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By Jamie Ducharme
February 14, 2018
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Money really can buy happiness, as it turns out — but you might not need as much as you think.

A large analysis published in the journal Nature Human Behavior used data from the Gallup World Poll, a survey of more than 1.7 million people from 164 countries, to put a price on optimal emotional well-being: between $60,000 and $75,000 a year. That aligns with past research on the topic, which found that people are happiest when they make about $75,000 a year.

But while that may be the sweet spot for feeling positive emotions on a day-to-day basis, the researchers found that a higher figure — $95,000 — is ideal for “life evaluation,” which takes into account long-term goals, peer comparisons and other macro-level metrics. Check out our investing article, to take steps towards growing your current cash.

The researchers, from Purdue University, also found that it may be possible to make too much money, as far as happiness is concerned. They observed declines in emotional well-being and life satisfaction after the $95,000 mark, perhaps because being wealthy — past the point required for daily comfort and purchasing power, at least — can lead to unhealthy social comparisons and unfulfilling material pursuits.

Still, the findings don’t mean that getting a huge raise won’t lead to individual satisfaction: It simply suggests, according to the researchers, that a group of people making $200,000 a year is likely no happier than a group of people making $95,000. The well-documented “hedonic treadmill” phenomenon also suggests that people adjust relatively quickly to their newly flush bank accounts, with happiness leveling back off over time.

In the new study, the researchers note that their estimates pertain specifically to individuals, and ideal household income is likely higher. Plus, while the figures in the paper represent global estimates, earning satisfaction also varies widely around the world, and in urban versus rural areas within countries. Certain regions — Western Europe, North America, Australia, New Zealand, East Asia and the Middle East — had higher financial thresholds for both emotional well-being and life evaluation, while areas including Eastern Europe, Southeast Asia, Latin America and Sub-Saharan Africa were lower than the global numbers. All told, the ideal income for life evaluation ranged from $35,000 in Latin America to $125,000 in Australia and New Zealand.

In North America, the optimal amount for life evaluation was estimated at $105,000, and the range for emotional well-being was slated at $65,000 to $95,000.

The researchers didn’t observe significant differences between men and women, but they did find that education level influenced monetary ideals. Highly educated people tended to have loftier income satisfaction points, likely because they had higher expectations of wealth and were more susceptible to social comparison.

All said, if your income is below — or above — the researchers’ ideal threshold, don’t despair. Research suggests that while money can buy happiness, the quality of your spending is just as important as the quantity.

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The purpose of this disclosure is to explain how we make money without charging you for our content.

Our mission is to help people at any stage of life make smart financial decisions through research, reporting, reviews, recommendations, and tools.

Earning your trust is essential to our success, and we believe transparency is critical to creating that trust. To that end, you should know that many or all of the companies featured here are partners who advertise with us.

Our content is free because our partners pay us a referral fee if you click on links or call any of the phone numbers on our site. If you choose to interact with the content on our site, we will likely receive compensation. If you don't, we will not be compensated. Ultimately the choice is yours.

Opinions are our own and our editors and staff writers are instructed to maintain editorial integrity, but compensation along with in-depth research will determine where, how, and in what order they appear on the page.

To find out more about our editorial process and how we make money, click here.

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