How much money is enough to be happy

Empower, an American financial services firm, found in the survey that six in ten Americans believe money can buy happiness.
Express illustration
Express illustration

The pursuit of happiness is a fundamental right. In a democracy, a limit cannot be imposed on individuals in their right to pursue happiness. Money plays a significant role in that for most people.

If you go by a new survey of over 2,000 American adults published last week, they just found an answer to the question of how much money they need in the bank to be happy. An average American believes $1.2 million (R10 crore) is enough to make you happy. It is just about the sum you need to follow your passion and not worry about a routine life. You need not have a 9 am to 6 pm job and do things you love. That also entails not worrying about paying monthly bills or spending more than expected on wants.

Empower, an American financial services firm, found in the survey that six in ten Americans believe money can buy happiness. Most are Millennials and Gen Z or those born in the 80s and beyond. Their idea of the specific amount varies.

The younger lot think they need more, while the older people are happy with less. That is a natural function of the perception of inflation. The young look at the present situation and fear inflation. If an average American can be happy with that money, those living in India can be a little more happy with that amount (R 10 crore) or live with a lot less to get there. If you live in a city in India, the cost of living is much cheaper than that of your American counterpart. For example, your average breakfast cost outside your home in India is a fraction of what you would pay in an American city. It is a no-brainer that the cost of making any consumer good in India is less than that in the rich world.

Happiness is not confined to you, making your daily subsistence comfortable. It involves possessing those things in life that bring comfort. A lot of migration overseas is due to a better quality of life. In countries like Western Europe or Scandinavia, you pay half of your income as tax in your working years. However, the government provides you with a universal basic income and quality healthcare on retirement.

In India, you must do much more to secure your financial future. There is no concept of a universal basic income. Quality healthcare is available to those with money for now. The government is allocating more resources, but India’s massive population will always leave people out of the equation.

That means expectations in India could vary for the right amount of money to make you happy. It also depends on where you live in India. If you go by the standard thumb rule of cost of living, you would probably need R2.5 crore for the same level of happiness in India. That is assuming you do not have monthly liabilities like loan EMIs.

You can quickly generate a 9-10% return on that yearly. That means the sweet spot in India could be about R24 lakh per annum or R2 lakh a month. That could go up every year with inflation. You cannot use all of the money for living life and spending. Even when you get to that stage, you must continue investing to counter inflation. That means your monthly expenses must be much less than R2 lakh.

You are in a good place if you do not pay for your home when you get there. The amount of R2 lakh per month should be enough for a comfortable middle-class life in a city in India. But then, our life does not stop at needs. There are wants and desires. You need more than R2 lakh a month for those looking for more comfort.

If your work is already your passion, you are already in a sweet spot. If that is not the case, then money is a parameter for you. If you are at a stage where you are confident of generating a steady income from your savings, it is time for you to follow your passions.

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The New Indian Express