However, what I believed was most fascinating about this examine was it discovered that in the event you surpass these thresholds, your life satisfaction and emotional well-being can truly begin to decline. When you hit your ceiling, you begin to fixate on issues like social comparability (i.e., the way you stack up subsequent to the Joneses) and buying extra materials beneficial properties (e.g., extra money, extra stuff). In different phrases, you develop into propelled by the idea that others are doing higher than you, so it’s worthwhile to get extra to maintain up, making your life satisfaction recede.

What’s the hyperlink between funds and wellbeing?

In a associated 2023 examine by psychologists Daniel Kahneman and Matthew Killingsworth, they pitted their opposing theories in opposition to one another in an adversarial collaboration to see if happiness did, in reality, plateau at a sure earnings degree.

In 2010, Kahneman famously theorized that emotional well-being didn’t improve above an earnings of $75,000 a yr, whereas a decade later, Killingsworth argued that it may. After surveying a brand new crop of individuals, they ended up discovering collectively that though happiness may improve with extra money, there was a ceiling for heading off unhappiness.

For those who’re already sad due to heartbreak, bereavement, scientific despair or “different miseries,” similar to trauma or skilled discrimination, cash can diminish your struggling solely as much as $100,000 a yr however not a lot past that.

As Killingsworth shared about these findings, “this means that for most individuals bigger incomes are related to larger happiness . . . [but the] exception is people who find themselves financially well-off however sad.

As an illustration, in the event you’re wealthy and depressing, extra money gained’t assist. For everybody else, extra money was related to larger happiness to considerably various levels.”

What’s the takeaway from all these research about cash and happiness and stress?

Right here’s what all these research inform me: First, it doesn’t matter what, in the event you don’t have sufficient to cowl your fundamental wants, extra money is undeniably the answer to that downside. This at all times jogs my memory of a basic Pals alternate the place Ross says, “I simply by no means consider cash as a difficulty,” to which Rachel responds, irritated, “That’s as a result of you will have it.”

While you manage to pay for, it stops being a difficulty. It may possibly, nonetheless, transfer the highlight over to your different points. As Vitug put it in his guide, “cash fixes cash issues, but it surely isn’t the reply to life issues.”

As I mentioned at first of this guide, there’s a motive why there are such a lot of depressing millionaires and billionaires on the market. There’s additionally a motive why I’ve met so many individuals within the FIRE community who efficiently amassed a seven-figure nest egg, solely to understand they have been nonetheless sad after they retired early.