Is $100,000 a Year the Magic Happiness Number? How Much Do You Need to be Satisfied?

Earning $100,000 per year used to be the gold standard for hard-working adults to strive for. Once you hit this milestone, you were officially “wealthy.”

However, things have changed over the years (especially since inflation). People now believe they require more than $100,000 to survive and thrive. But, is that truly the case?

Three years ago, in July 2022, I wrote “Is $75,000 a Year the Magic Happiness Number?” I had read an article saying that peak happiness comes around this amount of money.

Small City. Passive Income. Great Retirement.

Now it’s time to revisit this topic, albeit with a higher price premium. Do you really require six figures a year to be happy? Let’s begin.

The power of a number. As a Master Sergeant in the US Marines, I reached the $100,000/year milestone back in 2017. It sure did sound like a lot of money on paper.

In reality, I was struggling with debt. My “massive” paycheck didn’t go very far when the majority of it went toward credit cards, personal loans, and car loans.

Let’s begin our analysis there—with debt. To truly get a picture of how much you need to survive, you must defeat all of your debt.

Many people accumulate student loan debt to obtain the possibility of earning $100,000 a year. It certainly is a catch-22.

Education Destroys Creativity

If you have student loan debt, you have powerful options that most people don’t discuss. I recommend moving back in with your parents or getting roommates to help quickly pay off your student loan debt.

I can say the same about personal loans, credit cards, auto loans, and wedding debt. The goal is to pay these off as quickly as possible to determine how much money you really need.

What makes you happy? Many people have debt because they seek happiness through consumerism. So, how do you find what makes you happy outside of spending?

It is tough to find true happiness in the city. Most people live in the hustle and bustle of a busy city, working hard and spending money without thinking.

My wife and I never liked the city, even though I grew up in San Diego, California. Instead, we enjoy being on land.

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We bought a house in Arizona with three acres of sand and a home in Florida with three acres of forest. Both properties allow us to “touch ground” whenever we choose.

If you are having a tough time finding your base happiness, you may need a change of scenery. Small cities provide more freedom and less hustle and bustle, you’ll just need to bring your own income.

What else makes you happy? Do you enjoy spending time with family and friends? How much money do you spend on “self-care” or car payments?

I believe the $75,000 a year is derived from people living a humble lifestyle. They found peace and solace in the people around them. You can replicate their success by letting go; perhaps minimalism is your way.

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Digging into the budget. Let’s create a $100,000/year budget for a family of four. You can adjust the numbers as you see fit.

1. $10,000- to a high-yield savings account
2. $20,000- to investments
3. $25,000- taxes
4. $45,000- household expenses

Looking at the numbers, we see that taxes are the largest expense. You can lower your tax bill by moving to a different state or starting a business (where you have more control over taxes).

You should always set money aside in your high-yield savings account, which we call an emergency fund. The money for investments can go toward your 401 (k), Roth IRA, or dividend investing in a standard brokerage account.

The Magic of Leverage

Now, let’s dive into the household expenses. Again, your numbers will vary depending on many factors, so use this as a random guide.

1. $24,000- rent/mortgage
2. $12,000- household expenses, gas
3. $9,000- food, eating out

That gives us $2,000 per month for housing. If we cannot meet this number, we should get roommates or move in with parents or siblings. We have $1,000 per month for utilities and expenses.

Notice that we do not have a car payment. We also have $750 per month for food and eating out. Can a family of four survive on this? They sure can.

Blogging vs. YouTube #1

Reaction to the budget. Many people will not like this budget and say it is impossible. However, I will give you a hint on how this works.

If you invest your money, it will generate more income for you to use throughout the year. For example, my dividend portfolio generates $3,000/month in passive income.

Therefore, the crux of this plan is to use the $20,000/year in investments to generate more passive income from real estate, business, creativity, and investing.

For me, true happiness comes from living below my means, yet having a ton of money still flowing through my household. You can call this cash flow.

My wife and I have a $6,000/month budget. However, we earn well over $12,000/month, which affords us the ability to save and invest more.

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Passive income versus active income. If you take your investment portfolio seriously, it will eventually set you free. The goal is to earn $100,000 in passive income instead of active income (earned income).

I live on passive income. There is something truly magical about understanding how to live without going to work. Once you discover the concept of passive income, removing it from your brain will be hard.

True happiness. Therefore, it’s challenging to find true happiness when you are in the workforce. By definition, you will put your employer’s needs before yours.

That doesn’t mean quitting your job tomorrow; it means going to work with a purpose. I spent the last four years of my career preparing to retire.

I went to work to extract cash flow from my employer. I used this money to invest in the stock market, purchase real estate, and start a small business.

The Magic of Averaging Down

I used my employer as a means to an end. I continued to work hard, but my focus shifted to what “I” needed to accomplish in my own affairs. Robert Kiyosaki calls this “minding your business.”

Once my wife and I started building our retirement plans, we found my true happiness. I found that I enjoyed being a writer. I love staring at my dividend portfolio. I love looking at Zillow for real estate deals.

Conclusion. My happiness doesn’t come from earning $100,000/year in passive income; it comes from going from broke to retirement in six years.

Now, when we sit outside in our yard, we understand exactly how we got here. We took no shortcuts or easy routes, just pure hard work and financial education.

I suspect you will find true happiness in earning $100,000 in passive income. The first step is to earn $100,000 in earned income and slowly convert that powerful cash flow into passive income. You can do it. Good Luck!

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