As many of you know, I recently got a new job. And with this new job came a salary bump! A salary bump that feels like a particular milestone (at least for me): I surpassed the $100K annual salary mark for the first time in my life, the day after I turned 36 years old.
With this change, I’ve been thinking a lot about the all-too-familiar infamous saying “money can’t buy happiness”. Today on the blog, I’m sharing some thoughts on this highly debated topic.
But first, a story.
One day in the not-so-distant past, as I was doing my usual morning routine of combing through finance-related content over breakfast, I came across an article with a headline something along the lines of:
Once You Hit a Salary of $100K, Income No Longer Leads to Happiness!
Although I didn’t save this article, and I can no longer seem to find the exact one, I remember the premise. And I remember vividly the graphic that the article showed. The graph depicted money on one axis, and happiness on the other. On the first part of the graph (the left side), money was directly proportional to happiness. In other words, as income (or money earned) increased, happiness also increased at the same rate. That is, until the money unit reached $100K. Then, flatline. A plateau. Once the graph hit $100K, happiness was no longer increasing at a steady rate.
The graph showed that as income increased past $100K, happiness no longer increased at all.
At the time, there I was with an income below $100K, pondering this article and the bigger picture. What did this mean for me? Should a $100K salary now be my goal? Will I attain my maximum happiness once I reach a salary of $100K? And what about all the people who will never make $100K? Will they never reach their peak happiness?
Well, the evidence is now mixed on this $100K threshold.
But either way, my friends, here I am. With my recent job switch, I’ve crossed the threshold. I’m now making over $100K annually for the first time in my life.
So, then, what do I think about all of this now? On the other side?
Well, although I generally subscribe to the saying that money doesn’t buy happiness, I don’t feel I can be in the personal finance/financial independence space without disagreeing to some extent. I do believe that money can buy happiness, but only to a certain extent and with certain caveats.
First and foremost, I think we can all agree that we need to have our basic needs met to even consider the question. Because, ultimately, we do need money to survive in this world we live in currently. I can imagine it’d be difficult to even think about happiness in our lives if our basic human needs weren’t even being met.
In his book Taking Stock, Jordan Grumet relates money to oxygen. If you have enough oxygen, you don’t need to really give it a second thought. But don’t have enough? Well, you’re in big trouble, because your life depends on it. Same goes for money. So I don’t think it’s right to say that money can’t buy happiness at all, because we absolutely need money to live. And we need to be alive to experience happiness.
It’s the “excess” that I want to focus on here. The money we make on top of whatever we need to survive. Once we have enough money to meet our basic needs, and maybe even enough to live a modestly comfortable life, where do we go from there?
Continuing on with Grumet’s oxygen analogy, it’s not like we all benefit from excess oxygen (and Grumet, who is a physician, would be the first to agree). The same is true, in my mind, for our money. I strongly believe that once our basic needs are met, there is no direct correlation between money and happiness. Between money and meaning. Because don’t we need meaning to be happy? Aren’t meaning and happiness intimately intertwined?
According to a Harvard Business Review article, 9 out of 10 people would take less pay to gain more meaning.
To me, this shows that for most of us, we care more about meaning than money, and that we don’t equate more money to more meaning.
Just because we make more and more money does not mean we will automatically be happier and happier. Infinite money will not bring about infinite happiness.
But where do I think the threshold is? Is it $75K, 100K, 250K?
The short answer is that I think it completely depends on the individual.
As I took to Google to read all of the countless versions of quotes with the same basic premise, that money can’t buy happiness, this one struck me in particular:
Money is numbers and numbers never end. If it takes money to be happy, your search for happiness will never end.
Bob Marley
For me, this quote is the essence of why I feel so strongly about the importance of knowing your why on your journey to financial independence.
And not just knowing your why, but also knowing what’s enough for you.
Once you have enough money to cover your needs and then some, you must also know what you’re living for, what sparks you, what makes you feel alive, and at the same time how much money is enough for you to be able to live fully into that why, before money can really make you happy.
Because I am clear on my why and what enough is for me, I can make decisions about my income (and thus my work) accordingly, and with intention.
In the field I currently work in (medical communications), there is almost infinite salary growth potential. However, now that I’ve been in the field for a few years, I know (almost) exactly what that salary growth entails. For me to move up to the next rung on the traditional ladder, it would mean longer hours, line management responsibilities, and stressful (for me), client-facing work that I have no interest in.
It would be easy enough for me to do, to get that promotion, if I wanted it. I often get told by my managers and peers “Oh, but you’d be such a good manager!” or “Oh, but you’re so good with the clients.”
But for me, because I know my why and what’s enough in my life overall, I can easily say no to those types of roles/promotions that would come with more money. I can smile and nod while saying thank you but no thank you. I know what I’d be trading to get that salary bump, and as of right now, I don’t want that trade. I’m not sure I ever will.
And with this knowledge about what I don’t want, I have worked to find a role that is sustainable for me, for my goals in life. After a lot of searching, I finally found a company where they appear to value those who don’t want to take the traditional path. This particular company has made an entire career track for people like me. Sure, the salary growth potential isn’t as much as it would be if I went the other route, but that doesn’t matter to me. Because I know what I value, what’s important to me.
In the book Designing Your Life, there is an example of an electrical engineer working long nights and weekends at a start-up, who realized that he didn’t want work to be his main focus in life. So, he switched jobs. He found a more stable, non-start up environment, worked his way up to a senior role he was comfortable with, and then just stayed in that position (where he’s stayed for 20 years), turning down promotions and the corresponding salary increases. This electrical engineer knew what was enough for him.
In the same vein, I know many folks who want that lavish lifestyle, who are willing to grind away at work to get the money that comes along with that. And in my mind, there’s nothing wrong with that! With one caveat: as long as you know your why and what’s enough, and you’re consciously making decisions about working long hours in service of goals and values. If you’re doing that, you can’t go wrong.
That’s the joy of personal finance. What’s important is different for each of us. What each of us is willing to do to achieve a goal is different. What may be enough for me may not be enough for someone else, and that is perfectly fine. The point is that we can all make choices (and we have many to choose from) based on our own unique situations.
And those choices may never be easy, but they will become easier and easier the clearer and clearer you become on your why and what’s enough for you.
For example, it’s no secret that I still struggle with the golden handcuffs, even though I know my why. Although I’ve found a job that works for me, I also know that I don’t want to work full-time forever. There are so many other things I daydream about doing with my time, which is how my part-time work goal was born. But I struggle constantly with this goal. I have a hard time thinking about leaving money on the table.
Even with knowing my why and what’s enough for me, I still find it ridiculously hard to let go, to do something different. But getting clearer on what I value makes it easier.
And the rest comes from making sure you’re not on autopilot, that you’re in the driver’s seat of your life. You need to make sure you’re the one steering the car where you want it to go.
And not even just steering, but also making sure your foot is on the gas. It’s one thing to know where you want to go, it’s a whole other ballgame to actually take action on your dreams.
For me, that means not just knowing that I want to go to part-time, but actually taking steps towards getting there. It meant talking to several different companies in my industry until I found one that accepted me for who I am, for not wanting the traditional path. It means working full-time now in order to hit my financial goals. It might mean looking for another job if this one doesn’t work out. And it will mean actually taking my foot off the gas once I’m ready financially (which, if I had to guess, will be the hardest action of them all).
Without a plan, without a goal, without knowing your why, without knowing what’s enough for you, it’s hard to break any habit. The habit (in my case) is working for income. That steady paycheck. The security it brings, the healthcare, the benefits. Why would I give that up if I didn’t have a good idea of what I’m giving it up for?
There’s a good example of someone on autopilot in the book Die With Zero. The author Bill Perkins tells the story of a friend who started a hedge-fund so he could make a bunch of money and then retire and start living the “good life”. He starts with a goal of quitting after he’s made $15 million. But once he makes $15 million, guess what he does? He ups his goal to $25 million, then $100 million, and before he knows it, he’s reached a net worth of $4 billion!!
This is an extreme/exaggerated example for many of us, but we can all relate to the heart of the story. He was on such autopilot, it had become such a habit (maybe even an addiction) for him to simply make money, that he lost sight of his original goal of retiring early and living the “good life.” He woke up 10 years later not able to get that time back. Time with his children, time with his wife. He went for the money, and left meaning behind.
The last time I talked to a good friend who was in medical school at the same time I was in graduate school, I’ll never forget what he said to me. I had just left my fancy Professor job, gotten off the hamster wheel, took a paycut, and was beginning to see there was more to life than just work. I was also just discovering the FIRE movement. He was doing his cardiothoracic surgery fellowship at a top hospital. What he said to me was this:
“You know what? I’m going to make all this money, and I’ll never have any time to spend any of it. What a waste.”
I thought about those words often after that conversation. They still haunt me a little bit. How sad they are. How so many of us feel that way, but how desperately I wanted not for that to be me. I knew I didn’t subscribe to that kind of thinking, but the pull of making money can be so strong. But at the time, I was just getting started learning that there was so much more to life. More meaning to be had than what a job could give me. And I didn’t want to make money just to not be able to spend it.
Closing thoughts
Once we get our basic needs met, we all have choices. We live in an era with more resources at our fingertips than we’ve ever had before.
Don’t get stuck on autopilot when there are other things in life calling to you, gently (or firmly) tugging at your sleeves. Don’t let your dreams be only dreams. With a little intentionality, you can make them come true.
Do I know that the more income I make, the more I can save toward my goal of financial independence? Absolutely.
So why wouldn’t I want to make as much money as I can to get there as quickly as possible?
Because I know what enough is for me. Because I’m on a slow FI journey. Because it’s more important to me to have a job I can sustain, that gives me some purpose but doesn’t cause burnout, than it is for me to make more money.
And because outside of what I do for income, there are too many potentially meaningful things whispering to me for me to ignore, for me to wait any longer.
What do you think: can money buy happiness? Do you know what’s enough for you? I’d love to hear your thoughts!