- How much money is enough?
That’s the million (or billion) dollar question! Of course, it depends!
Where you live, how many dependents you have, your personal burn rate, and your nosy neighbors are all factors that greatly affect the answer. However, if you insist on getting a definitive answer then look to science. According to the Proceedings of the National Academy of Sciences, research has shown that well-being does not increase above incomes of $85,000 per year. (I know people in the Bay Area are probably choking on their mochaccinos right now).
Scientists have shown that higher incomes do get the happy juices flowing, but it generally plateaus at that level. Intuitively, this holds water if you consider Maslow’s Hierarchy of Needs. At the $85,000 level, you should be able to cover basic physiological needs, so any extra just helps you get bigger versions of everything and keeps you up with the Joneses.
It’s notable that while the starting salary of many in Silicon Valley and Wall Street greatly exceeds this level, many people I know are unhappy and simply work for more money. Wealth may give you the freedom to exert more control over your life and achieve greater happiness, but it can also be the thing that traps you in a constant state of misery.
Harvard psychologist Dan Gilbert clarifies the research on this subject by explaining that more money may not buy more happiness, but it provides an opportunity for happiness. He warns, however, that money “is an opportunity that people routinely squander because the things they think will make them happy often don’t.”
Reflect on that the next time you buy that tenth handbag or second sports car.
- What is the Grant study and why should I care?
The Grant Study has had a profound impact on my understanding of the drivers of long-term happiness. It is a 75-year longitudinal study conducted at Harvard Medical School and tracked the lives of a group of Harvard grads until their 70s and 80s. Participants included a POTUS, John F. Kennedy; an editor of The Washington Post, Ben Bradlee; four men who ran for U.S. Senate; and a presidential Cabinet member. Classic underachievers.
To me, the most fascinating elements of the study were the findings on what drives healthy aging. They found that those who had the best mature adaptations or defense mechanisms against adversity fared the best. They also found that those who were happiest towards the end of their lives had strong loving relationships with family and friends.
George Valliant, director of the program, explained, “The only thing that really matters in life are your relationships to other people. Happiness is love…The short answer is L-O-V-E.”
For the highly literate among you, this is old news. Two millennia ago, Aristotle’s Nicomachean Ethics told us that human friendship is necessary in order to live a good life.
This has taught me that investing and nurturing strong relationships is key to having a happy life. Not money, not power, and certainly not fancy titles.
- What stops us from being happy?
Nobel Prize winning psychologist, Danny Kahneman, says there are three things that hinder happiness.
- Too Broadly Defined. When one defines happiness across too wide a spectrum, it becomes meaningless. Figure out what happiness means to you and stick with it. Don’t move your own goal posts!
- It’s All Relative. Kahneman defines happiness as “what I experience here and now,” but he says that in reality, humans get wrapped up in social yardsticks. Brain science tells us that we care too much about keeping up with, and beating, the Joneses. Unless you forget the Joneses and focus on the now, you’re on a one-way path to misery manor!
- Focusing Illusion. With David Schkade, Kahneman developed the focusing illusion, which occurs when we exaggerate the importance of one single factor related to our future happiness and overlook others that, in most cases, have a greater impact. Remember this the next time you think you lost out on that promotion because you didn’t wear your lucky socks!
For those of you starting your career, or who are knee-deep in it, take solace that the odds are in your favor that you’ll feel better with time. Research has shown that happiness follows a U-shaped curve. It declines from our teenage years but starts to rise in our 50s. Perhaps it’s because the gap between our expectations and reality starts to close, or maybe because we know we’ll be getting beaucoup discounts through our AARP membership. Whatever the reason, rest assured that your best days are ahead of you.
About the Author
Dave is a seasoned executive and entrepreneur who founded several companies in entertainment, investments, and technology, and worked on Wall Street for almost 25 years.
He rose from an entry-level position to become one of the only managing directors of color at Jefferies. Dave also serves on the board of directors of Asian American Media Inc, the parent company of AsAmNews. He is also one of our largest donors.
If you want some great career tips and insights check out Dave’s book, The Way of the Wall Street Warrior, at TheWallStreetWarrior.com.
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