Looking for happiness through financial success? Wondering what the magic number is? It's $40,000 according to Harvard psychologist Daniel Gilbert. Really. So technically, most of you should be happy. And if you're working for the next big raise, forget it. You're better off working on teaching yourself how to look at your money with a different eye.

I remember when I passed the $100K mark. My boss loved my work and gave me a raise that put me at $125,000. But a competitor offered me $140,000 and my boss told me he wouldn't match it. At that point, I had no kids, no mortgage and no car payments, so I didn't need the money. But I recognized salary as a gauge of prominence in my field, and although I was making $125,000 I felt under appreciated.

Eventually, I left that job for one that paid more than $200,000 a year, and I lived the aphorism that you have to spend money to make money. I couldn't take high-end clients out to dinner in my refurbished wreck of a car, so I leased a BMW. Dressing as well as my clients cost an arm and a leg. And I hired an assistant to manage my personal life since my new position left no time for that.

You might scoff at my choices, but I was not unique among those whose salaries hit six figures: My expenses rose with my salary, and my desires expanded with my bank account. You might think, “That won't happen to me,” but how foolish you would be to assume you would be the exception to the rule.

In fact, the rule is well established in research: The first 40 thousand makes a big difference in one's level of happiness. Happiness is dependent on being able to meet basic needs for food, shelter, and clothing. After meeting those needs you need to turn to something other than consumerism. Because additional money has negligible impact on how happy you are. Your level of happiness is largely dependent on your outlook.

Maybe you're thinking there's another magic threshold beyond forty thousand. Like maybe 40 million. But you're wrong. When I ran in circles of venture capitalists, there was a common phrase, “It's not jet money.” Which was a way of saying, it was a good deal, but it won't earn enough money to pay for a private jet. No matter what size the pile of money is, there's always a way to see it as small.

So for those of you looking for more happiness, realize that a new job or a new home won't be nearly as rewarding as a new outlook. Optimism makes people happy. Raising your standing on the optimism scale will impact your happiness more than raising your worth on the pay scale.

Here's a ten-second test to figure out how optimistic you are:

Think of something really bad that has happened to you. Do you think:
1. It has made me a better person.
2. I made some mistakes, but bad things happen to everyone sometimes.
3. Nothing ever goes right for me.

Think of something really good that happened to you. Do you think:
1. I am good at creating my own success.
2. I got lucky.
3. In the end it didn't turn out to be that great a thing.

If you chose the first answer both times, then you probably already feel pretty happy regardless of your income. If you didn't answer one both times, then a shift in the way you think could dramatically improve your happiness.

The good news is that you can train yourself to think positively. Watch how happy people behave. The cliche about gaining strength through adversity might annoy you, but happy people live by those words.

If you took the test above and picked the third answer both times, you probably blame your life on external things so that you don’t have to take responsibility for your plight. Happy people take responsibility for their success and consider failure a temporary fluke. To change your thinking, start assuming responsibility for your emotions.

If you chose the number two answers, you probably tell yourself, “I’m not happy but I don’t know why.” Start believing that if you take action, good things will happen. Tell yourself good things happen because you expect good things and bad things happen to make you stronger.

Maybe you’re thinking, “Forget it. I don’t believe any of this works. And I can’t do it anyway.” But that’s part of your problem, isn’t it?

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37 replies
  1. Fazed
    Fazed says:

    True, after some point you have too look for something more than just another thing to buy, another thing to have. I make about 20.000$ a year and it’s enough for comfort and savings – but not enough for big dreams like owning a house. But then I looked around and noticed what I already have and saw, that some dreams really don’t have to become a reality. My family already has a house – a 100 year old country cottage made of stone :D How romantic is that, eh? Now that one of the biggest dreams I had in last few years is in reach and it’s always been there – now I have to find something other in life to ficus on. Nice post, we should all challenge our unhappiness and take a good look around and into ourselves – because maybe we don’t have anything to be unhappy about in the first place!

  2. Todd
    Todd says:

    I would say that I fall under those who consider that they “got lucky” any time i’ve had a success.
    At this point, I’d say I fall in and out of the “take action” attitude. And I recognize it as a help. However, it can be difficult when you are enduring financial difficulties, as well as personal difficulties. I suppose it’s good to keep in mind that a bad attitude solves nothing.

  3. lucilla
    lucilla says:

    I would have to say that if you think about positive things and do positive things, good things will happen. When I was in college, I saw groups of kids jumping around every weekend at the bars, while I sat there with my hands crossed. I always asked myself, “Why are these kids so happy?” Every weekend it was the same group dancing about and smiling like if there was nothing wrong with the world. I would always call them,”Stupid” or “Silly”. What I needed to do was start jumping and dancing about, and think positively. They had a secret that I did not know about. I am happier now than I had been in my last 10 years. I changed my environment and attitude about life. Anytime I hear someone spewing negative thoughts, I turn it around and look for something positive to say. I liked the blog. I chose 1 and 2. The second question I chose 2 because I met my current boyfriend when I was dancing and jumping around like those college girls from my past! I really did get lucky!

    • Amusieren
      Amusieren says:

      What if I picked 1 on the first and 3 on the third? Perhaps I am a work in progress? Excellent read and inspiring. Definitely puts some things into perspective. Wish more examples were given than a salary.

  4. Barbara Saunders
    Barbara Saunders says:

    I agree that the minimum is lower than we tend to think. However, an exact number is hard to pin down. At $40K in San Francisco, you’ve got to live with several roommates under the very precarious financial situation that if your rent-controlled apartment goes away, you are in trouble!

  5. Michael Sebastian
    Michael Sebastian says:

    What a terrific post. I am living proof of just about everything you’ve written here.

    I have a high-paying, prestigious (by the reckoning of some) “day job”, but I’m no happier, and probably less so, than during my lean years when I had enough to get by on but too little to warrant worrying about.

    With the big salary has come a big house in order to have the kids in a good school district befitting our exalted status; and the other trappings that accompany all of this (though our two cars have about 260,000 miles between them.) All it mainly does is lock in a much higher overhead and restrict your choices and flexibility; we spend $10k a year on friggin’ insurance to “safeguard” all that we have–which in reality, has US. I knew all of this, of course, but seeing you lay it out so starkly is a revelation nonetheless.

  6. rental insurance
    rental insurance says:

    interesting article and shocking title … because not many people can get $40.000 income in a year … but good for making many people to set their goal.

    I see a good test too … :-)
    i agree that “Tell yourself good things happen because you expect good things and bad things happen to make you stronger.” … we have to think positively in any condition.

    thanks and keep up posting informative article like this

  7. Randy
    Randy says:

    (May 27, 2009)

    My comment is late but this article is absolutely accurate. Best article from Trunk yet. Happiness follows the Hierarchy of Needs too.

  8. Tim
    Tim says:

    So true that money does not make happiness. I make about $500K a year. I am miserable at work. The more I make, the more I spend on things that have not made me happy (expensive cars, expensive women). I have gotten to the point that I am seriously considering semi-retiring. The only reason that this is even a possibility is that an inheritance from my dad has allowed enough to retire (assuming I let is sit and grow), since I do waste alot on money since I have not been forced to budget. Let me say in my own defense that I had to work an unbelievable long time (32 years formal education; including two doctorates) and many many sleepless nights to get to the position I am in.

    I actually like the work I do, it is just the environment and people that I work with that has made me miserable. The last place I worked (same work) was a paradise. If I semi-retire, I can decide where (and thus who) I work with; I can choose not to work in the same place again if I don’t like it. Of course with part-time work comes part-time income. Lastly, and most importantly, I can be closer to my 10 year old son, who happens to live in the city I was born and love (San Diego). I go back and forth in my mind about this choice.

      • Benny Yakubu
        Benny Yakubu says:

        This is outrageously late considering the date of this post but I just had to point out here that we should learn to enjoy articles and overlook grammatical errors that could possibly be typos. Especially when we make mistakes of our own whilst trying to point out the error of another – my ‘fried’.

    • Jenn
      Jenn says:

      Do it. Don’t be at a job that makes you miserable and miss out on real life. Be close to your son. Use the inheritance money wisely and create a grounded meaningful full life.

  9. Suzanne
    Suzanne says:

    I’ve commonly heard $50k as the happiness figure, but it probably varies a bit based on location. The concept that not having to worry about money- pinching every penny to meet basic expenses- is really the key. Everything else is gravy.
    One thing though is that it is not as necessary to spend huge amounts of money on clothes. You could shop at higher-end resale or consignment shops and look just as sharp for the fraction of the cost.
    But yes, happiness is a daily decision- both making choices that lead to happiness, and also deciding to be happy, or at least satisfied.

  10. River
    River says:

    Penelope, it’s a great post, but the second half deserves to be an additional post in itself, perhaps entitled “Ten-Second Test to Figure out How Optimistic You Are”. It was of more interest to me than the beginning topic of the article.

  11. TwistedByKnaves
    TwistedByKnaves says:

    How very true.

    My daughter (an impoverished student working from 10pm to 4 am three nights a week to pay her way through university) told me of some research indicating that actually, EVERYONE secretly believes that if only they had 25% more income they would be comfortable. She is a naturally happy person and was happy to put my mind at rest. She believes she has everything she really needs and is not one of the foolish herd who wants more.

    Though it would be nice to be able to heat the flat she shares in the winter. Which would cost… Oh my! there really are no exceptions!

  12. Brandy Brown
    Brandy Brown says:

    I integrated this post as a practical example of applying your motivators to your decisions, judgments, etc.

    I had read about it in class – but your method of presentation is a lot more accessible than the articles I personally love to those who might read my blog. In other words – thanks for writing it. You and your writing are so deeply inspiring – and I am so thankful for stumbling across them at this stage in my life when I’m coming up on getting my PhD, am in a happy relationship, and am looking down the barrel of career and life decisions.

    http://paintandsoul.blogspot.com/2010/04/chasing-your-motivation-could-lead-to.html

  13. Jonha
    Jonha says:

    Hi Penelope,

    “So for those of you looking for more happiness, realize that a new job or a new home won't be nearly as rewarding as a new outlook. Optimism makes people happy. Raising your standing on the optimism scale will impact your happiness more than raising your worth on the pay scale.” Love it. Everyday I bring with along my notebook and pen and get few things to jot down on them. There’s nothing more powerful than the thought that you can choose over your situations. It’s all about how we perceive things.

    Jonha

  14. Sue Chaunavel
    Sue Chaunavel says:

    The key however is connecting with others – this is essential even if you are an optimist.

  15. tramky
    tramky says:

    These kinds of pieces are written by shills for corporate employers who wish to enslave their mainstream employees so the executives can collect their multi-million-dollar compensation packages. How many executives in big corporations do their alleged work for $40,000 a year?

    Ahhh, just what I thought. Don’t believe this guy–in America it is ONLY money that matters. The rest is propaganda. If you doubt this, look at the Wall Street bailout, in which direct taxpayer money was given to banks, which then turned it over to executives & supposedly key employees as multi-million-dollar bonuses.

    The author if this piece is a bald-faced liar.

    • fred
      fred says:

      tramky,
      I am sad to hear you are such a miserable person. I am a full time college student living on $20,000 a year, paying for school and living expenses. I aspire to make more money one day to have more finacial freedom and be able to do what i want without months of planning. But oney is everything? really? I am in the service industry and the majority of my clients are “well off.” And you know what? those are the ones with the most problems and unhappienss…i think you should reconsider your approach to life unless you would like to remain miserable forever.

  16. Sharon
    Sharon says:

    Thanks for a great article. It could not have come at a better time. I have been given responsibility to mentor our youth church group and I know I could incorporate some of the points you have raised, real food for thought!!! I am a firm beliver in that we can not control some of the things that happen in our lives, but how we react to them is a choice we make.

  17. alireza pakzad
    alireza pakzad says:

    being positive is very important in all people’s life but it is needed to learn and having enough practice to do it.Any training in this regard could be useful and effective .I am trying to be positive and therefore i need your help.

  18. Alejandro Marten
    Alejandro Marten says:

    Wanting more is part of human nature. This is why humanity has progressed through the centuries and now we read stuff on the Internet etc. Wanting more does not mean that we are unhappy. You could be perfectly happy achieving and working towards something better. The key is to enjoy the ride. As Tony Robbins says, “Don’t achieve to be happy, happily achieve”.

    Becoming better and better every day is part of God’s will. This is what will really make you happy. Now remember that a bigger paycheck is not necessarily the right path to becoming better or achieving happiness.

    Cheers!

  19. Robert Beverly
    Robert Beverly says:

    This is a brilliant article. I’m an unsinkable optimist, and have “converted” a few others to my admittedly insane outlook. Well we might see things differently, but we bounce like rubber when others go “splat.” I’m glad to see someone writing about it… seeing obstacles and setbacks as opportunities is, in my mind, the first step on the path to enlightenment.

  20. gaonyadiwe mavis mosekiemang
    gaonyadiwe mavis mosekiemang says:

    I agree completely that your happiness is dependent on your perspective of yourself, regardless of how bulging your purse maybe. I remeber how I used to be content with the little salary I had. Then one day came a huge salary, and God forbid, I started wanting this and that, and was not really happy, because I could not meet my demands. Now, I live one day at a time. i’m happy with my family, friends and the little that I make, I live on my means, makes me so happy.

  21. Jordan
    Jordan says:

    I answered two both times, and I choose to look at it as not that I am “not happy and I don’t know why” but why I am happy and I don’t know why. I honestly can’t say the last time I’ve ever woke up and said, life sucks. Is that wierd?

  22. Cat
    Cat says:

    I really think happiness depends on the number of hours worked. If you are working 80/hrs week to make that 40K then chances are you are too exhausted to be happy. I know plenty of people who earn about $12/hr. Many of them have second jobs.

    Then again, I’ve heard that there are some people who work 80 hrs/week because they love what they do, but I’ve never met any of them.

    Maybe I’m just not optimistic enough? I chose a #1 and a #2 for the ten second test.

  23. Robert Beverly
    Robert Beverly says:

    To the person who said articles “like this” are written by shills for corporate employers, I disagree. I consider myself an evangelist for self employment, and I agree with the premise that happiness is internal. If you can’t be happy with “enough”, having a great surplus will not satisfy you either.

      • Robert Beverly
        Robert Beverly says:

        Thanks Benny! I had not thought about this article for a while (years?!), but I’m in the middle of obstacles-that-are-opportunities even now, and this article is once again relevant and poignant… time folds in on itself in strange ways, and the world is ever full of interesting opportunities ;)

  24. Van Janus Ice Mein
    Van Janus Ice Mein says:

    Here’s a shocker. We will ALL die in the end. If you are 30 years old, you barely have 45 more years to live, of which 35 years are working. You can make it big, really big, Michael Jackson Pharoah Bill Gates rich, and you will die too. The homeless smelly bum pushing a shopping cart. He will also die, same end result as President Bush, Ralph Loren, Alexander the Great and the guys from South Park. we will all die. so the only difference is duration until death, and quality of life while living the next 30-40 years.

    It’s ok if you died a few years early, because the quality of life between age 80 and age 85, is declining from bad to worse. everything hurts, you smell life farts and you dont remember anyone. So if you died early, its ok.

    what does matter is if you have regrets, if you are proud of yourself and your life. it matters when you made a last positive change in other’s life. that stuff lives on. that is how you leave your mark.

    owning a house for the next 40 years, but it will be around for 250 years, you the owner are just a transient resident. you dont own the land, the land owns you – in the end.

    jobs and money only matter to boost the quality of life for your next 30-45 years of life (assuming you are 30 – 40 yrs old)

  25. Matt
    Matt says:

    I really believe in this post. I make exaclt y40K per year and it was a big step to me. I just got outta college and went form 17per hr to 20, not a huge change but I was happy with it. I will make 60,000 within next 5 years so I know its all hard work, its all in believing in yourself, taking pride in your work and not giving up when challenged. Yes, happiness is inside, meaning that if your a naturally unhappy person 100K couldnt make u happy but having spending money does help. More u make more they take, remeber that too. I’d say, making 50-60K would be were I will be very happy and comfotable. Now its just alot of hard work and resisitance. What you go threw in life makes you and molds you into a unique character, some have a tendancy to give up when the going gets tough, I donot. I stand talll, proud of my accomplishments. I wnet form making $8 per hour hauling trash to a 2yr degree making 40,000. I am happy now but am always looking to do better so by the time im 27-30, Ill be making 60K and Ill have a nice home, car, boat possibly, land and hopefully a lil boy of my own not to mention my beautiful hott girlfirned who hoepfully will be married to by then..thats what makes you truely happy, yes in America money does help and can add or increase you happiness and without none more stress make u unhappy, but its the things that fill your life that make your soul truely happy. My firends, neighborhood, relationships, girl & passions were there with me since I was a little boy and will always be with me throuout life, don’t forget how you got here, many of us have very interesting sotires and some get loss along the way. Live a good proud life & always take one vacation a year at least to clear you mind and find you true innerself. Then you can be happy no matter what your doing or how much you make! Just love life and the gifts giving to you

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