If you earned $326,900 a year would you consider yourself to be rich? That’s what the average Australian feels they need, according to new research from Finder
A yearly income of $330,000 is close to seven times higher than the average personal income of $49,805, according to the Australian Bureau of Statistics (ABS).
But the survey also discovered that around one in four (25 per cent) of Aussies wouldn’t consider themselves rich unless they were earning at least $500,000 a year.
Finder personal finance expert Kate Browne said persistently pining for more money could be a dangerous game.
“A small number of high-income earners make average income statistics look impressive, but remember the typical middle-class Aussie is on a $50,000 salary,” she said.
“If you’re lucky enough to be earning above the median wage, you’re already in a better spot than most. It’s easy to get caught up in the money, but it’s much more important to truly enjoy your work.”
Browne warned that social media and the ‘FOMO economy’ (fear of missing out) could make it seem like everyone else was doing so much better than you.
“Appearances can be deceiving,” she said.
“There’s nothing wrong with striving for better finances, but trying to compete with others is exhausting and will make you always want more than you have.
“It can also lead you to live beyond your means, spending money you don’t have on expensive clothes or cars.”
Who needs the most money?
A US study by Credit Karma found 48 per cent of Millennials spent beyond their means to keep up with their friends in 2019, up from 39 per cent in 2018.
Food (47 per cent), clothes (41 per cent) and travel (33 per cent) were the things Millennials were most likely to overspend on.
Finder’s research found Gen X needed the most money to feel rich ($354,100 a year), while Gen Z needed a little less ($286,964 per year).
Women ($333,010 a year) reported wanting slightly more than men ($318,952 a year).
“Building your wealth doesn’t have to mean starting your own business, being a fiend for crypto or or even earning a competitive income,” Browne said.
“It’s all about smart and healthy habits – starting with cutting back your spending.
“Try to put at least 20 per cent of your income each month into a savings account and let this grow. If you have a savings goal – such as buying a house – you can set up a dedicated bank account to help you keep track.”
Can money buy you happiness?
Short answer: yes.
A seven-year study by the University of Pennsylvania’s Wharton School found happiness increased with the more money a person had.
It was previously believed that the amount of happiness a person could get from money would flatten out around US$75,000, but the new research suggested otherwise.
The research found people’s wellbeing and happiness increased with the amount of money they made because it granted them more freedom.