How Much Money Do You Really Need to Be Happy?
March 07, 2012For some people, the grass is always greener. I recently read an article about a banker living in New York who earns a $350,000 annual salary, which covers private school tuition for his two children, a summer home in Connecticut, and a duplex apartment for his family in a very desirable neighborhood. Yet he still feels it isn’t enough. “I feel stuck,” he lamented. “The New York that I wanted to have is still just beyond my reach.”You’re probably rolling your eyes right now but when you look at the way this banker thinks about money, it’s eerily similar to the way most of us think about our own finances. We’re constantly chasing things and stuff that are just beyond our financial grasp. If only we had a little more money to afford the things we want, we tell ourselves, well then we’d finally be happy.
It’s tempting to criticize the banker while feeling that the things we want are justified because to most of us, a $350,000 annual salary already feels like a fortune. But how much you’re earning right now probably felt like a fortune too when you first started working or before you had a job. I would suggest to you that how much money you feel you need to be happy is really just relative to how much you’re earning right now, which is why someone with no income may think $60,000 per year is a fortune and someone earning $350,000 may still feel like he doesn’t have enough. After all, ask yourself why you’ve probably always felt that you need just a little bit more money to be happy even though you’ve received periodic raises to your income throughout your career.
What usually happens is that as we receive raises, we correspondingly increase our expenses to “upgrade” our lifestyle with more things and more expensive tastes. But we eventually get comfortable with our “upgraded” lifestyle and things we previously felt were luxuries seem normal, leading to new desires for different luxuries. And so we again think that just a little bit more money to buy these new things will make us happy. However, all we’re doing is chasing a mirage that’s seemingly within our grasp but always just out of reach. Even worse, we’re teetering dangerously on a financial cliff since losing our job would leave us with no way to continue to pay for our “upgraded” high-expense lifestyle.
Think about the things that truly made you happy before you started earning money like spending time with friends and family, practicing a hobby, or eating an orange on a sunny day in the park. When it comes down to it, these things and not “lifestyle upgrades” are what truly make our lives worth living. In our apprehension about what we’re missing out on if only we had more money, we’re making ourselves stressed and dissatisfied with our lives, which is made worse by needing a high stress, high-paying job to support our expensive habits. Instead we should be appreciating and enjoying the real things we do have that make us happy yet don’t cost a thing.
So instead of worrying about what you could do “if only” you had more money, I recommend you consider my opposing view – that you can be truly happy with far less money than you think. Some increases in expenses are unavoidable and even welcome, as when you have a child. But if in general you can learn to keep your expenses constant even as your salary rises, you’ll be able to be learn to be happy while avoiding the trap of keeping up with the Joneses and the worries and dissatisfaction that come with it. You’ll also eventually be amazed at how much money you’re able to save, far more than you’ve ever dreamed. In my next post, I’ll explain how I live well and happily in New York on only $12,000 per year. The money that I save from keeping expenses that low isn’t just an illusion. It’s a real, tangible benefit. And by realizing that you can be happy with far less money than you think, you can do it too.