Financial Planning & Wealth Management

How Much is Enough

How much is enough?

 

There’s a pattern to how most people answer this question. Enough never seems to be where the person is; rather, it’s always just beyond the horizon.

 

What do I mean by this?

 

The Wall Street Journal recently ran a survey on how much people say they need to be happy. What made this survey interesting is that they asked respondents about their current salary and what salary they believed they needed to achieve contentment.

 

Most people indicated they required a significant increase to reach their desired standard of living. For instance, respondents with a median salary of $50,000 per year said they needed to earn $75,000 per year to be content. Similarly, those earning $100,000 per year aimed for $150,000, and those at $150,000 a year aspired to $200,000 for happiness.

 

Even individuals earning $250,000 a year said they needed $350,000 annually to feel content.

 

Notice a trend?

 

I copied the chart below from the Wall Street Journal article illustrating the results.  Take some time to understand what’s happening in this chart. It’s fascinating. 

When I look at a chart like this, I have two responses.

 

Firstly, it’s tragic because it shows that contentment based on any income level is basically impossible to find. Regardless of how much you make, you’ll always want more. The goalposts just keep moving.

 

Secondly, this constant striving is perhaps humanity’s driving force. It motivates us to improve our lives, be more productive, and foster economic growth. After all, this perpetual pursuit is what fuels job creation and expands economies. Our lives today are incomparable to what they were 100 years ago or even 50 years ago.

 

So, how much do you earn? And how much do you think you need to earn to be happy?

 

Is your answer similar to the respondents above?

 

Since we like to make decisions based on data, a conclusion from this is that it’s not what you earn that makes you happy. Naturally we will always want more.

 

Of course, earnings is important, but beyond meeting our basic needs, perhaps we should look elsewhere.

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About

 MattFin is a blog that focuses on wealth management, investments, financial markets and investor psychology. I build financial plans and portfolios for families and individuals

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