Do you have any idea how much money you need to feel happy, joyful, fulfilled and purposeful?
The old saying goes that “money can’t buy you happiness”, but research seems to disagree… to a point.
A recent study by Rabobank found that the happiest people in Australia were earning between $80,000 to $100,000. Similarly, an earlier Study by Deakin University found that a gross household income of $100,000 was optimal for a happy life. These happy folk also had strong interpersonal relationships and a purpose in life – a reason to get out of bed in the morning. Deakin University’s Professor Robert Cummins termed these three elements in life as the “golden triangle of happiness”.
Interestingly, the RaboBank Study also found a higher level of unhappiness in those with incomes over $150,000 (perhaps because these two other ‘golden triangle’ elements are diminished?).
It seems beyond a certain income level (your ‘sweet spot’), happiness just plateaus or can even diminish, depending on what we are giving up to earn it (like time, relationships, our values).
Over the past few years, I’ve become super clear on what’s important to me. I’ve moved beyond valuing the $50 bottle of wine and realising that it is the company with whom I share the wine that counts. I’ve realised it’s not the meal out at a fancy restaurant that is giving me joy, it’s having the opportunity to actually talk and connect with my husband. It’s not the 5 star hotel that creates the memories, it’s adventures and shared experiences with my family.
From these insights, our expenses have pretty much plateaued to the point where I can name my optimal annual income for us to live comfortably and have those family adventures both overseas and locally, go to my yoga classes, share a meal with friends at a cosy restaurant and indulge in fresh, local food and decent wine.
In the coming weeks, I’m going to show you a step by step guide for coming up with your golden figure. But for now, let’s explore why knowing your point of enough even matters.
Having an actual golden number of ‘enough’ in mind is insanely empowering.
Once you have your golden number, you can assess your different life options knowing that, as long as you earn $X, your happiness in life won’t be compromised by a change in income. And, more often than not, that income level isn’t as high as you might have suspected.
So much more may be possible than you imagined, and income can’t be your excuse anymore if it’s still above your golden number. Perhaps it’s a crazy adventure, a new venture you want to start, the possibility of going part time and spending more time with the children, changing your career or taking a sabbatical.
Knowing how much you need gives a sense of security.
I have gained a great sense of security from knowing that my golden income for happiness is far less than I thought. Whilst we have no intention right now of quitting our jobs or embarking on a massive career change, just knowing what I actually need, and knowing I have savings at hand to cover those expenses for a fair chunk of time if need be, gives me a great sense of financial peace!
You can set realistic (and sometimes really high!) savings goals.
We all know setting specific measurable goals means you are more likely to achieve them. Knowing what you need to earn and spend to maintain your happy lifestyle means you can get very specific about your annual savings goals.
For me personally, it has enabled us to set a high savings goal of 50%+ of our household income. Big savings goals for me are all in the name of building our ‘freedom’ nest egg. We can look at our investments now and know how many years’ worth of time it could buy us if we weren’t working or if we did decide to pack it in, jump in a Winnebago and head off into the sunset.
You can give more.
Once you are aware of the amount you need to be happy, and you find there is a decent surplus, giving more becomes a no brainer! Your day to day life won’t at all be effected by your charitable donations, but someone else’s will.
You can work towards financial independence.
Once you know your golden figure you can begin to calculate how much wealth you need to accumulate to become totally financially independent. That’s a topic for a whole other post, but with some relatively easy calculations you can set some very specific goals and timelines to reaching financial independence.
Regardless of your income, knowing your optimal income for happiness is a valuable and empowering exercise, and is quite possibly less than you think. You will be able to set really powerful savings and financial goals and plan those life adventures or shifts you have been dreaming about.
Stay tuned for my guide to calculating your golden number of ‘enough’.
But in the meantime, have you already worked out what your point of enough is? Was it more, or less, than you thought? How have you benefited?
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