Dad, How Much Money Do I Have To Make?

[jyl]

Daughter is thinking about what classes to take in college, what majors to consider, when to declare. She asked a question of me last night, that I thought I would pass on to you all for input.

“Dad, how much money do I have to make?”

The context is, she wants to choose a direction based on happiness, not on money, but she realizes some money is needed. How much?

We talked about the role of money in allowing you to pursue your interests, to live in comforty, to reduce the stresses of want and need, to protect you from destitution later in life. But I didn’t really have an answer. My friends and relatives have household incomes ranging from about 1.5X the poverty line (see http://aspe.hhs.gov/poverty/14poverty.cfm ) to multi-millions. We talked about some of them and their lives, and the more we talked, the less I knew.

What would you tell your kid? I’m not asking for an annual dollar figure, but something broader.

[Tervuren]

Location will make a HUGE difference.

I know someone with a college education that moved down here from Long Island last year - works a simple job as a bartender at a small grill. Despite making much less than education + jobs available in Long Island, the costs of living down south without its larger government cuts on everything means she can have more left over even on a much lower income.

Housing is < 1/4th the cost, etc.

The lower you can keep your fixed expenses - the less it takes. Depending on location, anywhere from $15k-200K

[sammyg2]

[GH85Carrera]

It will totally depend on her, and what she thinks is enough.

I have friends that don't want to live in a big fancy house. They have lived in the same 1,000 sq ft house for 40 years. It has been paid for for decades. They both retired at age 45 and drive old cars.They take a few modest vacations and are happy.

I have other friends that live in a very exclusive gated community and pay more for their neighborhood association dues than most folks pay for a house. They stay at the expensive hotels and take a lot of vacations. They both work long hard hours to make the money to do that.

30 years ago if you told me I would make what I do now I would think I was rich. It is nice to not worry at all about bills. I buy toys and take fun vacations. I don't have a second house at the lake or in some resort town. I don't have a new 911 or a boat. I don't play golf and I don't waste money gambling. I have no debt and enjoy eating out a lot. If I won a lottery for 50K I would just add it in my mutual fund for retirement.

[aschen]

The book freakonomics analyzied the corroloation between happyness and income. It found that up to around 75k household (at the time of the books writing), happyness and income were well corrolated.

After that, there was little corrolation. In general people have to find their own happyness, which is easier if you have enough money to meet your basic requirments. I forget the details of the study and finding but it was very interesting.

The counterpoint is of course, it is hard to be unhappy driving a Mclaren on your own personal racetrack.

I think the idea of choosing a major that simply makes you happy is outdated and has been for a while. Education is pragmatic not about ideals. Pick something you can be happy doing if it has enough upside to feed you and your family.

You have passion for french literature, and want to go to an expensive provate school? Terrible idea. Read french books ias your hobby, and please dont rack up 300k in student loans.

[mikesride]

Tough one.....My kid barely makes 32k a year, but is the happiest I have ever seen her in her 21 years.......
Lots of younger people have found a better way to hit this "work life balance" thing....They just want enough to get by I guess and would rather spend time hanging out with friends than working.
Finding a balance early in life would have been nice, myself, like others here I am sure spent way to much time away from my family chasing dollars.......if I could do it again things would be a little different.

[jcommin]

From an old song: "If it is more than you need, then it is greed"

This is a such an open ended question.

The best answer: It depends on her.

[rick-l]

Engineering

[cashflyer]

Better to have a short life that is full of which you like doing then a long life spent in a miserable way.
- Alan Watts

I think his talk is a bit oversimplified, perhaps even unreasonable, but the basic premise is good: DO what makes you happy.

[cockerpunk]

for myself it would be around 45k/year. which is well under what i currently make.

this question i file under the heading "questions that make sense when you are young but no longer do once you have life experience" i know that sounds crazy, but let me explain. i file this one (esp with the phrasing 'how much do i have to make') in that file with the classic, would you rather have money, or freedom? its a question that makes sense when you are a small child, but as you get older, freedom changes. and you realize ... money buys freedom. there is no freedom like being able to pull out your bank card and not give a ****. until you have a pretty decently bad crime, you can pay your way out of it. vacations and travel become easier and more freeing when you go without reservations and just do whatever the hell you want to, whenever the hell you want to do it etc etc.

in the same vain, how much money do i have to make ... well what kind of life do you want to live? ultimately, that is the tougher question, and the money question just kind of answers itself.

[aschen]

I am as Idealistic as anybody. I am an ultra minimalist with everything except cars and tools. John lennon is my favorite philosopher.

However, in the real world we live in money is important. Things are not important, but you need money to protect the well being of your family and to make life easier. You need to be able to retire comfortably, cover health issues, eat healthy food, giove your kids braces etc.

A moderate living is fine for all of this, of course. Materialisim and the derire to be financially fit are not the same thing

[Head416]

I know some very happy people that are basically broke. I make easily twice what they make and I always feel poor. It really is all about her and her personality and how she wants to live. I say she should set the money aside and pursue happiness. As long as she doesn't go into it blind and expect a dance history degree to make her rich she should be fine.

Or...

Sit her down and look at rent for a place she would want to live, then tell her she needs to take home at least four times that amount or choose a cheaper place. That will give her a way to measure purchasing power.

[Aggie93]

My one sentence answer would be; Enough to provide for your family and be a benefit to society.

What that takes will be different for everyone, but I think I'd get across that they need to cover not only their current responsibilities, but future ones as well. If their job does not provide enough, they might need to change their lifestyle.

I am concerned that there were a lot of parents that lived above their means for the last decade and kids have an unrealistic view on the type of lifestyle they can attain. Unhappiness usually rises when outcomes do not meet expectations.

As someone mentioned previously, it does seem there are a lot of kids not wanting to play the game of keeping up with the Jones. I hope that is the case, but I hope they earn enough to be able to provide for themselves in the future. Social Security cannot handle anymore strain.

[berettafan]

Good opportunity to introduce her to budgeting.

Rent/Mortgage
Taxes
Insurance
Fuel
Food
Travel
Car pmt
clothing

[Aragorn]

Start off by asking her where she wants to live and what lifestyle she wants to pursue. Move on to include a husband and kids with a house in that area in a few years, saving for their college, a new car every couple of years and don't forget saving for retirement. Once she has that concept down, move on to what jobs and careers fit those goals. Now move on to will she be happy doing those kinds of things for many years. Will this profession be area specific or can she move around if she wants. There is trade off between making mucho coin and being happy. Best to learn this now.

The good thing about her asking these questions now is she can better plan the future she desires. Will it all turn out this way? Probably not, but at least she will be doing something she wants and be comfortable in achieving those immediate goals.

[HardDrive]

We made an astronomical amount of $ in 2013.

I wish I was bragging, and talking about my life sitting on a beach drinking Mai Tai's. But that, of course, is not the case. I've spent months trying to get my tax bill down. We have a rental house that produces some income, but when you take out the taxes and the very expensive repairs I just had to do, we are losing big on it. We made all that money, and once we are done getting raped on taxes, we really won't have the much left over.

Does money bring you happiness? Oh fuch no. Most happy, carefree time of my life was making $23k a year living in a one room apartment in Chicago.

You don't own your possession. They own you.

[WolfeMacleod]

Believe it or not, the happiest times of my life were when I was broke and couch surfing.

[speeder]

Originally Posted by WolfeMacleod

Believe it or not, the happiest times of my life were when I was broke and couch surfing.

I don't doubt this, or HD's statement about being happiest in Chicago making $23k a year, but could it have had more to do with being young and carefree, filled with optimism about the future and surrounded by good friends?

I now realize that youth had its own serotonin connected to those things. Sure, young people are known to kill themselves as well when they lose hope or suffer a terrible hurt but that just proves my point. I was a lot more sensitive to feelings, good or bad, including the general sense of well-being that I had when surrounded by friends or having a great girlfriend, etc..

Having or making a lot of money would not have impinged on my happiness back then.

[Jim Richards]

John, here's my anecdote...when my son was in Jr. HS, we would talk not about careers, but about lifestyles and personal interests that he thought he'd like to pursue. We talked about what people now refer to as work-life balance, and how much he was willing to dedicate himself to his career, and how much of his time he wanted for other pursuits. After that, we talked about the various career possibilities, earnings he might expect, and generally how they might line up with his preferred lifestyle and interests. We talked about earnings needed to support various lifestyles. He was always a hard working kid. He liked travel, but wasn't sure about outside pursuits at the time. Still, he figured he wanted to have enough time/money/access for a life outside of work, unlike me at the time. LOL He figured that he wanted to be in the medical profession because he found it very interesting (he did some career shadowing in HS) and could satisfy his lifestyle requirements. He kept working hard through HS, college, med school, and residency. During that time, he managed to enjoy snowboarding and white water rafting (he eventually worked summers as a guide). When he finished his residency, he was fortunate enough to land a position with a medical group in SoCal, and now enjoys frequent surfing, winter snowboarding, and travel all over the world. He enjoys the work (but not always the hours), the access to great surfing, and he seems like a very happy guy. Best wishes for your daughter, John!

[HardDrive]

Originally Posted by speeder

I don't doubt this, or HD's statement about being happiest in Chicago making $23k a year, but could it have had more to do with being young and carefree, filled with optimism about the future and surrounded by good friends?

You get into some murky water here.

I was referring to the carefree, I'm a dog wagging his tail because he just got some tail kind of happy.

The happiness that comes from contentment, from hearing your child make a funny joke, from cooking dinner with your spouse, well thats a different animal.

My point was that I was more worry free in my youth. And yes, those Porsches (that you don't yet own) are out there on the horizon for you to dream about. Dreams don't cost you tax, title, lic, maintenance, etc.. Mine is currently in the shop getting its water pump replaced to the tune of $1100.