According to GoBankRates.com, the average earner in Phoenix has it rough.
The average wage is $37,293 a year, according to one GoBankingRates article, but according to a different one by the site, the salary you need for emotional well-being is $68,040-$85,050 a year. If you want to be happy, then you’re looking at $119,070 — or about triple the average income.
It’s not all bad news
According to GoBankingRates.com’s calculations, the percentage left over of the average wage — after necessities were taken care of — was 10.67%, or about the recommended minimum savings rate.
Of course, this doesn’t take into account day-to-day costs, but it’s important to note that the article’s numbers seem a little off.
The piece purports that a one-bedroom apartment costs $1,103.29, but there are plenty of $800-900 places to be had — even at the nicer properties. You could get a two-bedroom for $1,100 in a lot of areas of the city.
Also, $4,263.12 for groceries seems high for a single person, even someone not carefully watching grocery spending.
On the other hand, the “necessities” numbers (housing, groceries, health care and transportation) don’t take into account taxes. That’s going to take a bite out of a person’s ability to save.
Happiness (in two ways)
So I guess it’s no surprise that the average salary is pretty far off what it would apparently take for even simple emotional well-being. Which is defined (by the Purdue University study that the article was loosely based on) as being “measured according to a person’s day-to-day emotions, including happy, excited, sad and angry.”
So $68k a year will apparently keep you pretty happy day to day in Phoenix. But to be truly happy — that is, for money to no longer change your emotional well-being or life evaluation (your overall life satisfaction) — you’re going to need about $50,000 more. Eesh.
Apparently I don’t know anyone who’s truly happy.
On a broader scale
The Purdue study found that, globally, you need around $60,000 to $75,000 for emotional well-being, which jibes with the oft-cited statistic of $75,000 being the maximum needed for happiness in day-to-day life.
On the other hand, if you want life satisfaction, the Purdue study says that globally you’re looking at around $105,000.
Certainly, $60,000 would make the average Phoenix earner’s life a lot easier. It’d leave around $27,000 even beyond GoBankingRate’s inflated-numbers. Even assuming a 12% effective tax rate, that’s around $20,000 left over for saving, investing, etc.
But do you need that much to be happy? If you’re responsible with your money, a higher income certainly would mean fewer money worries. That’s a good breeding ground for happiness. But it obviously doesn’t take into account the more intangible aspects of happiness: friends, family, community, etc. For most people, at least a couple of those are integral to happiness.
Living on less (happily)
And of course some people are able to be truly happy on a lot less. According to her own writing, my mom didn’t just survive, but actually thrived in a major metropolis on $12,000 a year. Part of that was getting out of a toxic marriage, of course — another intangible that income can’t account for.
But some of it is that she simply doesn’t need a lot of money to be happy. On the other hand, back in her $12,000-a-year days, she might have been even happier if she hadn’t had to stretch every cent so far. Goodness knows, once she started working for MSN Money, life got a lot easier.
The point is that there are people who find peace and happiness on significantly less than $60,000 a year. Of course, like Mom, they might find even more happiness if some of those bills (especially unexpected ones) were easier to take care of.
A scary trend
One thing I did notice, paging through the 50 cities listed in the GoBankingRates article: Not one of the emotional well-being figures was under $50,000.
Most started in the $60,000 range. Some were even more than that. Heck, a few (Boston, Washington D.C. and Honolulu) were more than $100,000.
Mental note: Never move to those cities if I want to be happy.
But what, exactly, is happiness?
Actually, I think the Purdue study did a good job of breaking down happiness. That is, differentiating among day-to-day mood, life satisfaction and true easy living.
Because there is a difference among day-to-day happiness, being happy with your life as a whole and being at a point where more money wouldn’t make your life any easier or better. A $40,000 difference according to the Purdue study — or, for Phoenicians, a $50,000 difference if the GoBankingRates article is to be believed.
A harder look at the numbers
But how reliable are GoBankingRates numbers? Well, its living expenses calculations for Phoenix have seemed off in the past. And according to its numbers, I shouldn’t have the overall life satisfaction that I very much do.
So maybe we should take these figures with a grain of salt. After all, I know some people who make significantly less than $68,000 a year and are still pretty happy day-to-day. Granted, I happen to know that at least two of them have rents that are significantly lower than the average ones in Phoenix. So I guess take their happiness with a grain of salt too?
All in all
I don’t think there’s a magic number. But I do think that a lot of people, regardless of which city they live in, would be made noticeably happier if their salaries were bumped up to at least $50,000.
That said, I think some of us would worry about money regardless of our salary (short of it being millions of dollars). We’d worry whether we were putting enough into savings, saving enough for the kids’ tuition, etc.
So perhaps there’s no true happiness short of being a millionaire — no matter what studies say.
How do you think your happiness is at your current income levels? How much would it take for you to be truly happy (by the study’s definition)?