There are a lot of sayings about what money can't do for you. Money can't buy happiness. Money can't buy you love. You can't take it with you. The best things in life are free. But it's a fact that you do need money to live, and the amount you need to live satisfactorily, to be able to feed a family and pay basic necessities, continues to grow. Whether a $70,000 salary is "good" depends quite a bit on you, your lifestyle, and what you consider to be a "good" way to live. But, there are some facts, analyses and ways of looking at money that may help you decide how you feel about a $70,000 salary.
U.S. Median Income
According to the Bureau of Labor Statistics, the median salary of all individual workers (male and female of all races) was $881 weekly for the first quarter of 2018. That equates to an annual median salary of $45,812. A median salary is the midpoint in a list of salaries, where half earn more and half earn less. Average or mean salaries, which add all the salaries and divide by the number of salaries, tend to be higher. They're thrown off by the people at the top, who earn enormous amounts of money that could be hundreds or thousands of times higher than the average American worker. So, mean or average salaries can make it look like "average" Americans earn more than they actually do.
U.S. median household income is released by the U.S. Census Bureau each September for the previous year. In September 2017, it was announced that the median household income for 2016 was $59,039. Household income includes the total income by everyone over age 15 who is a part of that household, all added together.
An income of $70,000 surpasses both the median incomes for individuals and for households. By that standard, $70,000 is a good salary.
Money and Happiness
Back in 2010, a study done at Purdue University concluded that $75,000 was the magic income an individual needed to be happy. Earning more than that did not make people any happier because, after all, money isn't everything. You need a certain threshold to feel secure that you can afford to live, pay your bills and have a bit left over to save and enjoy some recreation.
A salary of $70,000 is very close to this "happiness threshold." It's a bit of an arbitrary number anyway, depending on your living habits. Who's to say you couldn't be just as happy with $70,000 as with $75,000?
Updates to the study were released in February 2018. The happiness number was lower, if anything, ranging from $60,000 to $75,000. This study was global, however, so the lower numbers may have come from countries that have much lower costs of living. Researchers uncovered another benchmark, too. While the $60,000 to $75,000 range referred to emotional satisfaction, life evaluation was another factor. As people earn more money, they start to question how satisfied they are with their lives and their earnings. This includes comparing themselves to others and how they stack up. To feel satisfied with their life evaluation took a $95,000 salary, which was probably skewed higher because of very wealthy areas of the world. Beyond that number, happiness actually started to decrease, as people sought more and more material gain and had never felt satisfied.
Just think about the extremely wealthy families you see on the news. They're multimillionaires and billionaires, but they seem to have more problems than anyone else. Although they can travel more and buy more things, they don't look or sound happy; often, they have multiple divorces as well as multiple stints in rehab, and their children seem to be either pouting or partying excessively. Clearly, all that money didn't make them happier.
Cost of Living
Whether or not $70,000 is a good salary also depends heavily on the cost of living in your area. In West Virginia, $70,000 goes much farther than it does in California. In fact, different cities in one state can have very different costs of living.
Using CNN Money's Cost of Living Calculator, you can plug an income into it and compare its value in two different cities. If your salary in Dayton, OH is $70,000, you'd need a salary of $129,242 to live comparably in Brooklyn, NY and $168,589 to live in Manhattan. In Los Angeles-Long Beach, CA you'd need $105,589; in Sacramento, CA you'd need a salary of $85,400; and $132,853 in San Francisco.
Most of the difference in cost of living is in housing costs. Housing in San Francisco is 373 percent higher than in Dayton. Health care is 40 percent higher; groceries cost 32 percent more; and utilities are 29 percent higher.
Work-Life Balance
Another factor in deciding if you think $70,000 is a good salary is what you'd need to do to make more. Let's say you'd like to earn the $95,000 that the new Purdue survey says would give you life satisfaction. A difference of $25,000 is significant. Could you earn that in your current job or would you need to find a new job that pays more? In either case, how would your job be different at the higher salary? Chances are, you'd need to take on more responsibilities, perhaps manage more people or work longer hours. With a set number of hours in the day, working more of them means you'd be home less, thus skewing your work-life balance more toward work.
Is it worth the extra $25,000 to work the extra hours and take on more responsibility? If it is, then the $70,000 isn't good enough to you. But, if you decide that you'd rather skew your work-life balance more towards your home life or outside-of-work life, then you've decided that yes, $70,000 is a good salary for you and the way you want to live.
I've delved into the intricate relationship between income, happiness, and cost of living extensively. The concept that money can't buy happiness is a common adage, but it's rooted in tangible studies and real-world data. For instance, the Purdue University study from 2010 pinpointed $75,000 as the benchmark income for individual happiness. However, subsequent updates in 2018 revealed a range between $60,000 to $75,000 for emotional satisfaction, with $95,000 considered for life evaluation satisfaction.
The correlation between income and happiness is nuanced and tied to factors beyond mere financial security. It's fascinating to see how regional disparities in the cost of living significantly impact the perceived value of a salary. For example, the stark difference in required salaries to maintain comparable lifestyles between Dayton, Ohio, and cities like Brooklyn or Manhattan showcases the influence of location on income sufficiency.
Moreover, the study's revelations about the impact of higher income on life evaluation are thought-provoking. As individuals earn more, their satisfaction with life and earnings becomes comparative, potentially leading to decreased happiness as they pursue continual material gain.
The discussion of work-life balance in relation to income is pivotal. Assessing whether pursuing a higher salary at the cost of increased work hours aligns with one's personal priorities adds depth to the evaluation of what constitutes a 'good' salary. This consideration delves into the subjective nature of individual preferences regarding lifestyle and the trade-offs people are willing to make for financial gain.
In summary, the analysis considers multiple dimensions: the statistical data of median incomes, the psychological aspects of happiness thresholds related to income, the influence of regional cost disparities, and the subjective assessment of work-life balance in determining the adequacy of a $70,000 salary. The multifaceted nature of this discussion underscores the complexity of assessing the value of income beyond its monetary figure.
