in Ask the Readers, Happiness, Money

The Secret to a Rich Life

Every week at Get Rich Slowly, I devoted Fridays to reader questions. I’d select one reader email to share, provide my own feedback, and then ask blog readers to contribute their opinions. It was one of the most popular features on the site.

I hadn’t planned to do that here at More Than Money. For one, I didn’t think there’d be many reader questions. Turns out I was wrong. Less than a week after this site’s “hard” launch, I’ve already received three great topics for discussion.

First up, my long-time friend P. dropped a line after reading the transcript of my WDS talk about personal transformation. She wrote:

I enjoyed your post yesterday, especially as I had my own Ulysses experience this summer. I realize you took significant action steps to get to where you are financially, but the whole time I was reading, I kept wondering how much of what you were able to do was based on money. (Please understand this is not criticism of you or your talk; it’s really just a philosophical debate.)

Certainly there are actions people can take to make themselves happier that don’t cost money (such as your examples from today), but even something as simple as saying “yes” often comes with a price. And so many of your examples were luxury items: travel to foreign countries, skydiving, getting tutored in Spanish. Even going on a massive dating spree.

Standing before Torres del Paine
Money has allowed me to see some amazing places

But as I said, this isn’t about you. Beyond the philosophical, it’s about me.

Mostly, I would say I am happy and lead an awesome life. The one hiccup to me is my job. I can say nothing negative about my job: It pays buckets of money, it has great benefits, great hours, prestige, lots of vacation, and nice co-workers. But it’s not something I’m passionate about. I probably once was, but it’s too familiar now, or old hat, or, perhaps, boring. I feel like if I didn’t have to work as much, I could spend more time doing the things that truly add joy to my life. But many of the things that bring joy to my life, I couldn’t do if I didn’t make this money.

And of course with kids, the ability to take big risks decreases a lot.

Again, I’m not really unhappy, nor am I looking for you to solve my job issue (retiring Dec. 31, 2015!), but I wondered: If someone can’t make a living doing what they love, or make a lot of money, how much of what you talk about is unavailable to them?

This is a great question, and one we’ve tackled many times over the years at Get Rich Slowly. (For instance.) Fortunately, there’s actually a solid body of research into the relationship between money and happiness. Rather than re-invent the wheel, I’m going to share my summary of the subject, which was first printed in the July 2011 issue of Entrepreneur magazine.

The Secret to a Rich Life

There’s a strong correlation between wealth and happiness. Rich nations tend to be happier than poor nations, and rich people tend to be happier than poor people. But money’s impact on happiness isn’t as great as you might think. If you have clothes to wear, food to eat and a roof over your head, more money has only a marginal effect on your sense of well-being. Other factors are more important.

In a 2005 issue of the Review of General Psychology, Sonja Lyubomirsky, Kennon Sheldon and David Schkade looked at years of research to determine what contributes to long-term happiness [PDF]. They found that about half of our happiness is biological, determined by a sort of happiness “set point.” About 40 percent of happiness comes from the things we choose to do, like exercising, setting goals and building friendships. Only about 10 percent of our happiness is based on circumstances like age, race, gender — and, perhaps surprisingly, financial status.

Although your financial situation plays just a small role in your overall happiness, it does affect it. According to a paper published in the April 2011 issue of the Journal of Consumer Psychology, some financial habits bring greater satisfaction than others [PDF].

“If money doesn’t make you happy, then you probably aren’t spending it right,” write authors Elizabeth Dunn, Daniel Gilbert and Timothy Wilson.

They offer several principles meant to maximize happiness, including:

  • Buy more experiences and fewer things. Material goods depreciate. The day after you buy something, it’s probably worth less than you paid for it. Experiences, on the other hand, appreciate. Your memories of the things you do — vacations you take, concerts you go to — tend to become fonder with time.
  • Use your money to help others. Personal spending has only a small effect on happiness, but pro-social spending [PDF] — money donated to charity or used to buy gifts for others — consistently produces strong, positive feelings.
  • Buy many small pleasures instead of a handful of large ones. This one’s tough to hear on a personal level, because I tend to forego daily indulgences for big rewards. But, in the words of the authors, people are usually happier with “frequent doses of lovely things rather than infrequent doses of lovelier things.”
  • Pay now but consume later. Buying today but paying tomorrow leads to debt — and to unhappiness. Deferred gratification makes us happier, and not just because we avoid debt. It also builds anticipation (which is itself pleasurable) and usually leads us to make smarter choices.
  • Beware of comparison shopping. If you’ve read The Paradox of Choice by Barry Schwartz, you know that people tend to be happier with fewer options. With fewer choices you’re less likely to make a “mistake” while shopping, and there-fore less likely to suffer buyer’s remorse. Plus, it can be tough to know which features actually matter most. Find a good option, go with it and don’t look back.

What’s the best way to be sure money will make you happy? At the 2010 Berkshire Hathaway annual shareholders meeting — also known as “Woodstock for capitalists” — Warren Buffett’s business partner, Charlie Munger, shared a pearl of wisdom: “The secret to happiness,” Munger said, “is to lower your expectations.”

If you can’t be content with what you have, you’ll never lead a rich life, no matter how much money you earn.

Happiness in Real Life

DSC_1608All of that is theoretical, of course, and P.’s question involves the real world. In the real world, I’ll admit: Much of the change I’ve been able to accomplish, and much of the happiness I currently experience, is because I have the money (and the time) to spend on activities that bring me joy.

What’s more, having savings gives me a safety net. It comforts me. I know that if I take a risk and something goes wrong, I have options.

That said, the things that make me happiest have nothing to do with money. I enjoy writing. And reading. I love working out. And, most of all, I get pleasure from spending time with family and friends — especially time with The Girl.

Related reading: Just yesterday, Paula at Afford Anything published a nice look at how wealth buys time. In many ways, that’s what I’ve been using money to do recently — to buy time. And that’s not a luxury everyone has.

The bottom line? One of my fifteen money mantras is this: It’s more important to be happy than it is to be rich. Money doesn’t matter if you aren’t pursuing a meaningful life filled with family and friends.

Fortunately, P. is already doing that. She’s happy and wealthy. She’s in a good place, and she knows it. In a follow-up email, she wrote:

For now, I’m finding my happiness by getting through my work and living passionately on the weekends (and Thursdays, because I only work four days a week!) and through vacations. My plan is to retire in three years, four tops (my husband is stuck on five — that’s our one money argument). Having a “finish line” also makes it easier to get through.

Since this is my first “ask the readers” column here at More Than Money, I want to turn this around now and ask you what you think. What’s the secret to a rich life? To what degree do you need money to be happy? If you’ve experienced both wealth and poverty, how would you compare the two? What was happiness like in each state? And to get back to P.’s original question: What are some of the best ways to find meaning and joy on a limited income?

Note: Do you have a question for the More Than Money community? Send it in. I don’t have a contact form yet, but my email addresses aren’t hard to guess. (Hint: I have a gmail account.) And the great thing about doing “ask the readers” here? We can cover all sorts of topics, not just personal finance. If you want to ask about blogging or travel or dating or donuts, those are all fair game.

Write a Comment



  1. For me, the first step towards happiness is having goals (or really, just knowing what you want). Money and time help, of course, but if you don’t know what you want or what you want to work towards, the money and time won’t do you a lot of good.

    For years I wanted to leave my day job so I’d have more time with my family and more time to write. I also wanted to exercise some slumbering entrepreneurial muscle. A year and a half ago, I got my wish. But the vague nature of the above desires sent me into a bit of a tailspin. Suddenly I had the time to pursue my dreams, but my dreams were not clearly defined. When I finally had my chance, I didn’t know what to do. I floundered for a while, trying to get my bearings. Money was, and still is, tight, but the things I want don’t really require a lot of money. The problem was that I hadn’t clearly defined what I wanted.

    I must admit that no one was more surprised than I was to find that I didn’t really know what to do with all this time I’d so desperately wanted and now had.

    I’ve been really interested in J.D.’s story of change. It seems that all of the changes he has been able to make (losing weight & getting in shape, learning Spanish, travelling, etc.) each started with a specific goal, something to work towards. His happiness is the result of J.D. figuring out who he is, what he wants, and making a concerted effort to work towards those things. I’m taking notes and trying to apply those strategies to my own life.

  2. I’ve been poor and, though I wouldn’t call myself wealthy, I am comfortable now. My poor life was simple, but not easy. My comfortable life is easy, but complicated. What do I mean? Well, not having enough money is very stressful, but when you don’t have very much, you don’t have many decisions to make. Now that we have more, it’s so much less stressful, but we have to make more decisions: Should we prepay the mortage or invest? Where and how should we invest? What should we do with this extra income? Still,
    I prefer easy and complicated :).
    I think a rich life is having enough to pay the bills plus some extra, a life in balance, and a community of people who support you when you’re down, are happy for you when life’s good, and give you a kick in the seat of the pants when needed.

  3. My family lived carefully with money so that I could stay at home for 12 years with our son. I did work from home to supplement our income, but it wasn’t a lot. Meaning and joy? That was found in the knowledge that we were doing what mattered to us, and therefore a lesser income was worth it. Having time to be a family and having time for one parent to be present with our son gave us happiness. Sure material things were harder to come by, but the time invested in our family and spent in nature (we live in a fairly spectacular part of the world) brought joy. We also realized that wealth is relative. We never felt poor, even when friends told us they could never afford what we did and we knew our income was lower than theirs. Choices, and being content with your choices, are key.
    Now that we have more income as I work more, sure material things are easier to come by. It’s nice, no denying it. But nicer is knowing that it’s not the key to our happiness. And with the extra income comes extra stress as someone isn’t in the house to take care of household things as often.
    Four the first six years of our relationship living together, my husband and I really had very little income as I was a university student and then we relocated and had a hard time finding jobs for the first year or two. We were still happy, because income didn’t define who we were. I wouldn’t want to live like that forever, but it wasn’t awful and it helped me realize that we could get through life pretty well together.
    All about trade-offs and making your joy where you can find it.
    Great conversation!

  4. Oddly enough these retirement years are the best of my life even though I accidentally started retirement in my late 50s. The last ten years of my working life was in the medical field which was so stressful I often wanted to scream. Loved the medicine part, but angry and sometimes bullying patients made me leave.

    I kept looking for another field but my age was against me. Finally I just stopped looking and we were fine, although I took early social security. Husband is retired and always thought he would get some minimum wage part time gig after retirement to help out. But we’re not only doing fine without it, we’re doing spectacularly.

    Two things contribute to our happiness. One is that we no longer go to a job every day where we have to serve the public. That can wear you down very fast.

    The second thing is we are intensely focused on travel. Our idea of a great lunch out is a $1.50 hotdog from Costco and an hour of people watching. All of our extra money is focused on travel. We will have had four major trips this year and three minor ones.

    We couldn’t be happier.

  5. Happiness is so arbitrary, it comes and goes as the circumstances of the day dictate. The key to prolonged happiness is creating a situation where things that would normally hammer a person can be shrugged off. Financially this means having adequate savings and insurance. Emotionally it means having the self-confidence and self-esteem that the a-hole at the state fair making fun of you wont ruin your day. It comes from knowing yourself. From accepting that you are imperfect, and in accepting your own imperfections you accept the imperfections in others. You stop dwelling on mistakes. You forgive others(and yourself) more quickly. Its a slippery slope towards having that emotional health that allows for happiness(and allows for change in your life since you are no longer afraid of failure).

  6. I got really lucky, because my natural happiness set point is pretty high. I need some social interactions in my daily life, and sure, my feelings can get hurt, but on balance I feel pretty good most of the time. (Also, my family is close and everyone still has their health. Jackpot!) I’m also easily content – give me a comfy couch, an oven to bake something in, and a good book to read and I’m happy. It’s amazing how getting up and DOING something successful in the kitchen can help change my mood.

    While I do value experiences over things, I’ve learned that I have a crap memory for experiences like Cirque du Soleil. Three minutes after the lights come up, all I know is I thought it was neat. So now I don’t spend that money. On the flip side, I’ve found unexpected bonuses from traveling, like when I walk down a street and the light or those flowers remind me of some alley in some city I visited. So even though I don’t have tons of intense memories, they do resurface at times in my day to day life .

    Still, I know I don’t have everything I might like and I can’t do everything I want to do. I make enough money for sure, and I’ve gotten to experience SO many great things but my desires still outstrip what I can provide. I think it’s important to know that and recognize it and accept it, and then focus on what I can do and enjoy in the here and now.

    Finally, if you’re interested in feedback, I sure wish you’d call your girlfriend something other than The Girl. I know it’s affectionate but I have the feeling she passed puberty a while ago! I’ve noticed society calling women “girls” more and more lately and it’s starting to grate, big time. Bottom line though, I’m glad you’re happy 🙂

  7. Love the “buying experiences” part, while my hubby loves “small often pleasures…plus sometimes bigger experiences”. Coming from where I did, making a leap and dropping a paying job to go into unknown is scary – although lame excuse, it’s scary for anyone. But I keep reading of people who had done it and keep planning:) Thanks for opening another blog.

  8. The question I often ask is: do I first become happy and then make money or do I make money and then become happy?

    If Daniel Gilbert is right then we don’t really know what makes us happy and if we believe that money will make us happy then we will probably be wrong in our guess. Even though having money always makes me happier than being broke and poor, I take the buddhist view that we should first strive to be happy and then our external environment will change to reflect this; the money will come. I have found that changing the way I think about life makes me happier and this has impacted my productivity and my finances. Somehow I have a hard time getting money first and then becoming happy. To me my emotions and my financial decisions/ finances are very interlinked.

    If research by Guven (2009) is to be believed then there is a relationship between happiness and money. According to Guven people that are happy save more, spend less, have a lower marginal propensity to consume, take more time to make financial decisions and expect less inflation, which impacts their investment decisions. Martin Seligman in his book “authentic happiness” also argues that happy people are more altruistic and willing to help total strangers. So being happy actually affects our financial behavior.

    • I would definitely agree that being happy affects our financial behaviour — how many people do we know who try to buy their happiness through spending, even when that very spending is putting them deeper and deeper into debt? Marriage shaky – let’s remodel the house that will make us happy. Unhappy with job – I’ll take a tropical vacation that will make me happy. Etc etc. It’s what we’re told, via advertising, will take all our troubles away!

      • Well said! I think credit card advertising is the worst. I recent got a letter in the mail that claimed with “an introductory rate this low, you can afford that end-of-year getaway to the islands” or to “make the upcoming holiday season unforgettable.” Not only that, but the card promises to “help you stay on solid financial footing.”

        It worries me that some people would take that offer seriously.

  9. These last two posts have been great to read, with whole Onion worth of wisdom packed into the layers of those nice concise words.

    I have lived happily at both minimum wage and now as a semi-retired writer with a cozy amount of savings (sort of like JD himself). I found that when I was younger and struggling to earn as much money as possible, I felt that money was the key to greater happiness.

    Now I find that learning to shed material desires is a source of even greater happiness. The less I want and need, the better life gets. Instead, happiness seems to come from learning new things and finding ways to become a better person, in the company of others.

    But even with a time machine, it would be hard to go back and convince the 21-year-old version of me that all this is true. That guy would probably tell me to Show Him The Money. It took quite a few years of searching to realize that luxury spending is just a way to pass the time, and there are millions of equally enjoyable ways to pass the time that are just as rewarding.

    Congratulations to everyone who has started the search with happiness as the priority rather than money – you’ll probably find the answer much sooner.

  10. I am a senior citizen, recently divorced, who is downsizing greatly. Now retired, I have the lowest level of responsibility I have had in 3 decades. I am happy leading a simple, quiet life. Money worries only about outliving my retirement nest egg. But I don’t really spend much time worrying about it. I do spend a lot of time reading personal finance and voluntary simplicity blogs.