The Marginal Utility of Money theory states that as your income rises, the amount of happiness it brings you begins to flatten. This is backed up by numerous studies. There was a recent article done by the Washington Post that states that once income has exceeded $75,000 per year, increasing income is not associated with increasing happiness (source: https://www.washingtonpost.com/local/social-issues/money-can-buy-happiness/2020/07/01/3c2fc554-bb5a-11ea-8cf5-9c1b8d7f84c6_story.html.)
Why is this important? As the new year comes around and people begin to get yearly raises, change jobs and look for new opportunities, remember that personal finance is more about how you allocate your resources than how many resources you have. If you get caught in the rat race of increasing your income, but increase your lifestyle at the same rate, you are stuck in a never ending cycle. My grandfather always told me as I was growing up, “The problem with today’s society is every-time someone spends a nickel, they turn around and borrow a dime.” Don’t fall into the trap that money buys happiness, because it doesn’t (past a certain point.) Healthy financial habits will go much further than an exorbitant income!
Submitted December 11, 2020 at 09:15PM by Brundonius https://ift.tt/2KeYDyr