Memo to Myself: The Three Money Thresholds

What made me write this

I was listening to a podcast between Morgan Housel and Ryan Holiday where Housel made the point that at some amount of wealth, money becomes a social liability. Your life doesn't improve anymore, you don't feel happier, but your kids become spoiled and people start asking you for money. That observation made me want to write down my own thresholds, principles to keep in mind when making money decisions.

Source: https://dailystoic.com/morgan-housel/

Disclaimer: Written with Claude (claude.ai). I haven't studied all of the research referenced in this memo thoroughly. I came across these ideas through podcasts and reading — and then did further research with Claude to find the underlying sources. They sounded reasonable and directionally true to me, so I included them. If you're making serious financial decisions, please read the original sources yourself rather than taking my word for it. This memo is a thinking tool for me personally, not financial advice.

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Threshold One: €100,000/year active income

The ceiling on income worth chasing

Below this, more money almost certainly makes my life better. At this number, my needs, security, experiences, and generosity are covered. Beyond it, the research is clear: day-to-day happiness stops improving meaningfully with income alone.

Every opportunity above €100K must be evaluated not by the number on the offer, but by what it costs in time, autonomy, stress, and relationships. If I can't clearly say "this makes my life better, not just my balance," the answer is no.

A note on the research: the studies don't point to a single clean number. The range they suggest is $100K–$250K depending on baseline happiness, location, and how you spend the money. I've chosen €100K as my personal threshold not because the science demands it, but because it's the number where I believe my life is genuinely, fully covered — and a useful forcing function for evaluating what I'm actually chasing beyond it.

The research:

• Kahneman & Deaton (2010) — original plateau finding: https://www.pnas.org/doi/10.1073/pnas.1011492107
• Killingsworth (2021) — happiness keeps rising, but at diminishing rates: https://www.pnas.org/doi/10.1073/pnas.2016976118
• Kahneman, Killingsworth & Mellers (2023) — reconciliation; plateau exists mainly for the already-unhappy, for most people it levels off around $100K: https://www.pnas.org/doi/10.1073/pnas.2208661120

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Threshold Two: €2,500,000 net worth

The number that sets me free

At a 4% withdrawal rate, this generates €100K/year indefinitely, inflation-adjusted over a long horizon. This is the point where work becomes fully optional — not retirement necessarily, but genuine freedom of choice.

The goal is not to hit this and spend extravagantly. The goal is to hit this and stop needing more. Every euro saved below this has clear, compounding value. Prioritize reaching it without compromise.

The good news is that €2.5M is reachable through what Nick Maggiulli, author of The Wealth Ladder, calls "just keep buying":

• consistent investing in index funds,
• prioritizing income growth over spending cuts, and
• staying in the market through downturns

No unicorn exit required. His framework places €2.5M at the upper end of what disciplined saving and investing can get you as a regular earner, given enough time.

The strategy is straightforward: earn well, invest consistently, don't time the market, give it time. The portfolio eventually starts doing more of the heavy lifting than your contributions.

What Maggiulli says not to do is equally useful:

• Don't hoard cash waiting for the perfect moment to buy — the data shows timing the market almost never works
• Don't over-index on your home as your primary asset — it's a consumption good, not an income-producing one.
• Don't obsess over cutting spending when the real lever is increasing income.

In practice, aim for €2.5–3M to account for taxes on withdrawals and early-retirement sequencing risk. And note: if retiring before 55, a 3.5% withdrawal rate is safer over a 50-year horizon.

The research:

• Bengen (1994) + Trinity Study (1998) — the origin of the 4% rule: https://retirementresearcher.com/safe-withdrawal-rates-for-retirement-and-the-trinity-study/
• Trinity Study overview: https://en.wikipedia.org/wiki/Trinity_study
• Updated Trinity for early (50-year) retirement — 3.5% is safer: https://thepoorswiss.com/updated-trinity-study/
• Nick Maggiulli, The Wealth Ladder (2025): https://ofdollarsanddata.com/the-wealth-ladder/

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Threshold Three: €10,000,000 net worth

Where money starts working against me

In his conversation with Ryan Holiday on The Daily Stoic podcast, Morgan Housel mentioned that there is a point at which money becomes a social liability. He threw out these numbers — $10M, $20M, $100M. I'm picking the lowest number he mentioned: €10M.

Here's what the research says: At this level of wealth, the hidden liabilities start to outweigh the visible assets:

• Loss of privacy, the erosion of trust in relationships, the nagging question of whether people are drawn to you or your money
• High net worth individuals consistently report that social circles shrink, relationships become more transactional, and more mental energy goes toward managing and protecting wealth than enjoying it.
• Piff and Keltner's research at UC Berkeley adds another layer — as wealth accumulates, empathy measurably declines, not through any moral failure but because financial independence quietly reduces the need to rely on and pay attention to others.

When setting goals and making plans, if €10M enters the picture I need to have a clear answer for what the excess capital is for — a foundation, deliberate giving, something with meaning beyond accumulation. Wealth without intention at this level is a liability, not an asset.

The research:

• Housel, "Rich and Anonymous," Collab Fund, July 2023 — original essay, no longer easily accessible online; the concept is also discussed in his conversation with Ryan Holiday on The Daily Stoic podcast: https://dailystoic.com/morgan-housel/
• Piff & Keltner (UC Berkeley) — wealth reduces empathy and compassion: https://www.scientificamerican.com/article/how-wealth-reduces-compassion/
• Luthar (2003) — physical and social isolation in wealthy communities: https://pmc.ncbi.nlm.nih.gov/articles/PMC1950124/
• Ward et al. (2020, University of Buffalo) — basing self-worth on financial success leads to isolation and loneliness, as time pressure to accumulate wealth crowds out investment in relationships: https://www.minnpost.com/second-opinion/2020/04/basing-self-worth-on-financial-success-leads-to-greater-feelings-of-isolation-and-loneliness-study-finds/
• Greater Good Science Center (UC Berkeley) — higher income is associated with spending less time socializing, with research suggesting a U-shaped curve where very high income may reduce the urge to connect: https://greatergood.berkeley.edu/article/item/are_the_rich_more_lonely