A new study reveals how much money you really need to be happy -- and it's less than you think

  • Researchers from Purdue University found the optimal income levels for emotional-well being and life satisfaction.
  • Emotional well-being for individuals peaks around $60,000 - $75,000, while life satisfaction peaks around $95,000
  • Beyond that point, people actually became unhappier — likely because they compared themselves, and what they spent on, to others. 

A new study reveals that money really can buy happiness — but only up to a certain point

The research, published in the journal Nature Human Behavior, shows that being wealthier isn't necessarily better when it comes to indicators of happiness like long-term life satisfaction and emotional well-being.

In fact, the researchers found that the ideal point — though it varies in different parts of the world — is around $95,000 for life satisfaction, and between $60,000 to $75,000 for emotional well-being.

Beyond that income level, the researchers found that the old adage of 'More money, more problems' actually holds true.

"At this point they are asking themselves, 'Overall, how am I doing?' and 'How do I compare to other people?" Andrew T. Jebb, a PhD student in Psychology at Purdue University and the study's lead author, said.

"The small decline puts one’s level of well-being closer to individuals who make slightly lower incomes, perhaps due to the costs that come with the highest incomes," Jebb said.

RELATED: Check out these 5 financial myths that just aren't true: 

5 financial myths that just aren't true
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5 financial myths that just aren't true
#1. "Home are great investments"
"If you're young and are burdened by debt, renting is probably the better bet for you. There's nothing wrong with renting either! Buying a house means putting a LOT of cash down and taking on a mortgage. Mortgages aren't exactly flexible. Then you've got to worry about monthly maintenance, taxes, insurance, etc. Owning a house is expensive, illiquid, and not something you should consider until you are REALLY REALLY REALLY ready." -The Funny Financial Planner
#2. "Investing is only for the wealthy"
"Wrong. Wrong. Wrong. This one just downright annoys me. Maybe you were conditioned to believe this? I'm here to tell you it is a MYTH! Investing is not as complicated as you might think. Sure, there's a learning curve, but with a little help and research you can begin. Maybe you've already begun? Do you have a retirement plan (401k or IRA?), then congratulations, you're already an investor. And guess what?! You don't need $100,000 to start." -The Funny Financial Planner
#3. "A will guarantees your assets will be distributed how you want"
"This is a myth my friends. In fact, if the beneficiaries named in your retirement plans (401k, IRA, Roth IRA, etc.) are different than those you've named in your will...the assets go to the beneficiaries on the retirement accounts and NOT those named in your will. Make sure your will and the beneficiaries you've named on the accounts are in agreement." -The Funny Financial Planner
#4. "I don't want to invest now... I'm trying to time the market"
"'Timing the market' means you think you can figure out the best times to buy low and sell high. Well here's a quote from famed investor Peter Lynch, "I can't recall ever once having seen the name of a market timer on Forbes' annual list of the richest people in the world. If it were truly possible to predict corrections, you'd think somebody would've made billions by doing it." That's all you need to know. It's just not possible. It's best to get in as soon as possible and have a solid, long-term, passive plan, with proper diversification." -The Funny Financial Planner
#5. "I'm too young to worry about retirement"
"Nonsense!!! Time is the best tool you have to build wealth. The longer you wait, the less money you're going to have at retirement. Even if you think it's a long way off and you don't have the money to start now, begin anyway. Do what you can. It will make a HUGE difference in the end. Time coupled with compound interest is pure magic my friends. (Click on the words "compound interest" to see Investopedia's explanation). It's truly the eighth wonder of the world." -The Funny Financial Planner


Once you pass the income threshold where purchasing the basic necessities of life, keeping up with loan payments, and having a little extra leftover is reached — starting around $60,000 after taxes for the average individual — people are generally driven by material desires and comparing themselves to others.

That reduces happiness overall, the study says. The amount is naturally higher for families that need to support more people. 

To understand how income affects happiness, Jebb and his team took data from the Gallup World Poll, a representative survey of 1.7 million people in 164 countries. The researchers made estimates based on questions around life satisfaction and emotion, correlated with average salary and purchasing power. 

Jebb cautions that his findings are only part of a larger equation of what makes a person happy.

"Money is only a part of what really makes us happy, and we’re learning more about the limits of money," Jebb said. 

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