The following article, How Much Money Is Enough?, was first published on The Black Sphere.
The Happiness Plateau: Why More Money Doesn’t Mean More Joy
Let’s start with a question: If I handed you $10 million today, would you be happier in five years? The answer might surprise you—because science says you’d only be slightly happier than you are now. But before you start throwing Monopoly money at me in protest, let’s unpack why.
The Hedonic Treadmill
In 1978, psychologists Philip Brickman and Donald Campbell coined the term hedonic adaptation—the idea that humans quickly return to a baseline level of happiness, even after major financial windfalls. Their study compared lottery winners to paraplegics and found that, after a year, both groups reported similar happiness levels.
Evelyn Adams, who won the New Jersey lottery twice in the 1980s (totaling $5.4 million), ended up broke and living in a trailer. She told The New York Post:
“Winning the lottery is the worst thing that ever happened to me.”
What a charmed life Evelyn led if winning $5.4 mil was the worst it got. Holy Mother of Mula. But here’s why she may have felt this way.
The $75,000 Happiness Cap
A landmark 2010 Princeton study by Nobel laureate Daniel Kahneman and economist Angus Deaton found that emotional well-being does improve with income—but only up to ~$75,000/year (about $100,000 today). Beyond that? More money doesn’t significantly boost day-to-day happiness.
Key Insight:
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Money relieves stress (bills, healthcare, etc.), but it doesn’t buy fulfillment.
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Example: Warren Buffett, worth $120B+, still lives in the same Omaha house he bought in 1958 for $31,500 (Source).
The Takeaway:
“Money solves problems, but it doesn’t create meaning. The key? Stop chasing ‘a little more’—it’s a treadmill, not a ladder.”
Defining ‘Enough’: From Ramen to Private Islands
Maslow’s Hierarchy of Needs
Psychologist Abraham Maslow argued that humans prioritize needs in tiers:
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Survival (food, shelter)
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Safety (stable income, healthcare)
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Social belonging (friendships, family)
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Esteem (respect, status)
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Self-actualization (purpose)
Key Finding:
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Money easily solves Levels 1-2.
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Levels 3-5? No price tag. (See: Johnny Depp’s $650M bankruptcy despite fame and wealth (Source).
The ‘Financial Freedom’ Formula
The FIRE (Financial Independence, Retire Early) movement’s rule:
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Save 25x your annual expenses.
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Spend $40K/year? Aim for $1M invested.
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Spend $100K/year? Target $2.5M.
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Pete Adeney (Mr. Money Mustache) retired at 30 with ~$600K by slashing frivolous spending (Source).
The $10,000 Watch Test
A 2018 study in Nature Human Behaviour found that luxury purchases don’t increase long-term happiness—they just raise expectations.
Funny Example:
“A $200 Casio tells time just like a $10,000 Rolex. But does the Rolex make you feel like James Bond? Maybe. Would I buy one if rich? Absolutely. That’s the problem—‘enough’ is a moving target.”
3. The Spending Trap: Why More Money = More Problems
Lifestyle Inflation (The Silent Budget Killer)
A CNBC study found that 70% of lottery winners go broke within 3-5 years. Why? Spending expands to fill income.
MC Hammer earned $30M+ in the ’90s, then filed for bankruptcy after buying a mansion with a gold-plated gate (Source).
The Diderot Effect
Philosopher Denis Diderot wrote that buying one luxury item (like a fancy robe) triggers a spiral of upgrades (now my slippers look shabby… then my chair… then my house…).
This explains why IKEA is a gateway drug. You go in for a $20 lamp and leave with a $5,000 living room set.
How Billionaires Stay Sane
Research shows self-made billionaires (Buffett, Zuckerberg) often keep modest habits, while sudden wealth (inheritance, lottery) leads to disaster.
“Wealth is a skill—not luck.”
4. Money & Relationships: The Awkward Truth
The ‘Gold Digger’ Dilemma
A Journal of Socio-Economics study found that sudden wealth isolates people—because they distrust others’ motives.
Jack Whittaker, a $315M Powerball winner, said: “I wish I’d torn up that ticket.” After winning, his granddaughter was murdered (money-related), and he was sued constantly (Source). While this seems like an overreaction, I do understand Whittaker’s dilemma. Once you get money to burn, a lot of jealous and unscrupulous people will enter your life.
The ‘Two-Pocket’ Friend Test
Wealth coach Ramit Sethi advises:
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“One-pocket friends” split everything 50/50.
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“Two-pocket friends” can’t keep up, and you cover them.
Be careful who you befriend.
“If your friend invites you to a Michelin-starred dinner, and you’re on a Wendy’s budget, do you…
- A) Panic-swipe your credit card?
- B) ‘Forget’ your wallet?
- C) Enjoy the meal and never mention it again?”
- D) Opt out?
Final Thought:
“Money amplifies who you already are. The key? Build wealth without losing yourself—or your people.”
Sources Cited:
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