Studies have been mixed on whether there’s a limit to how much money can make you happy. A newer study resolves it, but the answer isn’t quite black and white.
You’ve no doubt heard the expression that money can’t buy happiness. This is absolutely true, except for when it’s not. Like all advice, it has an operating range, meaning a set of conditions under which it holds. Let’s understand when and where it matters and because money and its use is a key driver (although not the only driver) of why people work at the jobs they do.
If you’re not familiar with the idea of an “operating range” consider the following Buffet quote [I can’t verify him as the source of the quote, but that’s moot for this point] in which he advises that when hiring to look for integrity, intelligence, and energy (reference). It’s good advice—unless you're hiring a bus driver. You likely always want integrity for all roles, but does intelligence matter for a bus driver? A genius level person might even get bored driving the same route over and over and start to get distracted. What about energy? A go-getter has nowhere to go driving a bus. If you’re hiring for a corporate job, the advice makes sense, but not so much for a bus driver, someone working an assembly line, or many other jobs. So, the advice works under some conditions but not all.
It’s true that money can’t buy happiness, by which we mean it can’t buy friendship or a sense of purpose. The stereotype of people in high paying jobs like finance or Wall St. is they make lots of money but find they aren’t happy. I’m sure that’s true for some, but not all.
But money definitely prevents misery. Maslow’s hierarchy of needs starts with physical safety, food, and shelter. If you struggle to pay your rent and buy food or worry that you’re a lost paycheck or two away from not being able to, your needs aren’t being met. People on the lower end of the income scale often face this. Even worrying about a medical procedure, say an operation that costs you $10,000 after insurance, can wipe out many people. Again, base needs aren’t being met for those people. (It’s actually worse than that as reported in the CBS article “Most Americans can't afford a $1,000 emergency expense, report finds” referring to the Bankrate2025 Emergency Savings Report which provides much analytics on how threadbare the financial safety net is for most Americans.)
Many marriages face significant stress over lack of money (which always damages another of Maslow’s needs, social connection). Having sufficient resources, be it money in the bank or income, helps to remove stress stemming from risk and uncertainty of not meeting basic needs. So how much money do we need?
You may have heard there’s a limit, or is there? Research in 2010 from Daniel Kahneman and Angus Deaton (“High income improves evaluation of life but not emotional well-being”) found that emotional well-being plateaued around $75,000. (Note: your mileage may vary depending on the cost of living in your zip code; $75,000 goes much further in Evansville, Indiana than New York City.) However, Matthew Killingsworth found otherwise in his 2021 paper, “Experience well-being rises with income, even above $75,000 per year.” Two papers, two different outcomes (ah, social science!). Kahneman and Killingsworth then came together along with Barbara Mellers in their paper, “Income and emotional well-being: A conflict resolved.”
You can read the papers yourself, but the short answer is: it depends. For the least happy people, happiness flattened around $75,000 - $100,000. For the happiest people, it continued to rise (and even accelerate).
What does this mean for you? For everyone, there’s a minimum amount of money which is required to remove risk. You need enough to cover basic expenses, have a safety net, and ideally be able to go out to dinner or take a vacation from time to time. Beyond that, it depends. Some people are really about having the biggest bank account, and for them, perhaps more money means more champagne wishes and caviar dreams which makes them happier. For others, where relationships and meaning matter more, there may be limits to what money can buy. In a study published in Nature, “Evidence from 33 countries challenges the assumption of unlimited wants” Paul G. Bain and Renata Bongiorno found that while there are some people for whom maximizing net worth as much as possible is the goal, for the majority of respondents the number was US $10M (and less in certain countries). While the methodology tends to be a bit hypothetical, it shows that people do feel there is some point where returns on marginal dollars diminish.
When thinking through your career and your needs start by creating a basic budget, even a ballpark one. Think about your expenses like rent, food, transportation, and retirement savings. Don’t forget to include an annual social budget for going out and taking vacations. And you’ll want to build up a cash safety net (my parents always taught me to have at least six months in the bank at your current standard of living). Think about how it will change over time. Do you need a bigger apartment or to save for a downpayment on a house? How about paying for a wedding or your kids' college expenses? It doesn't have to be exact but put in ballpark numbers to give you a sense of where you need to be. At age twenty-three you may not need to think about saving for your kids' college education (you’re still likely paying off your own), but it will be there at age forty-three. It’s less about a specific number a research paper shows and more about making sure your needs are met. Beyond that, it’s up to you how much more happiness each additional dollar brings. What matters most is that you know what makes you happy, marginal dollars or something else, and you can make sure you focus on that to maximize your happiness. “How much money do I want?” is one of the questions in The Career Toolkit’s career planning questions (which you can access for free with that link).
I can’t tell you what the right number is for you. That’s for you to answer; although remember that your spouse (or future spouse) may have some thoughts on it as well (and maybe also some contribution to it). What does matter is that you try to understand it and incorporate it into your career planning. Even if you get it wrong, you’re no worse off than if you hadn’t thought about it at all. Most importantly, you need to understand how much margin dollars will or won’t bring you happiness, and if they won’t be sure to find out what does so you can get it from your career and/or other aspects of your life.
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