John Lennon sang that he didn’t care that much for money and that money couldn’t buy
him love.
He was correct.
And according to science, at that point in his career, it wouldn’t have given him much
happiness either.
Believe it or not, there is actually a specific amount of money that brings people the highest
sense of contentment with their lives.
If they make less than this, they aren’t as happy, but once they make more, it has
little to no effect.
But, don’t worry, that perfect amount isn’t in the millions and you may be making something
close to it already.
Let’s find out just how much you need in this episode of The Infographics Show, What’s
The Right Amount of Money to Have?
Research has shown time and time again that up until a certain point more money is linked
to increases in happiness.
This is true for studies on individuals, families, and even entire nations.
One such study was conducted at Princeton University using information from a Gallup
well-being index.
It found that joy and satisfaction in life improved as an individual person’s income
increased up until they earned $75,000.
At this point, the benefits of any extra cash began to level off.
Interestingly, the researchers came up with an unexpected find.
The well-being index also included questions where participants rated their success in
life.
This represents their opinion of how much they have done and not how it made them feel.
In other words, it measures how people rate themselves when comparing what they’ve accomplished
to others.
This continued to rise with each additional dollar no matter the total amount earned.
So, even though they may not feel any happier, people believed they had done more to be proud
of if they made an income of $300,000 instead of $200,000.
Getting back to happiness, the same upwards trend based on income is seen not only for
individuals but for families.
Research proving this analyzed data from the Panel Study of Income Dynamics.
Thousands of participants were questioned about their attitudes and feelings, or how
often they felt nervous, restless, or hopeless.
According to what they found, additional money makes a great impact on both stress and sadness
for those in the 20th percentile for income.
However, it has much less effect on families by the time they reach the 80th.
In dollar amounts it was found that negative feelings improved quickly until a family earned
approximately $70,000.
Any changes became very small by the time a family made $160,000.
Extra money had absolutely no difference on happiness at all when income reached $200,000.
Beyond individuals and families, income impacts the happiness of entire countries.
Data from the World Bank and the World Happiness Report from 2017, for example, showed the
same patterns.
A study looked at a country’s GDP and compared it to the country’s own report of its happiness.
The results were as follows: when people within a country went from earning $10,000 to $20,000
a person, the country as a whole, experienced large increases in happy feelings.
While the same is mostly true for an increase from $30,000 to $60,000, results began to
be less predictable.
A few countries, for unknown reasons, stuck out from the rest.
For example, Costa Rica has $15,400 GDP but a happiness rating of over 7.
Other countries, such as the United States and Germany are much better off, but have
a lower happiness level.
Then in the Middle East, Saudi Arabia, Iran, and Iraq people have a lower happiness rating
despite a higher GDP.
Qatar, the wealthiest of all countries, shows among the most unexpected results of all.
Its rating on happiness was surprisingly low at only a little over 6.
Clearly, although most places around the world followed the same curve, there is a little
bit more than just money that brings certain people positive feelings in unique circumstances.
Now we know that good feelings go up when more money is made until a certain point is
reached.
After passing this amount they then plateau and, for all intents and purposes, soon after
this stop increasing completely.
The question is why.
There is more than one answer out there, but some experts explain by referring to Maslow’s
Hierarchy of Needs.
This hierarchy is displayed in the form of a pyramid and was created by no other than,
you guessed it, a guy named Maslow.
He gave his pyramid five levels, each representing a unique type of human need.
The needs at the bottom are the most basic of all and become more complex towards the
top.
You cannot move up to the next level of need until the one below it has been satisfied.
Now let’s discuss how this applies to income.
Well, when you are very poor you struggle with even the very bottom of the pyramid,
or your most basic of physiological needs.
You may have difficulty putting enough food on the table or finding shelter from the outside
elements.
Also included at this level are having clothing to wear or an environment that is well controlled
and without dangerous temperature changes.
At this level, you are struggling with having what you need to survive, and so every dollar
makes a huge difference.
Once you have made enough money to afford the most basic things you need, you then progress
to level two.
This level represents your need for safety and security.
This is when people try to have some control and organization in their lives which helps
them feel less anxiety or fear.
Examples of this would be finding a reliable, dependable job or having access to quality
healthcare.
Moving to a better neighborhood, living in a more secure house, and having enough money
to put some away are also ways that people meet this need.
Up until this point, every dollar still counts because it’s the difference from being out
of control or scared and having security.
The next step of the hierarchy is step three, or the need to be social.
This is when people want to feel loved and connected to friends, family, love interests,
and greater society.
When this need is not met people may feel lonely, sad, or afraid.
Basically, they will be unhappy.
In other words, once you have the money and resources to have met both your basic needs
your need for security, you can focus on building better interpersonal relationships.
After all, when you’re struggling simply to survive or feel unsafe you most likely
won’t be spending much time on unnecessary or leisurely types of activities.
But when you have the money and can do these things with others, it in turn, brings about
happiness.
More money won’t give you much joy at this point, as the first three needs will have
already been met.
But, remember, less money will eventually drag you back down into a lower level which
will once again detract from your happiness.
With that said, this is just one of many theories and while some support it, others may not.
A much shorter explanation that another expert has given is inarguably one that many would
accept and easily understand.
Imagine that Jeff Benzos, now the richest man in modern history, was able to double
his income.
Well, at that point he’s already been living the life, so it probably wouldn’t make much
of a difference.
Now imagine someone making something like $12,000 and living in poverty and then having
that income double.
That, in contrast to a billionaire, would significantly change their quality of life.
Then, let’s choose someone in middle of the spectrum.
If this someone made $100,000 and this was increased to $200,000, sure, life may improve
a little.
But it was likely that he or she likely already had a nice house and car and a dependable
job to rely on.
Now, say you make the ideal amount for you and, as a consequence, are pretty darn happy.
Well, what if we told you there’s a very unexpected way to spend some of that cash
so you are happier still.
And, no its not splurging on that thing you’ve always wanted but couldn’t quite justify
purchasing.
Surprisingly, researchers have found that when people do not spend their wealth on themselves
but on others, they get the most satisfaction.
This includes things like charitable donations or buying things for family, friends, or even
strangers.
To support this, in one study when company employees were given bonuses, the amount that
they spent on others still impacted their happiness after weeks or months had passed.
However, whatever amount they spent on themselves made no difference.
Another study gave people either $5 or $20 and told them how they had to spend it.
Those who spent it on gifts for others were overall much happier, whether it was the $5
or the $20 they had spent.
Strangely, all predicted that they would derive the most happiness from spending the most
money not on others but themselves.
Even big corporations understand this idea.
PepsiCo, Google, and DonorsChoose.org rely on people feeling good about themselves to
encourage participation in charitable events that also spotlight the organization.
For example, in 2010 Pepsi didn’t spend money on advertising during the Superbowl
but instead used the funds as grants to benefit needy communities.
However, they left it to the public to suggest and then vote on the specific projects that
would be funded.
The approach was so popular and there was such a level of input that it surpassed voter
turnout in the 2008 presidential election.
Needless to say, Pepsi also came out on top and was promoted through the event as a corporation.
Even some of the richest men and women are aware of this feeling and know the benefits
of helping others.
Warren Buffet met with Bill Gates in 2010 and together they made a request for billionaires
in the United States to donate their money.
Buffet then offered up an astonishing 99% of his own wealth.
And, afterwards, do you know what he said?
That he couldn’t have been happier with the decision!
According to these studies and as research has shown there should be no happier person
alive than a rich man, still well-off after giving away billions.
Clearly, when it comes to money, there are lots of surprises and many different explanations.
One thing that’s widely agreed on is that most people need a certain amount before they
can truly be happy.
And, once that amount is made, they shouldn’t strive for more but simply learn to enjoy
it.
Further, when they have enough, they will be happier still by giving some away or spending
it on others.
There’s very little reason not to, when studies have shown benefits in the moods of
those who gave away a single dollar.
Is
this true for you, do you feel like you’re happy and have enough money?
Also, be sure to check out our other video called Who Really Owns The Internet?
Thanks for watching, and, as always, don’t forget to like, share, and subscribe.
See you next time!