Can Money Buy Happiness? Millennials Believe So in New Study

Financial services provider Empower partnered with The Harris Poll to dive into the complex relationship between money and happiness among Americans aged 18 and over. 

The survey reveals intriguing insights into the varying perspectives across generations, with 59% of respondents believing happiness can be bought.

On average, individuals feel they need $1.2 million in the bank to achieve genuine financial happiness. Regarding annual salary requirements, the average respondent sets the bar at $284,167.

Breaking down these expectations by generation provides a nuanced picture:

• Gen Z is aiming for a $128,000 annual income and a net worth of $487,711
• Millennials set their sights on a $525,000 annual income and a net worth of $1,699,571
• Gen X is targeting $130,000 in annual income with a net worth of $1,213,759
• Baby Boomers aspire to a $124,000 annual income and a net worth of $999,945

Adding a gender perspective, men are looking for an annual income of $381,000, while women find contentment with $183,000.

Supporting these aspirations, a 2023 study co-authored by Nobel Prize recipient Daniel Kahneman suggests that happiness can improve with higher earnings, up to $500,000 per year.

"In the simplest terms, this suggests that for most people larger incomes are associated with greater happiness," co-author Matthew Killingsworth explained.

"The exception is people who are financially well-off but unhappy. For instance, if you're rich and miserable, more money won't help. For everyone else, more money was associated with higher happiness to somewhat varying degrees," Killingsworth concluded.

However, this contradicts a 2010 study by Nobel Prize recipient Angus Deaton, which proposed a happiness income cap of $75,000, beyond which extra money has little impact.

The survey emphasizes that financial happiness isn't solely about income; external factors like inflation, high interest rates and student loans play significant roles.

Surprisingly, the survey finds that the comfort of spending money on everyday items, like a $7 daily coffee, can significantly boost the feeling of financial happiness, with 62% of millennials expressing their willingness to pay for such joys.

In the broader economic context, recent data suggests a more achievable path to financial happiness for Americans. Inflation declined to 3.2% in October, with the Federal Reserve's pause on interest rate hikes further supporting this positive trend.