A recent report by Kamaron McNair for CNBC’s Make It looks at American generations’ varying perceptions of financial happiness, as highlighted in a recent Empower survey. The piece uncovers that while a significant portion of Americans link financial wealth to happiness, the actual monetary value they attach to this sentiment differs markedly across age groups.
The CNBC report points out that Americans, on average, perceive a net worth of about $1.2 million as the gateway to happiness. This average, however, masks considerable generational disparities. Millennials, for instance, peg their happiness price at approximately $1.7 million, substantially higher than Gen Xers and baby boomers, who estimate their ideal net worth for happiness at $1.2 million and just under $1 million, respectively. In a striking contrast, Gen Z adults feel a net worth of around $487,000 would suffice for their financial well-being.
CNBC’s coverage further explores the annual income each generation believes would bring them happiness. Millennials top the chart with an expectation of a $525,947 annual salary, a figure that far exceeds the expectations of other generations. Gen Z’s anticipated happy salary stands at about $128,084, while Gen Xers and baby boomers hover around $130,344 and $124,165, respectively. The median income deemed necessary to reduce stress, as per CNBC’s report, is $95,000, a notable jump from the current median salary of $65,000.
Interestingly, CNBC notes that the concept of financial happiness extends beyond just high salaries or substantial net worth. For a majority of Americans, being able to pay all bills on time and in full is the true definition of financial happiness. Additionally, being debt-free and enjoying small daily luxuries also rank high in their financial contentment criteria.
Back in May, BBC Science Focus magazine published an article challenging the long-held belief that ‘money can’t buy happiness.’ The article presents a shift in social science perspectives, suggesting that, contrary to past beliefs, there is a growing correlation between wealth and happiness.
The article references a 2020 study analyzing data from the Office for National Statistics and Happy Planet Index, which concluded that the average Briton needs an income of at least £33,864 to live a happy life. However, it’s the ‘more’ beyond this figure that’s crucial.
The article by BBC Science Focus Magazine explains that this trend isn’t just about materialism. It’s tied to the current state of ‘wellness inequality.’ Wealthier individuals often enjoy better health, which in turn impacts their happiness. Additionally, the wealthy who spend on experiences and time-saving services rather than material goods often experience a boost in happiness.
An important aspect of happiness, as discussed in the article, is relative wealth. People tend to feel happier when their standard of living matches or exceeds that of their peers. This phenomenon, known as ‘relative deprivation,’ affects our sense of well-being regardless of our absolute wealth. The article suggests that this could explain why global increases in income haven’t led to a corresponding rise in average happiness.
The article also touches on the role of taxation in mitigating the effects of relative deprivation. It notes that high-tax Scandinavian countries often rank high in global happiness polls, possibly due to reduced emphasis on status-seeking spending.
However, the article also highlights the potential downsides of wealth. Studies have shown that children of wealthy parents may face higher risks of mental health issues. Additionally, wealth can lead to decreased ethical behavior and empathy, as affluent individuals may become less concerned with others’ problems.
In contrast, the article notes that individuals with lower incomes tend to be more empathetic and better at reading facial expressions, suggesting a potential social benefit to having less wealth.
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