How Much Do You Need To Earn To Be Happy?

how much do you need to earn to be happy

The information in this article is general only. Before making a financial decision you should seek the advice of a professional 

How much do you need to earn to be happy?

Sure, most people want to be rich! But in reality most people don’t become rich, especially at a young age.

Getting to millionaire status is actually quite difficult. Becoming a billionaire? Almost impossible.

The reason why is competition, everyone wants your dollar, the economy is like a massive tug of war game.

With a high income and low expenses, building a net worth of a million by 40 is possible. But to be worth millions upon millions from scratch? Very difficult.

Once you do the mental money math you will see, the maths simply doesn’t add up.

To be worth millions in your life you usually need to start a business that provides a lot of value, something that doesn’t exist yet, leveraged by other people’s money and efforts by scaling with employees.

But the reality is most businesses fail.

So everyone wants to get RICH but the reality is most people will be average. With full time incomes ranging from $40k to 100-150k+ on the higher end. This article isn’t about getting rich, please read my other articles if you want to learn more about that.

This article is about how much do you really need to be comfortable and happy?

Sure, being rich, having a mansion, expensive cars, boats, holidays and all that would be nice, but you don’t need all that to be happy.

Saying that, you don’t want to be broke either, you don’t want to struggle day in day out, not being able to quit a job you hate to get a new one because you have no stash of cash, not being able to go out and enjoy yourself, travel, start a business or do other things that make you happy. Fuck that.

Studies show that happiness does increase with income, but once you reach an amount, your happiness doesn’t go up much more.


Money does make you happy, if you are struggling. Whoever tells you it doesn’t is a liar or isn’t struggling enough.

There isn’t an exact amount of money you need to earn a year because it varies by a person’s situation.

I believe a person will be most comfortable and happy if they,

  • Can pay their rent/mortgage comfortably/are ahead
  • Can pay for all bills and expenses easily
  • Can pay extra on debts, not just the minimum payment
  • Can afford to build a stash of cash
  • Can afford to put some into investment
  • Can afford a nice cheaper (5k) holiday every year or a bigger (10k holiday every 2 years)
  • Can set a goal and buy something they really want, like a decent car, in a few years

Do you see what I mean by being comfortable? In this situation you are always doing well. You are on top of your bills and debts and have money left over for a safety net, travel, a car etc.

Most people will be happy in the above situation, even if they can’t afford a Ferrari lol

You can’t set a net worth and income amount to the above example because it varies by situation, but I will provide some examples.

Example 1:

Total expenses. 40k pa (bills, mortgage/rent, general living expenses, going out, buying clothes etc.)

Annual income 70k (50k after tax)

Annual surplus 10k

In this situation you have an annual surplus of 10k, which in my opinion is the absolute bare minimum because you need this money to first,

Build a stash of cash.

Once that’s built this money needs to be used for all the above things that will make you happy.

And 10k won’t do much, 3k into holiday fund, 3k into an (extra home loan payment fund or if you are renting an investment fund, 3k for something else, you see it’s not much?

But it’s the bare minimum, you won’t be struggling but you will always feel like you are progressing very slowly.

Example 2:

Total expenses. 40k

Annual income 100k (75k after tax)

Annual surplus 35k

Having a surplus of 35k is very good, with this sort of money you can divide your money over those buckets easily, you will have your cash stash, money for travel, to upgrade your car in a few years, to pay off your home loan faster or if you’re renting, into investment, or as seed capital for a business.

Example 3:

What if your expenses were lower? What if you paid off your house so your expenses were 20k a year? Well you will simply need to earn less than the above amounts.

Expenses 20k

Income 50k (40k after tax)

Surplus 20k.

20k a year is a great surplus and you can achieve that with a lower income job which may require less hours and less responsibility.

This would be an example of someone older who has paid off their house or they are renting but have enough money in investment that it covers there rent.

What if you are struggling to get by at the moment? Well you need to either

  • Increase your income, or
  • Decrease expenses.

I would see if I could decrease expenses first because like I said in my other article it’s better to save money than make money, it’s easier.

Cut expenses, pay down debt, then your yearly surplus will build, first filling the stash of cash then the rest.

If you have a partner the income you bring in is yours and theirs in total. You will probably have a little higher expenses but the same principle applies.

In summary,

No matter what your situation is, the goal is to always have your stash of cash, and then have a surplus of at least 10k a year.

5k is not enough. Almost breaking even.

10k is minimum.

20-30k is ideal and you will be able to live a comfortable, happy, fulfilling life. This is the goal for everyone, once you hit this target you don’t need to keep building this amount of surplus If you don’t want to.

Any more than that and you have more than enough, you will be able to reach your goals a lot faster, if this is you congratulations, if it isn’t don’t worry because less is more than enough like is said.

I hope you liked this article, if you have any questions please ask in the comments.

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