Here are some thoughts from pages 169-171 of Brazen Careerist: The New Rules for Success (a book I liked very much) where the author says that all you need to make to be happy is $40,000 a year. She starts with this:
Looking for happiness through financial success? Wondering what the magic number is? It's $40,000. Really. So pick a job you are going to enjoy instead of one that makes a lot of money -- just be sure your job will get you to that $40,000 mark.
In fact, this salary guideline is well established in research: the first $40,000 makes a big difference in a person's level of happiness. Happiness is dependent on being able to meet basic needs for food, shelter, and clothing. After meeting those needs you have to turn to something other than consumerism, because additional money has negligible impact on how happy you are. Your level of happiness is instead largely dependent on your outlook.
She then goes on to detail how she and her husband (plus one child) lived in New York City (a few years ago) on less than $40,000 for more than a year. And if you can make it there on $40,000, you can make it anywhere on $40,000.
We've talked a lot about the relationship between wealth and happiness and she's right -- after a certain point, more wealth doesn't lead to more happiness. But is that point $40,000? I would have guessed it was more like $60,000.
Now I know I'll get some comments on how you simply can't live on $40,000. Oh yeah? Check out How to Get Rich on $20k a Year and How to Grow Your Net Worth When You Don't Make a Lot of Money. And on the other end of the spectrum, some people can't even make it on a huge income. See It's Still Not What You Make But What You Spend and It's Hard to Save Money On Only $250,000 Income for details. So it's clear that some people can make it on very little and some (most?) can't make it on what others would consider a fortune. As such, it seems to me that what you can actually live on is more of a matter of discipline than anything else.
But back to the topic at hand -- what do you think about the happiness/$40k relationship? Is that really all anyone needs to be happy? Or maybe money isn't related to happiness at all? Tell us all what you think.