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True wealth comes from learning the value of "enough"

Income does not determine happiness.Many people chase the almighty dollar because they think having more money will make them happy.  But scads of scientific studies have shown that people with more money are no happier than those with less (once you pass over the lowest income hurdle of having food and shelter, that is.)

In fact, affluence is a relative thing --- if you hang out with folks who barely have two pennies to rub together and you've got two nickels, you're going to feel rich.  On the other hand, if you hang out with someone who owns his own island, you're going to feel poor despite having a huge house and a fancy car and your own yacht.

The American dream tells us that we'll really be happy once we've got all of the modern conveniences that our neighbors have, but most of the time when you try to have it all, you just end up with lots of little bits of nothing.  You work so many hours that you barely enjoy your McMansion, then you're putting in overtime to save for your kids' college education and end up feeling like you're living with strangers.  How can you break out of the cycle of measuring yourself against your neighbors and always wanting more?

The trick is to learn the value of "enough" by recalibrating your financial sensors.  Throw away your television and stop listening to commercial radio --- those ads that you think you can ignore are really seeping into your dreams.  Even movies are nefarious --- have  you noticed that most movie characters have a fancy new car and all of the modern conveniences?  By watching, you're telling your psyche that these movie stars are who you want to measure yourself by.

If you can disentangle yourself from the mainstream media, chances are you'll stop wanting so much stuff.  Mark and I are barely middle class by most people's standards, but when people ask me what I want that I don't have, I honestly can't think of anything.  (Except more mulch, of course...)  By learning that "enough" for us costs very little money, we were able to quit our jobs and devote most of our time to the things we really enjoy.

I think that people who achieve financial independence and true happiness are marked by only one thing --- they can figure out when they have enough.  Are you always in search of the next raise, a new car, or a fancy gadget to make you happy?  Or do you realize that the things you really value in life are time with friends and family, time to explore your hobbies, and time to change the world?  If the latter, then you have learned the value of enough and can skip most of the Financial Integrity process --- you're there!

This post is part of our Your Money or Your Life lunchtime series.  Read all of the entries:

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I think the first chart in your post is a bit misleading. Inflation adjusted incomes have actually gone down since the 70s. When one considers purchasing power and inflation adjusted income, that red line actually goes the other way. Difference is we spend more of our incomes now compared to them... so our standard of living has remained constant but our debt loads and lack of preparedness for the future has gone up. So, we feel like we have the same standard of living. I'll try to find some references...
Comment by Shannon Thu Feb 18 14:09:44 2010
I was thinking about that, and you're probably right. On the other hand, you're really talking about relative income --- I'll bet the average person today can buy more actual stuff than they could in the 1970s (even though it might cost them less money in inflation-adjusted dollars.) For example, when I bought my first computer in 1996, it was $2,000 and was vastly less interesting than my current laptop which I bought for less than half that price. Of course, everyone wants the newest model of everything --- but the whole point is that if you can break free of this relative income trap, you'll realize you're rich already.
Comment by anna Thu Feb 18 16:14:37 2010

More or less what I was getting at... I'd argue that our purchasing power hasn't necessarily gone up when one considers the cost of education, housing, and health care.

Comment by Shannon Thu Feb 18 16:44:34 2010

But how much of that is also relative? I posted over on my wetknee blog today about how annual housing cost for the American family is currently over $16,000. That's in large part because most Americans think it's their right to own their own home, and not just any home but a huge house --- the square footage of American homes has tripled in the last half century. If we were willing to live in just 250 square feet per person (the average in 1950), could we do that on less money than people could in 1950? I don't know the answer, but I suspect we might be able to.

Education has seen a similar trend. My understanding is that people didn't used to go to college as a matter of course just a few decades ago. Now, everyone thinks they have to have an ivy league education. Now, I adored my ivy league education, but in retrospect, I'm not sure it was worth the money I paid for it.

(I don't know anything about insurance costs over time... :-) )

I guess my argument is that our standards for what constitutes the middle class have risen, which is why we feel a middle class squeeze. The current middle class is more like the previous upper class. Couldn't we live a little bit lower on the hog and still be middle class, if people who lived that way fifty years ago were perfectly content as the middle class?

(I wish I could cite sources here, but these are vague memories from blogs I've read and NPR stories I've heard... :-) )

Comment by anna Thu Feb 18 16:53:11 2010
I don't know if you are aware of this, Anna, but I raised my family with an income below poverty level, squeezing every penny, making do with used and low cost, because I was a war tax resister, and kept my income below taxable levels so I didn't pay (directly) for killing others. I don't think we suffered a lot from this, although I lay awake many nights wondering where money would come from for food and bills, when I had to leave a job which required me to increase my income, work full time, etc.
Comment by Errol Thu Feb 18 19:12:49 2010

I call this problem the "I'll be happy when..." syndrome.

So many people are unhappy with where they're at, but have this idea that if they just had that one more thing, they'd be completely content. It's "I'll be happy when I get a boyfriend", or "I'll be happy when I get that sports car", or "I'll be happy when I get that job". They think getting this one more thing is going to solve all the problems in their life. And that's why so many people will take on debt up to their eyeballs to buy that "one more thing".

And the weird part is, whenever they do get that thing they're yearning for, they're no happier and it's immediately replaced with yearning for the next "one more thing". Despite a lifetime of yearning, disappointment, and new yearning, they never realise that they're just repeating the same old unsatisfying pattern over and over again.

Of course, advertisers pander to this behaviour, and popular culture (TV shows, movies, magazines, music, career advisors, etc) continually reinforces it.

I think the simplest way to break free is to just stop watching TV and reading magazines. It also helps to hang around with people who earn less than you but share your attitudes and interests.

Comment by Darren (Green Change) Thu Feb 18 19:32:42 2010
I'm very aware --- I think that's where I picked up my skinflint habits/voluntary simplicity (depending on who you talk to. :-) )
Comment by anna Thu Feb 18 19:58:42 2010
Darren --- I couldn't have said it better myself! I like your suggestion of hanging out with people who earn less than you do (in addition to steering clear of that awful popular media!)
Comment by anna Thu Feb 18 20:30:41 2010

One very unique homestead, $1,500 per acre, the opportunity of a lifetime