According to Vicki Robin, author of Your Money or Your Life, U.S. respondents to happiness surveys consistently rate their happiness between 2.6 – 2.8 (out of 5) regardless of income level. When asked how much more they’d need to be happy, they respond somewhere between 50-100% more than they have now.
But those that have more aren’t necessarily happier. So happiness can’t be contingent on how much they bring in, but is more likely impacted due to the stress they feel regarding what is required of them in order to cover the expenses they allowed into their financial lives.
Is the answer to just make more money? Maybe. But only if your expenses don’t rise correspondingly. Of course, many experience burnout due to the burden of expectations, or even the necessity, to continue the pace and demands associated with being a high income earner.
Is the answer then to cut your expenses? Again…maybe. A deep review of where your money is going may be helpful by tracking all of your expenses for several weeks or months. You may have money that’s being automatically paid to subscription services that you don’t use or weren’t even aware of! You may even gain insight about your spending habits that seem trivial in the moment, but a broader view points to a substantial savings opportunity. But there is a limit to how much you can cut without sacrificing comfort and quality of life.
The right answer for your situation may be a combination of both approaches. Pursuing opportunities to increase your earnings through promotions, raises, or additional income streams like side hustles are ways to increase the amount of money you bring in.
Being honest about your needs versus wants, reviewing your spending patterns, seeking better insurance policies, shopping around for lower cellphone and television options, and simply making a commitment to be more mindful about money spent on convenience items like fast food, expensive coffee treats, unneeded clothing, etc. are ways to decrease the amount of money spent.
Ultimately, the goal is to expand the gap between what is earned and what is spent. The greater the gap, the more you have to save for the future and to give to causes you feel deeply about. Moving away from a paycheck-to-paycheck lifestyle and increasing your opportunities of making a meaningful impact helps to create an environment where happiness can take root.
