It seems to me that these can often be mutually exclusive for our modern world. Too little money and happiness suffers, but weirdly, too much money and happiness seems to suffer as well. This is a complex topic, and I’ve read a lot about it. From Tim Ferriss’ 4 Hour Work Week, to Anthony Robbins’ “Money – Master the Game” and the Mr Money Mustache website (www.mrmoneymustache.com) and a variety of other things. There seem to be come commonalities that appeal to me:
- buying stuff doesn’t bring you happiness – unless the purchase is to remove something causing unhappiness.
- there seems to be a sweet spot in earnings / spending where maximum happiness appears to be – enough to fulfill all of life’s needs, but not enough to be stressful to manage
- passive income looks like something I’d like to have
- the stock market should be treated as a marathon, not a sprint
- Vanguard Index Funds look really interesting
- property could be interesting – but is there a lot of trouble associated with it?
- save 10% of your income as a starting place!
- most people have very little margin, and if they were to get a large bill ($1000 or more) it would cause them real difficulty and hardship – so perhaps a bit of cash in the bank is useful
- money attracts money in the right environment
I’ll cover these things over time, but let’s start with:
The relationship between money and happiness
How much money is enough to be happy with? How little money is enough to be happy with? That’s probably a better question. If you can work this out, then you only need to earn up to that and you can be happy! Right? I think it might be. The early retirement dudes like Mr Money Mustache (MMM) seem to think so and he’s doing alright. Plus he has a shiteload of figures and information to back it up (which I like). And he links it to living a full and rich (as in full of goodness not money) life without spending a hojillion dollars (that’s a lot).
I have, on occasion, hated money. This is totally irrational, but nonetheless I linked the stress I was feeling at not having enough money to money itself. And let’s face it, money is just a concept that we live with – that certain things have a value and it’s represented with this worthless thing we call money. In retrospect, I hated the fact I was mismanaging the money I had coming in and it was all a mess. In later years I’ve gotten better at this, and my relationship with money has improved. It could be better but what relationship isn’t like that?
Recently I inherited some money after my mum passed away. I’ll put this out there right now – I’d rather not have that money and have mum, but that ain’t the way it works. So instead I had, suddenly and in the middle of a sea of grief, an increase in available funds. What to do with all of that? I certainly bought some stuff – several items of which were designed to remove unhappiness from life and this was OK, but other stuff was just stuff… and that didn’t really do all that much for the happiness meter. After the lustre wore off, it was back to ho hum. Money did not buy happiness in this instance. I also noted that I wanted, no I needed to do something constructive with the inheritance. I bought out my brothers’ share of the house and this will eventually be used as a rental. I’m still clearing it out. Mum was a collector of things, and very good at it so it’s taken awhile indeed. I found that having money in a large (for me) amount was stressful – too many choices and pressure to do something intelligent with it. Now it’s invested I feel much more comfortable with it.
In the intervening years, I’ve found myself thinking of money as a tool. Like any tool, it takes a while to get used to working with it and understanding the limitations involved. It’s a bit like when I try to lift a heavy rock with my shovel and watch the handle bend – I’m putting too much pressure on it and I have to stop or it’ll break. When I try to make a purchase or spend on something that is heavy (or big) then the money tool bends as well. While money can’t break like my shovel, the stress still gets applied – to my savings or to my stress levels. Is more money the answer? I think maybe a smarter approach is better. We’ll look into that soon.
Work smart, not hard.