We hear a lot about the growing divide between rich and poor. But how much does money really impact your quality of life?
Turn on cable news, and you’re likely to hear an expert gesticulating about the disappearance of the American middle class and the growing divide between rich and poor. Indeed, Pew Research is very clear that the wealth of America’s richest grew dramatically in recent years, while the rest of America fell behind. For those of us floating somewhere in the middle class, the growing income and wealth divide can feel alarming.
Perhaps, though, we should consider the facts about money and quality of life before falling into sensationalism.
The plight of the poor
It makes sense that middle-class Americans fear falling into poverty when they see income and wealth dwindle. The truth is that poverty in America is alive and well, and many middle-class Americans are just one crisis away from slipping into destitution. According to the National Poverty Center, over 15 percent of all Americans live in poverty, which is at its highest rate since the early 90s. These individuals — many of whom are children — experience a low quality of life that is hard to fathom from the middle-class. Impoverished people live with so much stress that they score lower on cognitive tasks than their wealthier peers. Poor Americans even have a reduced life expectancy compared with the general population.
The rich don’t have it so great, either
Recent research from Princeton University, however, suggests that quality of life isn’t that great for the richest of the rich, either. Now, we’re not trying to compare the plight of the rich and the poor, since the stresses of having too much and not enough money are very different. However, people who accrue wealth and pull in a large income tend to report lower emotional well-being and daily happiness than people who earn less money. Often, they are too flooded by the stress of owning wealth to truly enjoy it. As they say, “more money, more problems.”
The American sweet spot
Since quality of life isn’t that great for both America’s rich and poor, what should middle class Americans aim to earn? Surprisingly, the Princeton study found that there actually is an American “sweet spot” for income and quality of life. In 2010, Princeton and Gallup researchers surveyed 450,000 Americans and found that American households that bring in $75,000 per year experience the highest satisfaction with life, and also score the highest on key quality of life indicators. Households that earn less than $75,000 per year reported a steadily decreasing quality of life, down to the lowest quality of life for Americans in poverty. Similarly, households that exceeded $75,000 per year didn’t report any increasing quality of life, even as their income rose.
The key to quality of life
Happiness, then, isn’t about chasing the dollar. It’s about finding your sweet spot. Princeton researchers’ $75,000 threshold suggests that quality of life is a mixture of comfort that only money can buy, and gratitude that results from setting goals and occasionally going without.
If you think about it, this makes a lot of sense. The poorest of the poor can’t set long-term financial goals for themselves because they’re just trying to survive. The richest of the rich — even if they’re extremely hard-working — may not have to set long-term financial goals, either, because they already have everything they want and need. The $75,000 mark is all about comfort, gratitude and working towards attainable and exciting financial goals — like home ownership, college or a special vacation.