Do you think that earning a certain amount of income or reaching a particular level of wealth will make you happy?
In today's consumer focused society it's easy to get trapped in the cycle of always wanting more. Have you ever thought "I'll be happy when...." I have that new car, the house is paid off, I don't have to work any more.
In a paper titled “From wealth to well-being? Money matters but less than people think“, Akin, Norton and Dunn found that those with a comfortable income are happier than those in poverty (seems pretty obvious). But once you reach the comfortable standard (which they found was an income of about about $75,000 in the US), additional income doesn’t buy you happiness.
What's interesting is that when it come to happiness, what you do with your money matters most. In the study "The Hidden Cost of Value Seeking", Pchelin and Howell found that people find greater wellbeing in experiences and also consider them a better use of money. Spending on ourselves by buying bigger TV’s and cars is less effective than buying experiences or even from spending less in driving happiness (pun intended!).
When you think about reaching a monetary goal, will getting to it actually make you happy? When you have nothing, $20,000 seems like a lot. If you’ve got $100,000 and you really want to get to $500,000, it seems like a huge deal. But when you get there, you realise nothing really changes and try to work out what’s next. Sure there is a sense of satisfaction or achievement in reaching a goal but don't let your happiness depend on it.
It's not so much about reaching the magic $1M in savings (or whatever your number is) that is important - it’s what that allows you to do in your life.