Earn Big. Make More Money. Be More Valuable. Or...
Many advocate of financial freedom discuss earning more, making more, creating more.
We need to draw a hard line between making more and accumulating more. There is a huge difference between the making and accumulating if one is not frugal and thrifty.
If you would make more and spend more, you would be a poor accumulator of wealth. On the other hand, if you were able to make more and save more, you would be a good accumulator of wealth.
Increasing your net worth is simple. It requires that you become a good accumulator of wealth. It does not mean that you earn a high income and spend everything you make because despite your facade of high social status, you are essentially poor from a net worth perspective.
Word of caution, more income is not always better. You could certainly be a good accumulator of wealth and not have a high income, especially if you practice frugality.
Here are some questions to ask yourself surrounding the concept of more income:
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 Equal More Freedom?
Short answer: no.
Let us dig in a little further however. More money, more problems -- or Mo' money, Mo' problems for those so culturally inclined -- is a lasting adage because it holds a fair weight of truth behind it. We highlighted above that earning more money can potentially lead to increased psychological, and occasionally physical, stress.
Another axiom worth mentioning is work smarter not harder. Sometimes this is true however, if you are sitting on your ass making minimum wage and living above your means with debt and empty accounts, I would certainly worry about how hard I am working. At baseline, most people work relatively "hard". I use it in quotations because the average individual works hard because they are extremely inefficient and fail to recognize their lack of overall work density (defined as amount of productive output per unit of time).
For those of you working hard with very low rates of actual work density, it is time to focus on efficiency and work flow. For practical purposes, consider the Pomodoro technique pioneered by Francesco Cirillo in the 80's.
Why Do People Say "Money Doesn't Buy Happiness"?
Admittedly, most people who say this either have no money and pretend to be happy or they have money and still are not happy. I propose that you do not have to be either of the aforementioned individuals to believe in the above statement.
Further, may I suggest a revision of the above statement to:
"Buying More Things Doesn't Buy Happiness" - Dr. Jon
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. My proposal is that displaying a high social status almost always equates to lower net worth.
If you use your higher income to purchase more depreciating assets, and in turn those depreciating assets have other built in costs (maintenance, insurance, accessories, etc.) then it will actually reduce your overall net worth.
Besides, consider how displaying high social status to others actually reduces your true net worth visible to the only real person that matters... YOU!
So How Does Less Income Lead To More Success?
For what it teaches you. For what it permits you to do that you otherwise couldn't.
If your six-figure job requires ruthless hours late into the night and throughout the weekend, inclusive of holidays and allows a measly week for vacation, then I would say your trading your entire life for your income. Sounds to me like a shit trade.
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 manager - now you have more employees to manage. Fighting for days off. Always putting in sick leave. Poor performance and lack of motivation. Managing is nearly synonymous to "babysitting adults".
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.
My ultimate proposal is that we improve and optimize our efficiency. Researchers indicates that happiness plateaus at an annual income around $70,000/yr. I do not mind people working diligently to attain this point, but you need to enjoy life and enjoy what you do.
Do not be beholden to your job. 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!
Less income will but a greater emphasis on frugality and thriftiness. Think of how much of an advantage it would be if you learned how to raise a family with a wife and three kids while earning a household income of $45,000. I do believe that too little annual income can also have adverse effects.
If you are frugal, disciplined, and value-oriented, focus on the following:
Frugality Is The ANSWER
Becoming more resourceful with less is a great way to combat the added stressors and negative energy associated with worrying about spending more, displaying higher social status, and long nights in the office just to earn enough to "cover" the mortgage on your over-purchased home.
I encourage you to see if there is more to life than money in the respect that 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:
Those are few of many. Perhaps your best life is about a balance between what you do to generate income and what you do to define THE REST OF YOUR LIFE. Spend too much time generating income and it will define you completely and, 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?
Dr. Jon is a physical therapist by day, and a dedicated frugalist by night, deeply enthralled in the thrill of "pinching pennies" and investing the margin.