How much money is enough?

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As a freelance journalist, I spend a lot of time thinking about how much I earn. Should I spend more hours working, or try to hike up my rates to earn more money year over year? Am I satisfied with how much I earn now? It wasn’t so different when I had a staff job — I was always comparing my salary to that of my peers.

Learning to be happy with how much you make can be a constant struggle. Research shows there’s a figure that, once achieved, leaves most folks feeling satisfied because basic needs are met (about $75,000 according to a 2010 study1 from Princeton University in the US). But I was hoping to learn why some people seem completely happy — or entirely unhappy — with how much they bring in, regardless of that magic number.

Can the salary-obsessed ever feel satisfied? Turns out, the answer is complicated, but it’s possible.

Part of the reason we’re preoccupied with our salaries is biological, said Ben-Shahar Tal, a lecturer in psychology at the Interdisciplinary Center in Herzliya, Israel. Even when a larger salary isn’t needed to cover additional expenses, it’s natural to want to earn more.

We're still, by nature, hoarders

“Our nature hasn't changed much over the last few millennia and we're still, by nature, hoarders,” he said. “We have the need to have more and more, so that we're more likely to survive the future.” 

Don’t compare

Apartment rentals require deposits, as do some utility companies. You may need a moving van, and you may have to wait four weeks for a first paycheck. “You have to figure out what you’ll need to live on before that first paycheck,” Morrison

The perception that you’re constantly being out-earned by your peers is the biggest element in salary dissatisfaction, said Michelle Gielan, founder of the Institute for Applied Positive Research, a US research institute. Those who believe they are paid similarly to their peers are generally happier than workers who routinely feel underpaid, she said. “People are very focused on comparison,” said Gielan. “If they feel like they are making less than somebody else at the office — they might not be satisfied.”

To help people feel better about their salary, Kathleen Vohs, a marketing professor at Carlson School of Management at University of Minnesota in Minneapolis in the US, advises workers to think about money as a tool rather than a benchmark that pits them against their peers.

“It's very easy to compare one's salary against others because money is quantifiable,” she said. “Other areas of life are not so easily quantified.” 

For those who really want to feel more satisfied (and don’t just like to have something to complain about), “shifting the focus to what we have” rather than focusing on what we don’t have is key, Tal said.

It can be simple. Donating money, simply stating your gratefulness or feeling thankful for what’s already in your life can help create more satisfaction around what you earn, he said. Additionally, spending discretionary income on experiences versus things can help workers feel more fulfilled with their current salary.

Promoting transparency

Building a tight-knit network within your industry which allows for more-open salary conversations with peers can help you feel more satisfied, added Gielan. Generally, that only works if you are in line with your peers, however.

At the company level, some manager-led conversations can help ward off salary dissatisfaction. Research by Payscale, a data and software firm focused on compensation, shows that telling employees how and why the company arrived at their pay helps to promote salary satisfaction and improve company culture.

Perception of pay is more important than what’s true

“Having more transparent conversations about pay is incredibly important to feelings of contentment” at work, said Timothy Low, Payscale’s vice president of marketing in Seattle, US.

Without this kind of transparency, it’s easy to fall into incorrect assumptions about your own pay and that of other employees, Low said. “Perception of pay is more important than what’s true,” he said. “If you think you’re underpaid, but objectively overpaid, you are not going to be satisfied.”

Seeking balance

Feeling satisfied with how much your earn, can be easily influenced by how satisfied you feel with other areas of your life such as the time you spend with family or pursuing hobbies outside of work, said Gielan. People who feel engaged in their work and spend quality time outside of work are often less focused on the numbers, she said.

Most research shows that only a small fraction of happiness is derived from how much one earns, while the bulk of happiness depends on genetics and how one processes the world, she said. “There’s a deeper meaning behind what the paycheck can do for us,” Gielan said.

Still, wanting a higher salary has some positives. Feeling underpaid may force some to make a much-needed career change or strive to excel at their present job to reap the rewards. Being reminded of your own salary can motivate employees to improve the quality of their work, according to research from Vohs.

“Just thinking of money makes people want to work harder and be better,” she said.

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1. Center for Health and Well-being, Princeton University, Princeton, NJ, August 4, 2010
This article was written by Alina Dizik from BBC and was licensed as an article reprint. Article copyright August 26, 2015 by BBC
The statements and opinions expressed in this article are those of the author. Fidelity Investments cannot guarantee the accuracy or completeness of any statements or data.
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