Lately, I seem to be writing a lot of posts about money. I’ve covered net worth updates for June 2018, my investment portfolio and why $1m net worth is not enough for me to retire. But despite all those words about money, I don’t actually believe money is the key to enjoying life. Money doesn’t equal happiness, does it? But there is somehow a correlation between them in my life.
My money vs my happiness
I’ve been reflecting over my life and when I have felt more or less happier. As a child, I was materially happy and content. I felt secure and safe and was well provided for. But was I truly happy? I’m not sure, I always rebelled against growing up in such a small place and always felt that my family did not understand this.
I absolutely loved my time at university, as it gave me some freedom and a chance to experience the big city. And to go out without someone checking up on me. Nonetheless, these simple pleasures were balanced with a busy timetable of 35 hours a week at uni, 20 hours a week working leaving not a lot of time to fit in studying and partying.
After university, I’d say I was less happy, as my ready-made social crowd dispersed and I entered the real drudgery of work. This made me less happy. There were a lot of years in my twenties when I did wonder what the point of life was and thought there had to more to it. And then it all got better, and my happiness rose exponentially.
So, in order to demonstrate these, in true geek style, I have prepared a quality graphic -plotting my wealth /money against my happiness at those times. And I’d call that a direct correlation. Which is troubling – because money is not happiness is it?
I’m getting richer
I’ve been lucky to never have any serious financial challenges and to have the type of student loan that is a tax rather than a true debt. Therefore, in the graph above I’d judge my wealth as gradually increasing through my early years, as I was a kid that hoarded and saved. Increases in wealth initially can be attributed to some astute property purchases, that despite their small values, increased my wealth.
There is no doubt that over the last five years or so I have been getting seriously richer. And this has to be attributed to my income – by earning over six figures for five years now, I’d been able to save more. I now have the frugal budget dialled down enabling me to invest. Moreover, my investments are automated and just feel like a part of normal life now.
And also happier
And this is the part I want to concentrate on for this post. My happiness. It’s really interesting and revealing to look back on my life, and try and work out what made me happy and what did not. The big wins that have allowed me to exponentially increase my happiness seem to be a mixture of age mellowing me and embracing stoicism.
Honestly, things that would have driven me mad and really consumed me 10 years ago are just treated as minor irritations nowadays. I concentrate on what I can control, and boy I have a lot of options there. My aim is to spend my time wisely, improving my mind and body. And this philosophy has really improved my happiness levels.
Correlation or causation?
From looking at that graph, even the non-mathematically minded can see an epic correlation. The graph suggests my happiness and wealth are directly correlated, that they increase and decrease together. But is that true? And what came first, the money or the happiness?
Whilst not an expert in these areas, I am proposing the following theory:
The mindset that allowed me to make money allows me to be happy
These mindsets have proven to be inextricably linked for me – the exact same skills that have permitted me to earn money, have also permitted me to feel much happier and content.
And what mindsets am I talking about here? A growth mindset is the key, moving away from feeling like I am fixed and can only doing things one way. By leaning into my own personal challenges I was able to learn what I was truly capable of and leap ahead. Rather than saying “I cannot x” I moved into “I have never done X but would love to learn”. And this shift has been mindblowing. And once you start, you are truly on the roll, with momentum growing with each new item you try.
When I was younger I assumed having more money in itself would make me happier, but now I believe that is untrue. When I started making six figures I thought all the expensive holidays and home improvements would bring happiness. While they did fleetingly, they did not make an overarching difference to my baseline levels.
Happiness in a Capitalist Economy
I believe it is not the money in itself and the abundance of wealth that makes me happy. However, I believe the security of having enough money is critical in achieving super high levels of happiness in a capitalist society. I know that I need funds to cover my security needs, to provide food, water and shelter for myself.
I don’t want money and wealth for money’s sake. Furthermore, I do not aspire to be mega-rich and wealthy – I feel my current lifestyle is abundant enough. And this has been a fascinating learning for me personally. Living in a capitalist economy, it’s very difficult to achieve that security without funds to cover it. So, I believe you need the security of money to be happy, and enough money to use as a tool.
However, this capitalist happiness theory only holds up in developed countries. One thing that travelling a lot has taught me, is that people can be very happy even if they live in what my perspective calls abject poverty.
And that is fascinating to me. I love to learn how people live differently, and it really gets me to challenge my perspectives. I learn that my skill-set would not get me far in a different culture, but with a growth mindset, I could slowly adapt and learn the new culture and what they valued. And that is something I can keen to learn once I FIRE and begin really travelling.
Over to you
- How about you?
- How do you feel happiness and wealth intersect?
- Does your personal experience show correlation?
Thanks for reading – please leave a comment below and join in the conversation. You can also connect on Twitter. Looking forward to your thoughts and ideas – all are welcome.