Turns out, it’s true that you’d be happier if you just made a little more cash.
The income at which individuals experience peak satisfaction with their lives has been determined, and it’s $95,000. If you want to settle for just emotional well-being, say psychologists from Purdue University and the University of Virginia, you can aim lower: between $65,000 to $75,000.
The data the researchers crunched to come to this conclusion came from the Gallup World Poll, which gathers stats on 1.7 million people across 164 countries, from their earning power to reported life satisfaction.
What’s interesting is that once individuals surpassed $95,000 in income, their satisfaction actually started to fall back down. Why? The researchers’ guess is that once your “optimal point of needs” is met — that is, you make enough to cover your basic needs, pay down debt and afford certain conveniences without breaking the bank — your focus shifts to material gain and social comparisons, which doesn’t do anyone any good.
So how can you stop from entering keeping up with the Joneses mode when your income grows?
1. Don’t stop tracking your spending. Once you’re out of the paycheck-to-paycheck phase of your life, it’s easy to think that you don’t need to account for what you spend. But that’s not entirely true. While you shouldn’t need to keep track of every extra bottle of shampoo you buy, you should still have a general idea of what you can spend every week without going overboard. (Our One-Number Budget can help with this.)
2. Remember that your goals are different from everyone else’s. If you go green with envy when you see the fab restaurants your friends are eating at or the new mid-century modern loveseat your favorite Instagrammer just bought, then it might be time for a reality check. What you want to do with your money just won’t be the same as what someone else wants to do with theirs. This isn’t a time for judgment, but it also isn’t a time for comparisons. Go ahead and love that photo — and then move on.
3. Test-drive a lifestyle upgrade. If you’re contemplating trading up, whether that’s a bigger apartment or more luxurious car, first test the effect that bigger payment would have on your budget. Go a month or two pretending as if you had to pay for that cost (try putting the extra into savings) and see how it feels. Are you still comfortable with where your budget nets out? Or was it painful? Use that experience to help you decide — the trade-off just may not feel worth it after all.