099: When Enough is Enough
When you look back to when you were 25, could you have guessed you’d be making as much money, or be as wealthy, as you are today? Back then, you’d probably have thought someone making as much as you now is rich.
If you stopped working today, would you be able to retire and be (at least) reasonably happy? If you're like the majority of us, that answer is most likely no. How come? Why are high-earners still no happier than when they were just making a modest living?
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Money Only Brings So Much Joy...
As John D. Rockefeller is quoted say, when asked when is enough, enough?, he said, “Just one dollar more…”
John D. Rockefeller… One of the richest guys in American history. The guy who’s name is on buildings from New York to San Francisco…. “Just one dollar more.”
I don’t know about you but that doesn’t exactly scream “happy” or “content."
To clarify, I don’t use the words “content” or “contentment” to signify complacency. Quite the contrary! I’m a capitalist. In my upper 40s, I get giddy at the thought of how big of an impact I can have in the lives of others.
This begs the question… “How much is enough?” At what stage does our emotional well-being plateau?
According to a 2010 nation-wide survey, lead by Nobel Prize recipients Daniel Kahneman & Angus Deaton out of Princeton University of more than 450,000 responses to a Gallup poll on health & well-being - the magic number is approximately $75,000 per year.
There’s a correlation between income and emotional well-being, but this stops around $75k.
This means, you feel better when you go from $40K to $50K, and $60K to $70K, but once you hit $75K, it’s basically a wash. Everything after $75,000 per year is diminishing returns, the study shows.
After the mortgage, two cars, rising healthcare premiums, vacations, and family outings, 75 racks doesn’t seem really like all that much anymore, does it? Especially if you surpassed the six-figure mark years ago.
Ask yourself. "Is my life really all that much richer now than when I was just making a modest living? Do I feel fulfilled? Am I content?"
When 70% of lottery winners go broke within 5 years of hitting the jackpot, can we really say that the lack of money was their problem? Rather it, money only amplifies their problems.
And sure, money goes a lot further in Des Moines, Iowa or Indianapolis, than in New York or California. Say there's a $10,000, difference, maybe even 20, the fact of the of matter is that at some point, money does not provide any more value to us emotional utility.
You may ask, should we go back to making $75,000 a year? No way! But this doesn’t mean we should go just buy more stuff or fall victim to the scarcity mindset epidemic.
3 Steps To Increasing Emotional Well-Being Beyond The Money
- Know your number. How much do you really need? Do you have kids? Are you college planning? Do you desire more culture and to travel? Get clear on who you want to be, and that will determine what you need.
- Get crystal clear on what success means to you. If success is measured on a balance sheet, life is going to be pretty unrewarding.via Business Insider
- Reevaluate your social circles. As Jim Rohn said, “you are the average of you 5 closest friends.” If you are surrounded by money-hungry animals, but you desire to help underprivileged children learn about art, you might want to make some new friends…
And if you want us to answer your questions on one of our upcoming episodes, drop us a line at firstname.lastname@example.org.
Mentioned in This Episode:
- High-income Improves Life Evaluation, But Not Emotional Well-being?
- How Much Money is Really Enough?
- How Much Should You Have in a 529 Plan By Age?
- How Winning the Lottery Affects Happiness, According to Psychology Research