How much money do you need to make to be happy? It’s likely a question being asked by bankers in New York, traders in Chicago, money managers in Boston and San Francisco, and financial services workers across the U.S. who are wondering if all the toils are worth it.
Of course, the ‘happiness number’ is different for everyone, but not just because of our personalities and wants in life. It also depends on where in the country you reside. Cost of living makes an enormous difference when it comes to finding your own personal number.
Doug Short, vice president of research at investment group Advisor Perspectives, just did an analysis of a well-known study to breakdown exactly what you’ll need to hit that total.
In his paper, he cites a popular study that found the national benchmark for happiness is just $75k. Any money you make after that doesn’t contribute to your emotional well-being, according to the study.
Now it’s important to note that $75k is simply the benchmark for day-to-day mood and emotional well-being, not one’s overall life satisfaction. Income higher than $75k can increase one’s overall “life assessment” – or the way that they look at themselves in the world. But with at least $75k, day-to-day life doesn’t have to be a drag.
But not in New York – or any state with a major financial center for that matter. You’ll need more than that to clear the blues away.
According to Short’s formula, which takes into account cost of living adjusted by state, you’ll need just shy of $100k just for a chance at happiness in New York. In California you’ll need just over $95k. For emotional happiness in Connecticut, home to many a hedge fund and a few large trading houses, you’ll need $93k. Similar story in Massachusetts, a large supplier of asset management firms, where $91k is the barrier to entry.
With many first-year bankers making less than those figures – at least before bonus – Chicago may be an ideal place to start a career in the industry. In fact, you don’t even need to hit the national benchmark to build a foundation to happiness. Just over $71k will do the job.
The rest of the state-by-state happiness benchmarks are below.