You might have heard about the magic number of $75,000. A study that was done in the US reveals that “happiness peaks at $75,000 salary per year”. But what does that mean if you are in India or any other country? How much money do you need to be happy in other countries?
While the methodology I am using might not be perfect, but it can surely give you an idea about that number. One can convert $75,000 with the currency conversion rate but that would be incorrect. Reason being, a lot of things might be cheaper or expensive in your country vs the US and direct currency conversion does not factor that in. Better way is to use PPP or Purchasing Power Parity to convert this amount. I used Salary converter to come to an INR equivalent of peak happiness salary.
So, how much money is enough to be happy in India? The number is roughly INR 15 Lakhs of annual salary. The number does sound reasonable in terms of the lifestyle of someone earning $75,000 in the US vs INR 15,00,000 in India.
So would I not be happy if I earn more than Rs. 15 Lakhs?
There are two ways new research defines happiness. First is day-to-day well being and second is the overall satisfaction with one’s place in the world. Beyond $75,000 or INR 15 Lakh the day-to-day well being is not changed much. What changes is the overall satisfaction or life assessment. It makes people feel they have a better life without having much effect on day-to-day mood.
This somehow resonates with what I have written about buy what you need not what you want. What it means is that beyond a certain level of need, whatever you get has minimal impact on your happiness but of course, it does improve your life assessment as you think you have more stuff than others to brag about (at least brag to yourself if not publicly).
Does it mean if my income is less than Rs. 15 Lakh I cannot be happy or retire early?
No, it does not mean both those things. All the $75,000 or Rs. 15 Lakh means is that happiness for most people on an average peaks at that point. Can your happiness peak earlier, yes it can. Can you retire with an income less than that, definitely. You need to save more and spend less to retire early, without, of course, letting go of your happiness.
Additionally if I think about it, before doing my MBA I was roughly earning Rs. 15 Lakh (inflation adjusted). Has my happiness changed in my post-MBA jobs with a salary rise? No, in fact if anything it might have come down a bit. As you already know, there are no free lunches. If you think a considerable pay rise only brings in the money, think again. There are high chances that it will also bring in additional stress and the demand on your time would increase. This is an additional reason why you should retire early, if you are working non-stop for more than 12-14 hours per day.
$75,000 or Rs. 15 Lakh is just a number
I have seen people much happier in half the amount and miserable in double the amount. While these studies and numbers give us a general idea but are in no way definitive. You must chart out whatever makes you happy. And that is one of the key purpose of this blog. To allow you to decide your own Peak Happiness number and reach financial independence.
So, what is your number? How much money do you need to be happy? And what is the expense level at which your happiness will max out? It’s worth thinking about on a regular basis. Do let us know if you think that number is different for you.