Money and Happiness: How Much Salary Means Satisfaction
Money and Happiness: How Much Salary Means Satisfaction
As a 23-year-old Software Engineer, I understand the challenges and benefits of my current in-hand salary, which is 1.70–1.75 Lacs per month. Let's explore the factors affecting income and happiness, and how we can measure our satisfaction with our earnings.
Income Levels and Financial Comfort
Consider my experience living in Germany and working there, where I earn 70k€. With the increase in energy prices, food costs, and housing rents due to the Ukraine war, my post-tax income of 3500 euros is insufficient. However, understanding my financial situation and goals is crucial for assessing my satisfaction. Being part of a middle-class family, my salary of 3.5 LPA after my and an increase to 4.5 LPA after one year, aligns with my personal values and aspirations.
Personal Perspective on Salary and Happiness
Like many, I am generally content with my current earnings. The ability to work from home (WFH) and remain unmarried allows me to focus on learning new skills, aiming for a future where I can earn more. Being brought up to value what I have, I find fulfillment in the income I earn, regardless of the specific amount. This perspective influences my pension plans and my overall happiness.
Research on Income and Happiness
Research on income and happiness is extensive, and studies reveal that there is a point where additional money does not significantly increase happiness. A 2010 study by Daniel Kahneman and Angus Deaton found that happiness levels off at about 75,000 USD per year. However, more recent studies suggest the ideal income is around 95,000 USD for life satisfaction and 60,000 to 75,000 USD for emotional well-being. Beyond 105,000 USD, happiness levels tend to decrease.
Relative Income and Happiness
Happiness is not just about having more money; it’s also about how your income compares to others. A psychological theory called "relative income" suggests that even the wealthiest individuals may not be fully satisfied if they see someone even slightly more successful. This is because humans are naturally wired to compare ourselves to others.
Meaningful Work and Purpose
An essential factor for happiness is the meaning and purpose derived from your work. Research shows that people are happier when their job aligns with their personal values and strengths. Even if a lower-paying job offers more fulfillment, many stay in high-paying but unfulfilling roles due to financial constraints. The key is to identify your values and align them with your work, regardless of the salary.
Summary and Implications
While money affects our happiness, it is not the only factor. Understanding the point where additional income stops adding value, recognizing the relative nature of income, and finding meaning and purpose in your work can significantly enhance your overall life satisfaction. Whether you are a 23-year-old software engineer or a seasoned professional, the pursuit of happiness should focus on these three pillars: financial well-being, relative income, and a fulfilling sense of purpose.
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