We have all been there. We see our neighbor with his new Mercedes S class. We rationalize to our self. “If that schlep has a Mercedes, I should get one too� What most people do not realize is the Mercedes is taking a huge amount of cash out of Mr. Jones income. He has been successful in perpetuating the myth of trying to look wealthy. Not because he bought the car, but because you bought into it as well. Trying to look wealthy is a mirage.
Recent studies have been conducted to determine if people hare happier by making more money. The findings may be a surprise for some. Consider the following:
For most Americans, a comfortable living equals at least $50,000 — almost $4,000 more than the 2004-2005 median household income of $46,326. Twenty-four-percent of Americans say that even if they earned less than $50,000, they could live comfortably. Just about half (48 percent) say they would need to earn $50,000 to $100,000 to live at ease, but 23 percent say they’d have to earn more than $100,000, according to a new MSN-Zogby poll. But, beware — even if we earned these incomes and were living comfortably — it doesn’t mean we’ll be more content.
While most people assume that a higher income will make them happier, a 2006 study by Princeton University researchers found the link between money and happiness is mostly an illusion.
“The belief that high income is associated with good mood is widespread but mostly illusory,” the researchers wrote. “People with above-average income are relatively satisfied with their lives but are barely happier than others in moment-to-moment experience, tend to be more tense and do not spend more time in particularly enjoyable activities.”
Two Princeton professors — economist Alan B. Krueger and psychologist and Nobel laureate Daniel Kahneman — joined forces with researchers at three other universities on the study. The goal was to formulate different methods of measuring the well-being of individuals and of society; they ended up with deeper insight to income and happiness.
The researchers developed a tool to measure people’s quality of daily life known as the Day Reconstruction Method (DRM), according to a press release. DRM creates an “enjoyment scale” that makes people jot down the previous day’s activities in diary form and assess their feelings about the experiences. The survey showed that respondents who earned less than $20,000 a year reported only spending 12 percent more of their time in a bad mood than those who earned more than $100,000.
“If people have high income, they think they should be satisfied and reflect that in their answers,” Krueger says. “Income, however, matters very little for moment-to-moment experience.”
According to this information, most American’s have it completely wrong.
People seem to think they should have it all now. This is a ridicoulous proposition which creates more stress. The “get rich quick� set is alive and well. Building wealth takes a lifetime. It requires patience and dedication. Many people feel if they make more income, they will be able to have more free time. This would be true if people knew what to do with the money they make. More often than not, they don’t.
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