bonus.

[Crowbar17]

Excellent theory, my friend, but I'm 27, still in debt, and incredibly happy. I'm not saying I'm the typical human being, I'm just saying you're wrong.