How much money do you need to be happy?

Money permeates every aspect of our lives, influencing where we choose to live, what we do, where we go to school, what we eat, among other things. Having money frees us from dealing with issues like housing insecurity or an inability to afford medical care.

Yet when I looked into the research on the connection between money and happiness, I found that the relationship between the two is actually quite complicated. It seems that even psychology researchers can disagree on the effect that money has on people’s sense of wellbeing and happiness.

How much money do you need to be happy?

What I did find was that more money often means more happiness, but not always. According to Jon Jachimowicz, a business administration professor at Harvard, the primary benefit of making more money is that it serves as a buffer when negative events in life happen. For example, if you don’t have time to cook, you can order takeout or if a medical emergency occurs, you can swiftly cover the bill.

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“Money is not just a way that people can buy themselves happy moments; it is also a crucial tool for safety, security, and stability,” says Jachimowicz. “Money can help soften the blow of bad times; a lack of money can make even benign things much more distressing and painful.”

While a previous study by Daniel Kahneman and Angus Deaton found that people’s sense of wellbeing plateaued when they made at least $75,000, new research challenged this notion, finding that there was no leveling off effect at $75,000. Put another way, your happiness increases with your income, even if you make above $75,000.

Kahneman and Deaton’s research

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