Money and Happiness

I had an upsetting conversation with one of my good friends the other day. She used to work in NYC at a investment bank, and now she’s a full-time MBA student at a school in Boston. I hadn’t seen her in awhile because her banking job took over her life (+100 hours/week). When I did see her, she was exhausted and could never enjoy her time outside of the office because she was glued to her Blackberry.

I get it. Money is important if you want to live comfortably…but how much do we really need to be happy? And is it worth giving up our lives in the pursuit of a bigger paycheck?

Having worked for a couple of big Wall Street banks, I know a thing or two about working your life away for a paycheck. After a few years I realized that I was spending 95% of my waking hours at work, and I was missing out on all the things that used to make me happy:  time with my husband and family, my social life, exercise, traveling, cooking, etc. What was the point of making a lot of money if I didn’t even have time to enjoy it?

I read an article the other day about the “happiness benchmark”. It referenced a study done in 2010 by psychologist Daniel Kahneman and economist Angus Deaton, which found that a person’s happiness stops improving after a certain income threshold. The national average is $75k, but it differs by state based on cost-of-living (see chart below).

happiness-benchmark

People will inevitably vary from these averages, but the idea is worth thinking about. What is your happiness benchmark? Can you afford the things that make you happy with a lower paycheck? If so, maybe it’s time to leave that miserable job that works you to the bone and take a risk doing something you’ve always wanted to try.

Do you agree with the idea behind this study, or do you think it’s missing some crucial points?

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