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  1. Money and Happiness: How much money do you really need to be happy?

Money and Happiness: How much money do you really need to be happy?

In the real world there certainly is a relationship between salary/income and happiness. However, what is that ideal amount of money which can make your life happier forever?

By: | Published: March 12, 2018 11:19 AM
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They say money can’t buy happiness. Let’s, however, be honest — they say a lot of things and they’re not always right. Experts say that happiness does increase with wealth, but the correlation peaks at a certain amount of earning per annum. However, no matter how much more than that people make, they don’t report any greater degree of happiness.

You must have heard a common saying ‘Money Can’t Buy Everything’. There are many things that no amount of money can buy and you can think of it this way:

# Money can buy medicine, but not health.

# Money can buy a house, but not a home.

# Money can buy companionship, but not friends.

# Money can buy food, but not an appetite.

# Money can buy a bed, but not sleep.

# Money can buy the good life, but not eternal life.

The above logic is absolutely true. However, just think a while…What happens if at first you aren’t able to buy medicine, a house, companionship, food, bed, good life and so on…? Therefore, a certain amount of money is a basic minimum necessity to achieve a happy existence.

“In the real world there certainly is a relationship between salary/income and happiness. People who earn a good living are often happier than people who live in poverty. Having extra money can certainly enhance our lives with materialistic needs such as food, objects and creature comforts in our homes and importantly it gives a certain level of security to our life that keeps us mentally satisfied,” says Rahul Agarwal, Director, Wealth Discovery/EZ Wealth.

The question, however, is: why to work so hard after reaching an income level which is able to make one happy? The fact is, “after a level of earning, money can’t give you the same increase in happiness and sometimes it is also negatively correlated — with a rise in income you tend to shift towards a life that takes you away from basic happiness that you had enjoyed while you were earning less. Therefore, there actually is an ideal yearly amount we can earn to feel emotionally content and satisfied – and believe it or not, if you have too much money, you may actually start creeping back into unhappy territory,” says Agarwal.

The important question now is what can be that ideal amount of money which can make your life happier throughout. It depends…

It can vary from person to person, situation to situation. It depends on your geographical location, family values and traditions, social environment, your aspirations and many more. In India per capita income is at Rs 1,11,782 in FY2017-18, though there is higher income inequality in India, as India’s top 1% bag 73% of the country’s wealth. If you are the only earning person in your family, assuming four members in your family, to maintain the per capita income you have to earn nearly Rs 4.5 lakh per annum. Does this money is enough to maintain a comfortable life for four members of your family? Certainly not, considering today’s cost of living, if you are living in a metro or tier-II cities also.

So how much earning do you really need? “Considering various factors, your family income must be in a comfortable zone where you could at least be able to meet the basic expenses of your family, and thus an annual income of at least Rs 7 to 10 lakh is a basic necessity. Now, if someone is able to meet basic needs, he is mentally free to think other life events and also remain happy if he wants to be happy,” says Agarwal.

The real story actually begins after you are able to achieve a basic earning and now it’s actually your aspiration, your greed, and your thoughts towards your life and society that make you happy. If you earn more from this point, it really can’t buy you happiness unless you do not know how to live happily.

“If you have already earned or are currently earning sufficient money but you are still unhappy with your life, then its time to think about your attitude towards your life, family and society. At this point you can’t buy happiness with more earning without changing your viewpoint as happiness, of “subjective well-being”, is a state of mind – how we feel about our self and our life. If you start thinking that you have got all the necessity to remain happy, you will really become happy,” informs Agarwal.

To summarize, money and happiness can be explained to some extent by applying the theory of ‘Decreasing marginal utility’. If you are famished and are offered a large pizza, barring the first few slices, the satisfaction with each addition slice of pizza diminishes and after a while additional slices make you cringe. “The same can be applied to money as after a while additional accumulation of money or materialistic things do not really add to happiness. The key highlight here is that the quantum of money required for happiness varies for each individual,” says Agarwal.

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