What is Your Happiness Worth? Our Exclusive Formula
Here we go! We’re going to quantify the correlation between money and happiness and put some real numbers to the concepts we talked about in my post The Question of a Lifetime: How Much Money Do You Need to Be Happy?
I had to put my accountant hat back on for a bit to create this worksheet. It is designed to help you calculate how much money you need to make to be happy. (It will be helpful to read the post referenced above to understand what I mean by this.)
I’m sure I forgot a few things, and every situation will be different. But, this worksheet should give you a good starting point to work from.
The dollar amounts are based on living in Grand Rapids, Michigan; that is the largest city that I live near. I found a calculator that you can use to adjust these amounts to the cost of living where you live, and I’ve built a column for this adjustment into the worksheet.
For example, if you live in New York, where the cost of living is 34% higher than in Grand Rapids, you would enter 1.34 in most of the multiplier columns.
However, this calculator also gives separate %’s for housing costs, which is 77% higher in New York. Yikes!
For a 1 Bedroom apartment, you would enter $725 x 1.77% = $1,283 in New York.
On the flip side, if the cost of living is 34% lower where you live, you would enter .66 in the multiplier column (1.00 – .34).
A few things to keep in mind as you go through the calculation:
- You may need to redefine your basic needs. I think I’ve been pretty generous with the dollar amounts, which would provide for a comfortable life. It wouldn’t be a luxurious lifestyle, but remember, a luxurious lifestyle is not going to make you any happier in the long run.
- I based the housing expenses on rent because it made quantifying the monthly cost easier. Plus, I think renting might actually make us happier. There’s much less to worry about when you don’t own a property, and you have much more flexibility when life-changing opportunities come your way.
- You won’t incur all of these expenses every month, but I allocated a monthly cost to each one to keep the calculation consistent.
- The health insurance costs assume that you don’t have health insurance through your employer.
- I realize that a lot of people have student loan payments, so I created a line item for that cost, but I did not attempt to assign any values.
- I even allowed for one vacation a year. I think being able to unplug and get away from our everyday lives for a little bit is an important part of living a fulfilling life.
- I tested the worksheet given my personal situation, and it worked!
If you would like a copy of the spreadsheet with formulas or would like to know how I came up with any of the specified amounts, shoot me an email. I’ll be glad to share this information with you.
Enjoy!
Note: You will first have to download the PDF before you can print it.
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