Nov 22 (Business Insider) – Money might actually be able to buy happiness — and each generation has a different idea of what that price tag would be.
On Monday, Empower — a financial services company — released the results of a survey conducted by The Harris Poll in August that asked 2,034 Americans aged 18 and over what they think the key to financial happiness really is. Turns out, 59% of respondents think happiness can be bought, and the average person believes it would take having $1.2 million in the bank to be truly happy financially.
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When it comes to annual salary, the average respondent thinks they need $284,167 each year to be happy. Here’s what each generation said they need to earn annually, as well as the net worth required, to achieve happiness:
Gen Z: $128,000, with a net worth of $487,711
Millennials: $525,000, with a net worth of $1,699,571
Gen X: $130,000, with a net worth of $1,213,759
Boomer: $124,000, with a net worth of $999,945
Men said they needed to earn $381,000 annually, while women said $183,000 would make them happy.
A 2023 study coauthored by another Nobel Prize recipient Daniel Kahneman found that happiness can improve with higher earnings of up to $500,000 a year, supporting the millennial survey respondents’ predictions.
“In the simplest terms, this suggests that for most people larger incomes are associated with greater happiness,” Matthew Killingsworth, a senior fellow at Penn’s Wharton School and coauthor of the study, said. “The exception is people who are financially well-off but unhappy. For instance, if you’re rich and miserable, more money won’t help. For everyone else, more money was associated with higher happiness to somewhat varying degrees.”
That differs from a 2010 study from Nobel Prize recipient Angus Deaton found money could only boost happiness up to $75,000 in annual earnings, and after that point, extra money had little impact.
Still, there’s more to it than just the annual salary. According to the survey, inflation, high interest rates, and student loans are weighing on Americans’ financial security, and having the comfort to spend money on everyday items can boost the feeling of financial happiness. For example, 62% of millennials said they would be willing to pay $7 for a daily coffee “because of the joy it brings.”
The latest economic data could make Americans’ financial happiness goals more achievable. Inflation is continuing to come down as the US recovers from the pandemic — the Consumer Price Index, which measures inflation, increased 3.2% year-over-year in October, a decrease from the 3.7% reading a month prior.
The Federal Reserve has also pressed pause on its interest rate hikes given the promising inflation data, and the central bank no longer forecasts a recession as the year comes to a close.
However, as Insider previously reported, millennials still aren’t doing too hot in this economy. Per Morning Consult’s latest iteration of its financial well-being index, which tracks the financial security of respondents, millennials’ score sunk to .94, compared to baby boomers’ 4.04 score from August 2022 to August 2023. A one-point increase could be a result of incomes increasing or a credit score going up by 20 points, Morning Consult said.
The latest Survey of Consumer Finances from the Federal Reserve, however, had a glimmer of hope for millennials when it comes to net worth. Net worth for the typical family surged 37% from 2019-2022, the survey found, and the median net worth of Americans aged 35 to 44 was $135,000 in 2022, up from $105,610 in 2019.
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