From this post: Canadias and Debt, I posted this graph and made a comment about how it was surprising to me that people with higher incomes would be less satisfied with the current state of their finances.
By at least 15% – 20%!
So why are people unhappy with more money?
We all know money doesn’t buy happiness and you cannot earn it either, and here are the key factors of happiness.
The threshold income for happiness is a $75,000 income. Any higher and you don’t get a major jump in happiness.
- Increased pressure to keep up a certain lifestyle tied to their income & spend
- More things available to buy because they’re within reach to purchase
- Constant upgrades of your lifestyle as well: private school, new car, McMansion
- Lottery winners get stressed with so much money because they’re paralyzed for choice
- High income is just one breadwinner in the household, with a SAHP (stay at home parent) and kids
- Don’t know how good they have it, not having lived at poverty level or minimum wage
- Don’t know how to manage their money to invest for the future, and not lose it all
- More overall debt because of all the nicer, upgraded toys they couldn’t afford?
- Job insecurity because replacing a $100,000+ income is not as easy as a $40,000 one
- Recent recession blues; the higher your income, the higher the fall when your investments drop
- .. or maybe they sold too early and didn’t wait for the comeback
I’ve always believed that it is far harder to be poor without choice, than to be rich and be spoiled with choice, so I have very little sympathy for high income earners who give me the “I deserve” speech when there are people out there who make do with a lot more, with a lot less.
The best path to follow is that at any income, you should always watch your bottom line.
Even if you’re making a million dollars a year, if you spend every last penny, you are no better off financially than someone who makes a fraction of your income and does the same.
In fact, you could be worse off, having more in debt to your name, because of all the high and easily obtainable lines of credit, and all the luxuries you’ve gotten used to.
Just a girl trying to find a balance between being a Shopaholic and a Saver.
I cleared $60,000 in 18 months earning $65,000 gross/year.
Now I am self-employed, and you can read more about 
My family has a six-figure income but I disagree with the idea that:
1) My DH doesn’t work hard for his job as implied by Joe_on_drums. ~~My husband does real work that means that he may have weeks where he’s travelling away from famiy, working 80+ hours (he’s an IT Director) to keep a company up & running, and most holidays he’s busy because that is when everyone is gone and off the system and major upgrades can be done.
2) That people in an upper middle income bracket spend more time/money on “keeping up with the Jones'”
~~The average couponer has a $75K income and many in my circle are frugal upper earners. Our family lives in a 600 sqft apartmen (for 3 people)t. We only own one tv which is a 27″ LCD. We only own one car. Most millionares in fact don’t live like Paris Hilton. It is just a Hollywood-ized version of what people think. While I’m not a millionare yet, I know that we will be one in the next 10 years because we live simply.
3) That we shouldn’t have stress based on income.
~~#9 is the biggest issue for us. It is not easy to find jobs at the Director level. I can find a job as an administrative assistant or burger flipper any day because they are a dime-a-dozen. Now try finding a $100+ job at the Director level at a company that one has a fit with. Its not easy and takes several months (if at all). In addition, we are Americans and healthcare is a big issue. I have major health issues (we spend about $10K out of pocket a year on this alone) and it is hard to just willy-nilly change jobs without first making sure that coverage transfers over.
We live simple in a higher income bracket and I think that for the most part we’re happy. I just know that it is a work/life balance that is harder to achieve. But we sacrifice in order to find more stability, fund our retirement, be able to do the “little things” like travel, and to leave a better life for our child!
I have almost inadvertently traveled a career path to higher income, and yes, I have higher anxiety. It’s not about the things on that list. I’m not paralyzed by too many choices, or trying to keep up with McMansions and private schools. In fact, I’m almost insulted by some of the stuff on that list, to be honest.
I can give a few reasons, though. First, sustaining my job means that right now, my husband is a stay-at-home dad. This means we’re a single-income family. For me to be able to do the thing I do, I NEED more support at home, which puts more “bread-winner” weight on my shoulders. This increases my anxiety.
Add to that the fear of job replacement and the fear of corporate “house-cleaning” that tends to take place often at higher-income-earner levels. Every time there is a re-org, it’s typically people at my level who are made redundant. And when people at my level lose their jobs, it’s harder to find a replacement job. Both of these things add to my anxiety.
When my title was Widget Polisher, for example, I knew that every company around had a need for widget polishers. Usually a whole team of them. It was a common skill needed in most corporations. I could look on Monster and see lots of ads for Widget Polishers. But when your VP of Widget Operations or something like that, there just aren’t as many jobs out there. Most companies have ONE, and that one may not be located in the office near you – they could have VP of Widget Operations done out of New York or Seattle or something. And guess what – no company will look at the resume of someone who was VP of Widget Operations and hire them in a role of Widget Polisher. No way. “Over-qualified.”
I am trying to leverage the higher-earning I’m enjoying now to offset this future risk – job loss, possible extended unemployment while looking for a new job. Our lifestyle hasn’t changed significantly – same house, same blue-collar neighborhood, same public school district for my kids, same 10 year old mini-van.
But yeah, I do have anxiety.
Mind you – it’s not nearly as much as I had 25 years ago when I was a young mother raising two kids at an income that fell just below the poverty line. THAT was anxiety there. This is nothing compared to that.
They MAY fear losing that meal ticket, (housewife, stockbroker, overpaid athlete) but I doubt they are unhappy. That sounds like a rumor started by one of THEM, to cover the guilt of not having to do any REAL work, or earning what they make.
I believe that those who earn A LOT and lead the diva life style always live in the fear of what will happen if they lose it all? This can be particularly true if you do not have any savings- imagine losing your job when you expected it the least, having a bad economy and your current lifestyle to maintain? Changing status from an ex-rich to a new-poor can be a nightmare in the life of the rich. Why am I picturing Paris Hilton trying to live her life like a normal person instead of going around splashing her money, fame and beauty?
OH I like the Hilton reference. I do find it kind of sad the grandfather
gave away the fortune rather than let them have it…
Job insecurity is my biggest worry at the moment. We are working on a plan to live on one income, but it’s tough. I hate to say it, but losing 2/3 of income is going to be difficult to overcome. We don’t live extravagantly, but we are not living like students anymore either.
So are you scaling back your expenses then? Where do you find is
easiest/hardest to cut back?
So true.When I earned $200 aweek in University I always seemed to have enough and never worried.Now I earn 6x that and I have worries all the time ! I am minimalist too,so am not spending willy-nilly ! Great post.
I’m just curious, so what kind of worries do you have now? 🙂 Don’t answer
if you don’t feel comfortable saying so, but I find this really interesting!
Willy-nilly? Are you tithing your 10% at church each week?
A lot of people with very high income got there because they are competitive type-A perfectionists since childhood who had to be the best at everything which is great for accomplishing many things, but also is associated with anxiety.
I sort of had that kind of personality as a kid but perhaps my lazy side
kicked in to temper that aggressive go-go-go behaviour. 🙂
I don’t think people making 500 K + really worry bout losing their money, but if you are rich or wealthy and live the lifestyle, there is just so many more responsibilities to keep up with. If you make that money doing a 9 to 5 or likely 9 to 9 you don’t have much personal time and if you throw a family in the picture your Kids will likely be a lot more engaged in activities outside of school because they can. More for you to keep up with. Add to that all the social networking things you have to do to maintain business relationships ( in person.. NOT facebook) , it means a very busy life.
Add to that , if you are of the personality where you are always aiming to improve on your current position, and set high goals for yourself, you will always be somewhat dissatisfied with your acheivements and feel there is still much work to do. I don’t make 500 K but i can relate to this. I find that even in my down time I am always thinking about what else I can do. It does not make me unhappy, I enjoy it… it;s who I am.
I don’t know if you related anxiety to being unhappy with life in general. Happiness comes from doing what you love. It could be by picking berries, planting trees or building a better wheel.
My idea of happiness right now would be to be in Portugal picking wild
blackberries to have with a cup of fresh milk.
No joke. Had a dream about it last night. Am going to do it this summer.
because they have so much more to lose?
As Van said – less work / life balance.
Also, maybe people who are dissatisfied are natural strivers for more. They’re not satisfied with the status quo and push themselves to excel – a benchmark for that is earning more.
That is exactly my brother. Too much is never enough <— That's his motto.
Perhaps many of them are workaholics, putting in 60+ hours a week and feeling pressure to keep working more, earning more, forever in a cycle until they implode…
I don’t think people tend to ever have enough money to satisfy all their desires in life. I think people who find happiness reign in their “I want that” instinct.
Also, the circle you run around in is very important, and it’s really hard to not spend the same way as your friends and enjoy the same type of extended social sphere, so the social pressure to spend if you have it, is stronger in rich circles.
Basically, if you and your friend each makes $30,000 a year, you will both be equally limited by your income once you fulfill the basic necessities of your life (taxes, rent, food). If your friend wants to catch up over a $20 lunch and you ask to downgrade to a cheaper venue or have a free hangout or something, it’s understandable because your friend also knows the money is tight.
If you make $75,000 a year, you’ll take home about 50-55k and after the basics, you could have about $30,000 in floating money. If you turn down the lunch and your friend has a different saving/spending philosophy than you, he will think you don’t value their friendship over saving that $20 (or heck, most people will just think you don’t value the friendship because it would not occur to them that the money is an issue).
Also, I think it’s kind of silly to lump $100k+ all together. You can afford a lot more common luxuries at $500k than you can at $100k. I wonder if the fabulously rich are perhaps more satisfied with their finances than the middle-class?
Also, I think most people who are well-off don’t have friends who are much poorer, so people never really consider the fact that families live with less, because you only compare yourself within your social network and reference frame.
I would imagine that the average person making $75k a year has more friends making $60k+ than friends making under $40k.
That’s a good point. Thinking around my circle of friends, the majority from
my personal life make at least $50k a year upwards to over 6-figures… It
lends to some “frivolous” spending as they are also single.
I got anxiety just looking at the title of your post 🙂
*laugh* I get anxiety just thinking of my brother’s situation.
I think #9 is a big factor in the anxiety. The more you have (and the more inflated you let your lifestyle become), the more you have to lose.
I’ve watched a family I know make so many illogical choices to keep up their high social status over the years. They live one of the most harried and stressed lives I’ve seen, yet insist on keeping their mansion status even though they can’t technically afford it. It doesn’t happen to everyone, but it definitely is a trap many fall into.
Sounds like my brother… you are totally describing his family.
I’m always skeptical of polls like this because there are many factors that contribute to happiness that don’t involve money. Wealth doesn’t stop cancer or major illnesses. It doesn’t make friendships or marriages stronger, and it doesn’t make you more religious. I wonder if people who are dissatisfied with other areas of life are also dissatisfied with their finances as well because they have such a negative outlook.
Great point Elizabeth! Community and family they say, are the greatest
contributors to happiness. We want to belong.