“Sex” and “Money” are probably two of the most powerful words in the English language. First, those two words got you to look at this article.They also sell products, books, and services from “How To Have Better Sex” to “How To Make More Money” — ostensibly so you can have more of the former.

Unfortunately, they are also the two primary causes of divorce in the country today.

But “happiness,” is also an interesting word because it is ultimately derived from the ability to obtain money and the lifestyle with which it will afford.

Researchers at Purdue University recently studied data culled from across the globe and found that “happiness”doesn’t rise indefinitely with income. In fact, there were cut-off points at which more annual income had a negative effect on overall life satisfaction.

So, what’s that number? In the U.S., $65,000 was found to be the optimal income for “feeling” happy.

While the media jumped on the headline, given median national incomes are closing in on $60,000, they should have actually read the rest of the study.

The income figure is per individual.

So to calculate the required income number for “happiness” you must multiply that number by the square root of the household size. So, what’s the number for a couple, or a family of three or four?

That is an entirely different message from what most have been led to believe. An income of $130,000/year is far above the average incomes from most Americans currently and ability to maintain the basic lifestyle is becoming ever more problematic.

In the U.S., despite higher levels of low income (now there’s an oxymoron), inflation-adjusted median incomes have remained virtually stagnant since 1998.

However, the chart above is grossly misleading because the income gains have only occurred in the Top 20% of income earners. For the bottom 80%, they are well short of the incomes needed to obtain “happiness.” 

For most American “families”, who have to balance their living standards to their income, the “experience” of “happiness” is more of a function of “meeting obligations” each and every month.

Today, more than ever, the walk to the end of the driveway has become a dreaded thing as bills loom large in the dark crevices of the mailbox. If they can meet those obligations, they are “happy.” If not, not so much.

The Financial Crisis Mindset

In my opinion, what the study failed to capture was the “change” in what was required to achieve “perceived”happiness following the “financial crisis.”