I can’t remember where I first saw the quote in the title of this post, but it left a lasting impression on my outlook on life. The concept of “happiness” is a pretty vague one. Happiness to one person could be misery to another. But I think we can arrive at some reasonably consistent understandings when looking at modern human life within a monetary economy. For instance:
- If you don’t have an income or any savings then life in a monetary economy is incredibly difficult because we all need a source of spending in order to obtain the bear minimum necessities in life.
- This means that having some money or access to money is an essential component of achieving some degree of “happiness”. In other words, money has to be at least somewhat positively correlated with “happiness”.
As I’ve previously discussed, it’s useful to view this idea on a scale of monetary happiness:
Okay, so we need money to be able to pay for shelter, food, clothing, etc. That seems pretty obvious. But you’ll notice something interesting there. As you ascend the scale of monetary happiness you find that the things that are likely to make you feel increasingly fulfilled are not things that money can necessarily provide for you. Money might aid you in the process of ascending the scale, but it doesn’t necessarily provide you with things like morality, purpose, meaning, confidence, achievement, friendship, family, intimacy, etc. In fact, money is often found to be negatively correlated with these things.
I can’t speak for everyone, but my personal experience seems to be very consistent with the scale above. That is, as I earn more and obtain more I don’t necessarily find myself happier. It’s true – anyone who says that having more money doesn’t make life easier is lying to you. There is, with certainty, a level of income and financial security that makes life much easier. In other words, it’s a lot easier to work on your friendships, family, purpose, meaning, and things higher up in the scale when you have the bottom pieces of the pyramid pretty much taken care of. And you need money to build the base of that pyramid. But this can also veer in the opposite direction. It’s also easy to think that money is the solution to everything resulting in neglect of the things that matter in favor of an increasingly rapid rise in income that likely has diminishing rates of return on your personal happiness.
It makes me wonder as I get older – is happiness really about “having it all”? It seems to be that “having it all” just brings more burdens in other strange ways. Instead, it seems that happiness really is somewhere between having too much and having too little. And when you get that balance right you can start focusing on all those intangible things. And while you can’t show those intangibles off to your neighbors it’s really those intangibles that will bring more personal happiness in the long-run.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.