How much money do you REALLY need to be “happy”?
About 15 years ago, a pretty famous study was carried out by Princeton University that aimed to pinpoint the amount you need to "buy happiness".
It found that once you reach an income of around US$75k a year – equivalent at the time to AU$110k – you will have a baseline level of financial stability and security and enjoyment.
You'll have enough to pay your bills, travel, enjoy some hobbies and, by and large, be "happy".
You can earn more than that amount and upgrade your lifestyle, but anything more than that won't necessarily make you any happier.
You'll have fancier cars; bigger and more luxurious homes; more expensive toys and gadgets and hobbies; more luxurious and frequent travel. You'll likely have more investments and more money in the bank.
But the difference in happiness between "broke/struggling" and "financially stable" is a massive chasm to leap.
It's like climbing a mountain and at the start, you see a view of rubble and bushes and dirt (broke). Then you reach a summit and see expansive hinterland and ocean views (happiness threshold). What a feat! Once there, the vista is amazing – and any further financial growth is like achieving a slightly higher position with an incrementally better view.
Today, adjusted for inflation, this "happiness figure" is about US$110,000 or AU$160,000.
But a Finder survey of 1,032 respondents revealed the average Australian wouldn't consider themselves wealthy until they were earning over twice this amount.
On average, we estimate we need to bring in $345,819 per year to be happy.
I had a chat with 3AW's breakfast hosts Jimmy Bartel and Mark Allen about the findings and we dug into the details a little. When we break it down by age group, it seems to be the younger we are, the more money we think we need:
| How much do you need to earn per year to be rich? | |
|---|---|
| Gen Z | $392,077 |
| Millennials | $418,325 |
| Gen X | $307,257 |
| Baby boomers | $273,812 |
| Average Australian | $345,819 |
| Source: Finder survey of 1,032 respondents, November 2023 |
These are some lofty figures, especially when we consider that the average personal income is $72,753, according to the Australian Bureau of Statistics.
Whatever amount you think you need to earn to feel prosperous, and however much you earn right now, there are always opportunities to manage our money more effectively.
I'm on a mission to help you save money and make money! Check out my latest 'Savings with Sarah' tips here and learn how to pay less for your home loan, energy bills, mobile phone, and even your UberEats!
