Can money buy happiness? Recent data shows that most Americans need an annual salary of $100,000 to be happy. But this number varies by state, with some residents reporting needing more income and others claiming to need less.
Twelve hundred Americans answered survey questions about their income, satisfaction with their current salary, and how much more they would need to earn to be happy. The response was a $25,000 jump from a 2010 Nobel-prize-winning happiness study.
Considering the average income in the United States is about $31,000 a year, most people have a long way to go.
This Western State Requires the Biggest Paycheck
People in Hawaii need the biggest paycheck to be happy, an annual income of $200,978. Hawaiians are also near the top of the list regarding dissatisfaction with their income. The difference between what they currently earn and the salary they believe they need to be happy is 311%.
Residents in the Northeast Like to Live Large
Many states in the Northeast rank high on the list of needing the biggest paychecks to be happy. New York, Maryland, Maine, and New Jersey are all in the top ten, and Massachusetts, Pennsylvania, and Virginia are in the top half.
The cost of living in these states is notoriously expensive – higher than the average. It stands to reason that at least a portion of this higher income allows residents to meet basic needs like housing, food, and healthcare.
For most people, though, happiness is achieved beyond meeting basic needs. The fact that more than half of the respondents said they avoid social outings and vacations because of financial instability shows that there is more to their happiness than just keeping a roof over their heads.
Southern Residents Can Get By on Less
On the flip side are Southern states. Six states, including Arkansas, Alabama, Louisiana, Tennessee, Georgia, and Mississippi, come in on the bottom half of the list.
People in Alabama say they would be happy with an annual salary of $69,615, and those in Mississippi would be satisfied with $57,500.
Residents of Five States Would Be Happy with Less
While most people feel like they need to earn more money to be happy, those living in Delaware, New Hampshire, Indiana, North Dakota, and Vermont are pleased with their income. Some residents even say they would be happy to earn less.
They have found a sweet spot of contentment that has little to do with how much money they have in the bank. They recognize they have many things to be grateful for, which is one of the keys to happiness.
Paycheck Size Does Not Correlate with Cost of Living
The most significant surprise in the findings is that paycheck size does not correlate with the cost of living. Californians report needing an annual income of $127,968 to be happy when this western state is one of the most expensive in the country.
New York, also well known for its high cost of living, ranks number one for needing the largest paycheck, whereas Massachusetts, which has an even higher cost of living than New York, ranks fifth.
This finding shows there is more to happiness than the number of zeros on a paycheck. So, what's the real secret to a happy life?
Money and Happiness Do Not Relate
A previous study showed that income increases happiness, which makes sense. The higher a person's income, the easier it is to meet their basic necessities and still have money left over. But these same studies also show that the relationship is not infinite. There is a tipping point where additional money does not bring extra happiness.
Earning an income of greater than $100,000 does not equal more happiness. Other, more critical factors are likely at play, such as the quality of relationships, job satisfaction, health, and overall quality of life.
Those who are earning over $100,000 and are still unhappy may need to take a step back and change their perspective. As the old saying goes, you make lemonade when life gives you lemons. A grateful attitude goes a long way, as does the realization that not all good things in life come with a price tag. Learning to enjoy the simple pleasures in life can help to break the belief that chasing more money will equal more happiness.
Using Self-Care for Happiness
Another important tool to use against unhappiness and discontent is to prioritize self-care. All too often, people get wrapped up in family, career, and friends, putting others first while leaving little or no time for taking care of themselves. The result is unhealthy habits like eating poorly, not getting enough sleep, and adopting unreliable coping strategies that can damage the body.
Chasing happiness on a dollar sign breeds discontent, which leads to stress. Creating a detailed list of self-care ideas and putting them into action is critical to finding more happiness. The truth is happiness is not a destination. It is an attitude, a state of mind, a decision, and all the money in the world can't create that.
Jon is the founder of MoneySmartGuides, which helps people dig out of debt and start building wealth so they can achieve their dreams. He has over 15 years of experience in the financial services industry and 20 years of investing in the stock market. He has both his undergraduate and graduate degrees in Finance and is FINRA Series 65 licensed, and has a Certificate in Financial Planning.