When Money Isn’t Enough
Let’s be real. In today’s world, there is almost no such thing as too much money. If you have a million dollars, someone will be standing on the other side of a new home waiting to trade it to you for cash. If you have a billion dollars, you might have to work a little harder to spend it, but it’s more than doable.
Yet we all have a concept of “enough.” Practically, some people might say I need my home paid off or I need a fund to put my kids through school at some unknown future price. Less practically, some people might espouse the belief that they need a bigger home or a private tutor for their kids before “enough” is reached. More outlandish still, some people “need” things that the wealthiest people in the world couldn’t have dreamed about 100 years ago: The newest phone or the latest private jet.
And this is arguably a good thing. Living standards have improved drastically since the industrial revolution in large part due to our desire for more. Achievement, which couldn’t be measured for much of human history on the individual level because people had no room for advancement, is now easily quantifiable through bonuses, power, promotions, and wealth. As much as people despise the idea of keeping up with the Jones’s, it is perhaps our insatiable drive to do better that has led to advances in healthcare, life expectancy, and comfort.
And while there’s little arguing that today’s world is cushier than in ages past (even in the poorest countries humanitarian aid is more sophisticated and advanced than ever before), that doesn’t mean we’re happier. In the past few years a number of stories have emerged about how Americans aren’t as happy as they should be given our levels of prosperity.
Most noticeably perhaps are two telling reports that get to the heart of the issue. Women consistently rank themselves less happy today than they did 40 years ago despite having considerably more money, status, and prestige that their mostly suburban counterparts in the past. Additionally, researchers found in early 2007 that people are so unhappy that they would have to make hundreds of thousands of dollars more just to achieve the same level of happiness they had in the 70s.
Why cite a study from 2007? Because it was before the financial crisis. Before the worry. It was during one of the largest economic booms in our nation’s history. And the fact that it compares 2007 to a time notorious for the term “stagflation” – when we were allegedly much happier – is mind boggling. Or is it?
Perhaps it’s no mystery that more isn’t always better. A higher GDP leads to more waste and greater stresses on the environment. More choice has been found to cause decision anxiety. Higher levels of social connection (manifested through social media) mainly exists to compare ourselves to others. So if we understand these phenomena so well, why can’t we make the same conclusion about money, or more importantly, the stuff that money buys?
Well I’m here to argue a contrarian idea – albeit one that you probably secretly agree with. Money does buy you happiness. But like everything else, we should be worried about having too much of a good thing. One of Monte Largo’s core values is that Happiness Is The Most Enviable Luxury, and what’s most important in that statement is that happiness is, for most of us, a luxury.
Generally speaking groceries aren’t luxuries. Restaurants are. Housing isn’t a luxury. Making a house a home is. Happiness acts in much the same manner. We all have a base need for happiness below which we are unable to survive, making daily living excruciating. But finding excess happiness above that level takes effort, and maintaining it even more so.
Purchasing things can boost hormones in your body that make you happy. That’s a simple 1 to 1 correlation between money and happiness that’s hard to dispute. But just as a drug user finds he needs more and more to feel the same high, purchasing things may not always produce the same level of happiness the second, third, or fourth time around. And that’s where we get into problems.
The human desire for more is both our greatest strength and among our most crippling weaknesses. There becomes a point where money really isn’t enough to make us happy. Staying the same is rarely ever anyone’s definition of enough. And most of us can’t make more money fast enough to maintain our current happiness, let alone increase it. So what’s a boy (or an entire nation) to do?
Work harder on being happy. Don’t use money as a substitute for thought and reflection. Flex your gratitude muscles. Be thankful. Prioritize your happiness. Spend money on things that make you happy. And most importantly and counterintuitively, recognize when you’ve reached peak happiness. Yes, you read that correctly. Learn when trying to become happier isn’t worth the time and investment.
Don’t get me wrong, we should all try to be as happy as possible, but hear me out for a second, and try to think of happiness the same way we think of money – in units and percentages. If you have $100 and someone offers you an hour of work to earn $100, you might say yes because you’re doubling your net worth for only an hour of work. But if you had $100K or $1M in the bank, the calculation is very different.
Happiness works much the same way. When you’re feeling down, any little thing might help cheer you up. But when you’re spending every day doing your dream job and taking dream vacations, it’s a lot harder to double your happiness. Yes, someone somewhere will always have more than you. And it’s natural to compare yourself to that guy. But chasing him is rarely the answer. More likely than not, by recognizing where you are on the path to peak happiness rather than chasing extra units of happiness unnecessarily, you’ll become happier still, despite your best efforts.
Nathan is the Chief Financial Advisor at Monte Largo Financial