If Money Doesn't Buy Happiness, What Does?

The downside of focusing only on earning more money

Earning more money can either turn your life around or turn it inside out. There is a difference between earning to spend and earning to save. The mindset is completely different between the two.

Poor accumulators of wealth spend more as their income increases. Good accumulators of wealth learn to save some, or all, of their increased earnings. This is the difference between displaying and accumulating wealth. Those who "display" wealth, are interested in spending on things that show to others some resemblance of wealth. Savers are frugal with their habits and are more interested in their net worth increasing over what friends think of what they have. 

Increasing your net worth is simple and it necessitates that you become a good wealth accumulator. It does not mean that you earn a high income and spend everything you make because despite your façade of high social status, you are essentially poor from a net worth perspective.

A word of caution: more income is not always better. You can actually be a good wealth accumulator if you practice mindfulness and frugality with your money.

Here are some questions to ask yourself before chasing a higher salary at all costs:

• Will a higher salary bring me higher amounts of stress?
• Will I get to spend as much time with my family if I chase a higher salary? What about friends?
• What am I giving up now by trying to earn more for the future?
• Do I actually need more money (surprisingly many people answer "no")?
• In trying to be more productive and resourceful, am I missing out on some things that actually  contribute to improving my mind and body? (Exercising, sleeping, proper nutrition, meditation, reading, etc.)

If we are always focused on productivity and output, we may miss the very things that are right in front of us. Further, many activities listed above (exercise, sleep, nutrition, meditation, cognitive challenges) are actually scientifically proven to improve BDNF and neuroplasticity thus making our brains even more productive. 

Does more income always result in more freedom?

Not always. We highlighted above that earning more money can potentially lead to increased psychological, and occasionally physical, stress.

Another axiom worth mentioning is about "working smarter, not harder". At baseline, most people work relatively "hard", they just tend to be inefficient. Efficiency would be working aggressively for a short period of time and then taking a break. For example, the Pomodoro technique is surrounded around taking 25 minutes for a task and then given yourself a break at the end of 25 minutes. This technique is centered around the concept that we have very limited attention spans. Instead of trying to work for 8 hours straight, try instead to break your work down to short intervals interspersed with stretching, standing, or walking breaks. Doing this throughout the day will likely increase your productivity quite a bit.

Our work inefficiency and arbitrary 40-hour work weeks actually reduce our freedom greatly. If you work remote, this might be easier to pull off. If you work at the office, you will look like anybody else who is frequently taking breaks throughout the day, they are just doing it at random. You are going to pre-define your time periods and rest intervals. Set the clock for 25 minutes and do not stop and take a stretch break until you get their. Once you reach the 25 minute mark, try taking a true 5 minute rest by breathing, stretching, walking around, or anything else that can allow you to practice mindfulness.

"Money Doesn't Buy Happiness"?

The typical belief is that we need to have "nice things" and buy more stuff to display a high social status to prove to others how wealthy we are. In spending more, you fail to realize that you are inherently saving less and therein drastically slowing down the accumulation of your net worth. In the long term, spending more will effectively create more financial strain and stress, not less. This is not likely to result in long-term happiness.
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Efficiency and happiness maximizes your freedom

If your six-figure job requires ruthless hours then you are not in control of your own freedom. There are certainly ways to make more money with less stress, but those opportunities are few and far between. More stress traded for more money is almost always the deal.

Think of the promotion to management. Now you have more employees to manage, scheduling to do, deals to close, handling poor performance and lack of motivation. Management is somewhat akin to "adult babysitting". Consider if this is truly something that you want and go into a promotion like that fully aware of how increasing your earnings might impact your job satisfaction. 

What about the successful business owner who sits in his backyard while earning $10k a month from his business? Where were you the first 35 years he was rolling around on the floor like one of the employees? All you see now is the snapshot of what he has become due to all his time spent, holidays missed, birthdays not attended. All so that he can enjoy the "twilight years" of his life just to have you assume he always did it that way.

My ultimate proposal is that we improve and optimize our efficiency. Researchers indicates that happiness plateaus at an annual income around $70k per year. After that, the return is insignificant. This might mean that if you are already above this income level, earning less by taking a role more aligned with your values is more valuable than the increased earnings. 

I am not averse to hard work and discipline, far from it. However, you need to enjoy life and enjoy what you do. Be careful about becoming beholden to your job. Buying more than you can afford is the number one way to feel stuck in a job you hate. If you are going to participate in periods of life with higher income and higher stress, please do so wisely by accumulating, saving, and investing your increased earnings, not spending it all away!

 If you are frugal, disciplined, and value-oriented, focus on the following:

•  Attaining a household income of at least $50k-$75k per year. This will allow the typical debt-free individual to all expenses (expected and unexpected) and still save at least 10% of their income. You can certainly earn more if you love your job but be careful about chasing a higher salary if you hate the job you are presently in. 
• When receiving a raise or promotion, only realize a maximum of 50% of that actual raise meaning: only spend up to half of the difference and save/invest the other half. 
• Attain a position with an ideal schedule. Imagine what your dream schedule would look like. Weekends off? Summers Off? No nights? Short commute? Want more than just 1 week per year of vacation? Map out your ideal schedule. Now, what positions are you able to attain that would get you close? Start there. This is essentially reverse engineering yourself a successful job search.
• Saving and investing as early in life as possible. The reason for this is that you won't need to earn more money later in life which means increased options when choosing the source of income you generate. Think of it this way: a 30 year old who has accumulated $100,000 in a 401(k) or other retirement account, could stop investing altogether at age 30 and still wind up with $1 million by the time they reach 60 (assuming 8% return per year for 30 years on the initial amount of $100,000. A 40 year old would need to have accumulated a total of $220,000 by this age in order to reach $ 1 million by the age of 60. Only 10 years difference in age but a difference of $120,000 in starting balance to attain the same goal by the age of 60, $1 million dollars.

Happiness is more important than income

I encourage you to see if there is more to life than determining success based on earnings. Money can only buy certain things, most of which derive very little happiness.

There are plenty of things that move the needle on happiness that are free:

• Socializing - spending time with family and friends
• Going for a walk
• Forest bathing
• Meditation
• Yoga at home - or even light stretching
• Visiting the library - taking out books/videos as well
• Going to a park

Perhaps your best life is about separating "what you do" from "who you are". Do not think about work after hours or on days off. Be mindful and figure out "who you are" when you are away from work. Spending too much of your precious time at work and thinking about work will make your job define you. From my experience, MOST people do not want to be defined by their jobs.

Let us know your thoughts below in the comments section. Are there any other free activities that you really enjoy to share with the frugal community?

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