In the UK, the average median salary is £39,039, according to the Office for National Statistics.
However, despite a 4.3% increase compared to April 2024, 58% of Brits say they don’t feel financially comfortable. In addition, 25% admit to feeling anxious about the year ahead.
This begs the question: how much money do we actually need to be earning to feel happy?
Here, we unpack the amount of cash considered the ‘best’ it gets, why happiness isn’t inherently linked to income, and why we can all learn from Nordic countries.
How much money can ‘buy’ us happiness?
In 2023, journalist Adam Shaw explored how our happiness is connected to wealth in an episode of BBC Radio 4’s Money Box.
He was joined by Jan-Emmanuel De Neve, Professor of Economics and Behavioural Science at the University of Oxford, and Mark Williamson, the director of the Action for Happiness charity, who helped to unpack why we have an emotional relationship with money.
The experts agreed that money makes less of a difference to a person’s happiness as they become richer, revealing that an annual salary of £120,000 is the magic number when it comes to feeling happy and content.
However, during the episode, Professor De Neve stated that £120,000 is the ceiling, as we ‘no longer detect a statistically significant relationship between further money and life satisfaction.’
A £120,000 annual salary in the UK provides a take-home pay of around £76,150 to £77,300 per year. Or, roughly £6,300 to £6,400 a month after income tax and National Insurance.
But, unfortunately for us, an annual income of approximately £120,000 puts an individual within the top 1% of earners in the UK, meaning it’s a figure 99% of us will never see on a paycheck.
Research has shown that our relationship between income and happiness is ‘logarithmic.’ Essentially, if you double your salary from £20,000 to £40,000, you would have to then double it again to £80,000 to reach the same happiness gains as the first increase.
In 2021, a study found that well-being rises with income. But, it also revealed that there’s no difference in happiness whether you earn $1 million or $10 million.
Ultimately, it found that people are at their happiest when they transition from poverty to middle class.
However, it’s not that bleak — and the fact that this salary is unattainable for most of us doesn’t mean we’re destined to be miserable.
Happiness isn’t linked to income
Action for Happiness’ Mark Williamson explained that factors other than income significantly contribute to wellbeing.
While it is acknowledged that basic needs — i.e. food and shelter — require money, he stated that once these things are covered, it’s up to you to create your own quality of life.
This includes having good relationships with family, friends, and colleagues, feeling that you’re part of something (be it volunteering or achieving individually), and having control over your life choices.
A 2022 study from the University of Bath also looked at the relationship between income and happiness.
It echoed the point of needing money to cover your needs but only to an extent — and that money’s link to happiness is indirect, ‘rather than directly rewarding in its own right.’
So, instead of saying ‘money can’t buy you happiness’ — which admittedly, is an age-old cliché — the study flipped the phrase on its head.
Instead, say ‘money can buy you safety and security,’ which are actually the things that achieve baseline happiness. Money can’t buy the aforementioned relationships and freedom.
Ultimately, the research argued that there’s no direct relation between money and happiness. Rather, our contentment depends on who we are as individuals and how we were raised.
Why are Nordic countries so happy?
For the last eight years, Finland has been named the happiest country in the world by the UN-sponsored World Happiness Report.
The latest rankings reveal that Denmark, Iceland and Sweden — all of which are Nordic countries — make up the top four. This was the same in 2024, and almost the same in 2023.
In fact, for the last 10 years (bar 2021, 2020 and 2016, when Switzerland made an appearance), the top three have been solely Nordic countries.
However, the Nordics are not the wealthiest. Rather, these medals go to Liechtenstein, Singapore, and Luxembourg.
Professor De Neve, who is one of the authors of the United Nations’ World Happiness Report, told Shaw that strong social networks, welfare states that bring ‘psychological security’ and trust in government tax plans are among the reasons for happiness.
The professor also noted that an equal society is a key factor.
He explained: ‘The levels of inequality are much lower than they are in economies like our own here in the UK. All of that means that, in our report, the average well-being or life satisfaction of somebody in Finland or Denmark is much closer to [a score of] eight. Whereas in the United Kingdom it’s sort of around seven.’
At what point do people stop caring about money?
While the majority of us will never experience extreme wealth (and let’s be honest, no one needs to be a multi-millionaire or billionaire), there does come a point when the rich elite literally stop caring about money.
Metro previously spoke with two financial experts, Ayesha Ofori, former executive director and private wealth adviser, and founder of investing app Propelle, and Emmelia Powell, financial adviser and director of premier wealth solutions, about everything you can afford at different levels of wealth.
They explained that people with net worths between £500 million and over £1 billion no longer care about money. At this level, their only focus is achieving influence and power as they find themselves asking ‘what is the purpose of their life now?’
Ofori also stated that these individuals typically only associate with people who have the same amount of money. As no one is impressed by anyone’s wealth at that level, ‘they have to find other things to be impressive’.
Unless you have a private island – which Powell says is common – there’s also nowhere else for you to go. Ofori says this is why we’re seeing billionaires heading to the moon. ‘They’re finding ways to change the level.’