I know this is a cliche saying, but I’ve found it’s very true. Sure, everyone needs a certain level of income/resources to keep them out of hunger, homelessness, fear and general unhappiness. After a certain point though, those extra dollars don’t buy more happiness and often bring heartache or stress.
If you need examples of this, look at all of the famous people in the news. Self-medicating with drugs and alcohol, depression, mental breakdowns, overdosing and suicide. By all accounts many of these people “had it all”, money, homes, cars, fame, etc but they are miserable.
Multiple studies have shown that 60-75k per year (USD) is around the sweet spot for optimal happiness. In the FIRE community this is a bit above what most seem to be spending.
While there are some following this new “fat FIRE” movement and others who claim you need 200k+ per year for optimal happiness, I just don’t see it. Unless you are choosing to live in a very high cost of living area, it just doesn’t add up for me. That Tesla isn’t going to make you measurably happier than the Chevy Volt in the long run. The $12 bottle of wine is pretty drinkable and I can have 5 for the price of the one from my former wine club.
Giving it up
I was working on my last joint tax return for my ex and I. As I’ve mentioned before, we had a significant disparity of income (in her favor). It struck me, that I had willingly gave up access to a much higher annual income by choosing to get divorced. I considered for a minute, that many people would probably say I was crazy from the outside. Things weren’t bad, we didn’t want for anything, but I wasn’t happy and no amount of annual income was going to change that.
I’ve had fancy cars, been on fancy vacations, drank fancy wine and learned none of it matters. At best it was a distraction and at worst non-value added stress. I had a beautiful truck that I loved for a while. Not long after I got it, someone backed into it, bent the bumper and I was so upset. While I enjoyed the truck, it brought me stress overall because it was expensive and I couldn’t enjoy it as much as I wanted to because I was worried about damaging it. Money clearly didn’t and couldn’t buy happiness, at least for me. It hopefully will buy my eventual freedom via FIRE, but I’m happier now and still on my FIRE journey, so I’ll take that any day.
What do you think your optimal income level is? Do you think money buys your happiness?