The Retirement Resource - money happiness threshold

The Money Happiness Threshold with Certified Coach Joe Schum

During today’s coaches corner, Certified Coach Joe Schum and I are discussing the Happiness Spending Threshold – What does it mean for you to live within your means, and what does it mean to live a life that lights you up within those means?


  • The Happiness Spending Threshold
  • What does living within your means mean to you?
  • How do you live a fulfilled life within your means?
  • Why you need a liquidity plan
  • An exercise to do with your partner
  • 3 things to consider after this episode


Research suggests that the typical household is satisfied with around $70,000 in annual income, meaning additional income above that amount does not increase emotional well-being – also referred to as the “happiness threshold.”

So it’s important to square away that amount of income before retirement so that you aren’t stressing about where money is going to come from, but what’s important to you beyond that?

You have to consider what are you giving up by investing your time and energy into earning anything past that happiness threshold.


To live within your means simply means to spend less on your lifestyle than you generate in earnings. However, this is clearly easier said than done.

Part of it is the habit of spending less than you make, but another part is the ability to plan and build a buffer for the unexpected. Did you know that a $500 surprise expense would put most Americans into debt? Having the stress of that surprise expense hanging over your head is not going to help you feel fulfilled, so you need a liquidity plan.

It’s also important that you “don’t compare yourself to others goldfish bowls,” as Joe likes to say. Focus on what lights you up and what fulfills you, not what other people have.


Joe is currently in the process of doing this exercise with his wife, and it might be a good way for you and your partner to plan for your future.

  1. Start by identifying a point in the future by which you’d like to see some change – Joe and his wife are looking at four years from now.
  2. Individually, consider what you want your life to look like in four years (or however far you want to cast your vision). Work your way back from there and list all of the big steps that you will have to accomplish to make that happen. There’s no rush – each of you can take a week, or however long, to really mull this over.
  3. After you’ve completed the individual part of this exercise, sit down with each other share your vision for the future. Then you’re going to start to take stuff off the table, maybe bring new stuff to the table, to create a shared vision of the future. Then, again, work backward to identify the steps that you will have to take to make it happen.

If you start now and take the journey in small steps, with small wins outlined along the way, you will be surprised at how much progress you can make.


  1. Take it easy. Take a breath. This is probably going to be a difficult process because you’re overcoming all kinds of misconceptions and perceptions about yourself, but it should be a positive experience and you should have fun with it.
  2. Stop looking at your neighbors. Tap into your values, not others’. Looking in the other fish bowls is a surefire way to bolster feelings of disappointment and underachievement.
  3. What’s your current habit when you have money? Are you going to spend it, save it, invest it? And what are the cues in your life that lead to this habit? For example: If you get a tax return in the mail tomorrow (the cue), what will you do with it (the habit)? If a wayward relative comes knocking on your door looking for money, again, what do you do?


“The Money Happiness Threshold


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About Beau Henderson

Beau Henderson is a financial advisor, author, coach, radio personality, and CEO of RichLife Advisors. He has helped over 3,000 clients to not just improve their relationship with money, but to live the life of their dreams.

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