How Much Money Do You Need to Actually Be Happy?

A little bit ago I kept seeing articles about a study Princeton University’s Center for Health and Well-being conducted back in 2010. The study was titled, “High income improves evaluation of life but not emotional well-being.” Everyone from economists and financial planners were weighing in on the subject. Even Tony Robbins’ site had a blog post about it.

Basically what is means is that money can buy you happiness, but only up to a certain point. A little contrary to what we were told growing up, right? Even though it feels like the more money you have, the happier you would be, we’re taught that money isn’t supposed to buy us happiness at all.

Money has never made man happy, nor will it, there is nothing in its nature to produce happiness. – Ben Franklin

According to this study, ole’ Ben Franklin had it wrong.

The consensus of the study was that someone making between $70k and $160k was the happiest of all wage brackets. By hitting the $70k mark, it meant that a family of four would be above stresses like worrying about bills and debt. They were comfortable and able to take care of day-to-day expenditures and even most surprises. That seems normal and pretty obvious. The interesting part of this study was that anyone over the $160k mark showed that their happiness was diminishing.

Why would this be? Wouldn’t making $500k or even $5 millon a year create more happiness and less stress? It’s easy to believe that if someone is making more and more money that they could be more and more happy. And here is where the problem is— more never stops.

Wanting More Only Leads to Wanting More

It’s a flawed mindset that causes many people, myself included, to think that if we just had a little more money or a bigger house or a new Range Rover, or whatever it is that sweetens your dreams at night, that THEN we could be happy.

It’s what is known as the hedonic treadmill. This principle states that “regardless of what happens to a person, their level of happiness will return to their baseline after the event. There is an initial spike in happiness, or sadness; however, as time goes on, the feeling of happiness or sadness caused by an event starts to dissipate. After some time has passed, you are back at the level of happiness that you were at before.” (1) This means even though your happiness bumps up when great things happens in your life like getting a raise, a new car or a better job, you will get used to this new level in your lifestyle and that bump of happiness goes back down. You’ve adapted to your surroundings and you start wanting more again.

Sonja Lyubomirsky, psychology professor at the University of California, Riverside, explains it really well. She says:

Human beings are remarkably good at getting used to changes in their lives, especially positive changes. If you have a rise in income, it gives you a boost, but then your aspirations rise too. Maybe you buy a bigger home in a new neighborhood, and so your neighbors are richer, and you start wanting even more. You’ve stepped on the hedonic treadmill. Trying to prevent that or slow it down is really a challenge. (2)

It’s that age-old, slippery slope. The more you have the more you want and you’re never satisfied. I see it in my business quite often.

More is Never Has Enough

Say I’ve got a client come in who makes $100k. She finally feels like now she’s got a little more breathing room financially. She’s got an emergency savings fund in the bank, out debt and maybe even saving and investing a couple hundred dollars a month for the kid’s college fund or for her retirement fund. Wouldn’t you say that on paper this woman would be happy? I definitely would.

Now, a couple years later this same woman has a raise and is bringing home $150k. She’s still following the same financial goals as before, but maybe making more progress toward them. She started doing a 401k plus match and is putting one or two thousand dollars a month in savings. I would say she’s still happy and feeling fulfilled and satisfied at this point. She’s got goals and is making them happen.

But what I’ve noticed from talking to clients is that something changes when the income keeps rising after that point— they stop saving money. While there are always some exceptions, most people who reach this point in their life stop saving and start spending.

Money Often Costs too Much.- Ralph Waldo Emerson

In fact, I’ve noticed after 15 years of overseeing money, that after hitting $150k, most people don’t really save that much more than when they made $100-150k. They just start accumulating stuff.

Eddie Vedder hit this square on the head with his song, “Society.”

We have a greed with which we have agreed
And you think you have to want more than you need
Until you have it all, you won’t be free
When you want more than you have, you think you need
And when you think more than you want, your thoughts begin to bleed
I think I need to find a bigger place
Cause when you have more than you think, you need more space.

Again it’s that idea that there’s always more. More house, more cars, more clothes and more big screens. And when you get more house, you need more furniture. And when you get more cars, you need more trips to the mechanic. And when you get more clothes you need more closets to fit them in. And on and on it goes.

I’ve known people with $30 million that felt like they still didn’t have enough. They thought that if they could get to $40 million they would be happy. Can you imagine? $30 million and still feeling money stressed?

The Wall Street Journal posted an article on the subject titled Can Money Buy Happiness and succinctly said, “The bottom line: When you don’t have much money, a little can go a long way, because you have more essential needs to fulfill. As you accumulate more wealth, however, it becomes more difficult to keep ‘buying’ more happiness.” (2)

So many people also use this logic when it comes to retirement. The grander their lifestyle was before, the grander it needs to be in retirement. To keep with this notion, a person would have to save big money. But we’ll talk more about this later.

The Problem with Ambition

So where does this come from? What causes the hedonic treadmill to keep spinning?

Some might say it’s ambition. It’s ambition that makes us strive for more. It’s ambition that makes us reach for better for ourselves and our family. But ambition isn’t really a bad thing. Society as a whole would still be living without electricity and manually pulling our water from the ground if it wasn’t for ambition. Ambition alone isn’t the problem.

The problem is when we let our ambition overwhelm and block our pursuit of happiness. In his article, Is Modern Western Culture a Health Hazard, researcher Richard Eckersley states,

One of the most important and growing costs of the modern way of life is ‘cultural fraud’: the promotion of images and ideals of the ‘the good life’ that serve the economy but do not meet psychological needs, nor reflect social realities. (3)

In other words, we are letting ourselves get stuck in this idea of a ‘the good life’ where more is better. We see what is going on with our neighbor and want what they have. We see people on Instagram and Facebook posting pictures of their ‘bigger and better’ and it leaves us feeling empty. We are letting our pursuit of this ‘more’ take over the most space in life and take away opportunities for happiness.

So how do we fix our problem?

How to Maintain Happiness

As a hardworking person and someone with goals, you might eventually find yourself in this position. As you start climbing ladders and gaining success, how will you maintain life-long happiness and stay far away from the hedonic treadmill? I’ve got a couple suggestions.

Have a financial plan: Sit down with someone who has experience with budgeting and planning. They can best help you figure out what buckets your money should go into. This is going to help you spend your money wisely. You’ll always know where it’s going and how you can use it best as your life changes.

When talking about the the Princeton study, Tony Robbin’s blog stated,

This study quantified what we instinctively had guessed- that money alleviates the stress of providing our most basic needs. In other words, $75,000 of annual income buys peace of mind…If you’ve already hit that $75,000 threshold and you’re not happy, it means you just need to learn how to spend effectively. (4)

Find gratitude: After you’ve got your financial planning in place, another approach to finding satisfaction with your lifestyle is to simply be grateful. Lyubomrisky says that making a conscious effort to foster appreciation and gratitude for what you have can help.

The process of adaption, after all, comes from taking what you have for granted, so you can slow it down by reminding yourself of why you value what you have. (2)

What could fostering gratitude look like for you? Maybe it’s a gratitude journal that you write a couple sentences in each morning to get your day started off right. Maybe it’s giving to a local charity. It will be different for everyone, but they will all help in maintaining happiness.

So can money buy you happiness? In it’s own little way it can. But it’s your job to manage it well and to keep you and your family’s happiness in the foreground of your pursuits.


  1. The Hedonic Treadmill: Happiness Throughout a Lifetime by Paul Wierzbicki
  2. Can Money Buy Happiness by Andrew Blackman
  3. The Hedonic Treadmill- If Only Happiness Were as Easy as Marriage, a Big House and Kids by Amit Amin
  4. How to Buy Happiness by Kellie Colunga

Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of David Adams and not necessarily those of Raymond James. Please consult with your financial professional about your individual situation.

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