Money and Happiness

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When I didn’t have money, I thought money would make me happy.

Not only would money allow me to buy more of the things I wanted, but it would allow me to stop worrying so much about every dollar spent.

My guess is that a lot of people without money think this way. And they’re not entirely wrong. Because when you don’t have money, all you see are the many things you don’t have or can’t do.

And some of those things are extremely important, like being able to afford healthcare for yourself and your family.

But after you have the means to pay for the vital necessities of life, money does not generate happiness by allowing you to buy more things.

Rather, it contributes to your happiness by giving you increased control of your life and slack for when things inevitably go wrong.

For example, let’s imagine you’ve gotten yourself to the point where you’re free of debt and have 6-12 months in living expenses saved up.

You may not be “rich,” but this level of wealth can have a tremendously positive impact on your quality of life.

And that impact doesn’t come from using this financial cushion to buy a new car or a slightly bigger house.

Instead, it comes from the ability to:

  • Be less fearful of a terrible boss, as you know you will be able to get by for a while if something goes wrong or you decide to leave.
  • Deal with an unexpected medical emergency without worrying about how you might pay for it.
  • Help a family member who’s in a tough situation without it breaking your bank.
  • Choose a job that you enjoy and that has more flexibility, even it pays a little less.
  • Take a few days off of work if you’re sick or want to do something fun with your family.
  • Invest in things that can make you healthier and happier, like therapy, coaching, personal training, and higher-quality food.

As you climb the wealth ladder, the biggest boon to your happiness comes from the increased level of control you have to design your life and your ability to better endure unexpected events that cost money.

I think this level of wealth is available to most people in developed countries. The path to getting there is easier for some than others.

Some people are born with this level of financial security and never know that life could be otherwise. I find that many of these people have strong opinions about what we need to do for “poor people,” and often those opinions are completely out of touch with what it means or feels like to have no money. But that’s a discussion for a different newsletter.

For those of us who weren’t born into such circumstances, it’s a more difficult path.

You have to find a way to make a good income, become financially literate, learn how to control your spending, avoid becoming saddled down by interest payments on debt, and make prudent investment decisions.

And you have to get lucky. You have to avoid getting duped into something that puts you in a big financial hole. You have to stay relatively healthy for a long period of time. You have to maintain the mental equilibrium required to continue putting in the effort.

None of these things are easy, especially if you’re starting without money.

But I’m optimistic that far more people can get to the place of having 6-12 months of a financial cushion than exist today.

If you put in the work, learn how to avoid mistakes, and mitigate the influence that consumerist culture has on your purchasing decisions, you can get there, even if it takes decades.

And getting “there” is a better goal than “becoming a millionaire” or adopting a lavish lifestyle to impress other people.

Because “there” is the point where money can significantly improve the quality of your life.

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