What do you think is the ideal salary for you? The Wall Street Journal says that $75,000 is the perfect salary for overall happiness. I first read about this salary over at Budgets Are Sexy. I wasn’t sure what this meant, but the WSJ studies goes on to state:
The magic income: $75,000 a year. As people earn more money, their day-to-day happiness rises. Until you hit $75,000. After that, it is just more stuff, with no gain in happiness.
Let’s dig a little deeper…
For the college students reading this:
How much do you expect to make out of college?
What are your income expectations for your future career? Furthermore, the biggest issue really is your financial picture once you graduate from college. If you’re in massive amounts of student debt then this annual figure might not feel like enough money due to your student loan payments. If you graduate debt free from college you might not be too concerned with how much money you make right off the bat. If your field doesn’t lend itself to earning lots of money you also might not find this figure to be note worthy.
For all of the young professionals reading this:
Are you close to this “perfect salary?”
We all finish college expecting to be rich after a few years. You know what I mean. We expect to be flying around the world at age 25 meeting the CEOs of Apple and Facebook for a bottle of champagne at lunch. This isn’t exactly how it works. We soon realize that an entry-level salary isn’t all that it’s cracked out to be. The work itself also isn’t always the most fulfilling. After years of grinding and sticking it through, breakthroughs will begin to happen. You will move up in the ranks. You will begin to earn more money. When and how you get to 75K is really unknown.
My thoughts on this “perfect salary?”
I think this number is missing one key ingredient: your lifestyle. The article questions the location where you live and how it affects your annual salary. Where you decide to live is extremely important (big city vs small town, downtown vs suburbs, U.S vs third world country). This then of course leads to the next question: where is $75,000 the perfect salary? What do you guys think?
I also wanted to look at your actual lifestyle. Lifestyle is also critical in the sense of your expenses. Starting a family at a young age will obviously increase your expenses. Living an active lifestyle where you’re always going out (dinner, clubs) or joining different clubs (gym, social groups). Do you think that 75K/yr will be enough to maintain your lifestyle?
(photo credit: mait juriado)
Mr. BFS and I were worried about money when we were making a combined $30,000 a year, less worried at $55,000 a year, and have been pretty dang happy since we hit the $70,000 threshold. Not a lot has changed for us between that $70,000 combined and our current $82,500.
Breathing room is nice of course, but I think our perfectly happy salary was at or around $65,000. That left us with about $55,000 take home pay minus my 401(k), his pension contributions, and health insurance costs…so about $48,000. We live on about $36,000 a year ($33,000 when we are really good and $40,000 when we splurge alot), so everything above that is savings. 🙂
I agree, the $75,000 salary for happiness needs its qualifiers. There are many questions that need to be asked, including where you are living, what you are living in (house, apartment, condo), who you are living with (parents, significant other, friends, roommate, alone), and many others. The questions just about living arrangements are enough to really change how far a $75,000 salary goes. And that doesn’t include many other factors as well.
Obviously a college student’s ideal salary is one that is higher than whatever they’ve been told to expect. And this varies across majors, career fields, locations, etc. I graduated this past May, and just making money is pretty great. I am looking forward to promotions and raises and such, but I know they will take a while.
Anyway, I think to answer your last question, I would say yes. But that is for me personally. I have close friends who are my age and graduated college at the same time I did, who live in the same area that I do, who still live with their parents (like me), for whom this wouldn’t be enough. It all really just depends on who you are and what you like to do.
My husband I were making about 100K together when we got married. We were in our early 20s hadn’t left college that long. I think we were pretty happy then. Now that we have been working a while, we make more than double that amount. We have added 2 kids, but we still live on less than that 100K a year so we put the rest towards mortgage prepayment and savings ourselves.
Having the emergency saving and extra savings just help my husband sleep at night knowing that we have several safety nets.
What about an average of $75,000 for some length of time. So may be you take it easy (or easier) with a $60,000 job so you have more time and less stress and have more fun, but then pick it up with a $90,000 job (if you can get one). Happiness is very dependent on how you spend your time, so if you manage to have more free time while earning less you may be happier if you pick up your earnings after. Though, realistically, you may need the higher earning job before the lesser one..
Lol there’s no definitely no perfect in the engineering vernacular.
Salary and your first gig shouldn’t be just about the bottom line. Please consider the grown opps and the cost of living in the city.
Good luck Rafael and thanks for visiting us!