In their classic Your Money or Your Life, Joe Dominguez and Vicki Robin argue that the relationship between spending and happiness is non-linear.
More spending brings more fulfillment — up to a point. But spending too much can actually have a negative impact on your quality of life. The authors suggest that personal fulfillment — that is, contentment — can be graphed on a curve that looks like this:
Beyond the peak, Stuff starts to take control of your life. Buying a sofa made you happy, so you buy recliners to match. Your DVD collection grows from 20 titles to 200, and you drink expensive hot chocolate made from Peruvian cocoa beans. Soon your house is so full of Stuff that you have to buy a bigger home — and rent a storage unit. But none of this makes you any happier. In fact, all of your things become a burden. Rather than adding to your fulfillment, buying new Stuff actually detracts from it.
The sweet spot on the Fulfillment Curve is in the Luxuries section, where money gives you the most happiness: You've provided for your survival needs, you have some creature comforts, and you even have a few luxuries. Life is grand. Your spending and your happiness are perfectly balanced. You have Enough.
According to Dominguez and Robin, your goal should be to achieve Financial Independence, the condition of having Enough for the rest of your life. “Financial Independence has nothing to do with rich,” they write. “Financial Independence is the experience of having enough — and then some.” This is achieved when your savings has reached a level that will sustain you at the peak of the Fulfillment Curve indefinitely.
As many Money Boss readers have discovered, the exercises and advice in Your Money or Your Life can transform your relationship with money, helping to break your dependency on Stuff. It's a great book for learning how to align your spending with your values. It provides a roadmap to Financial Independence.
Where Your Money or Your Life is less good, however, is providing advice for what to do after you've reached this goal. What happens when you achieve Financial Independence? What happens when you have enough — and then some? Many people reach this place only to find themselves wondering, “What next?” It's an important question, one that's often tough to answer.
The Power of Purpose
When you're building your wealth snowball, your goals and mission keep you focused on the future. They guide you toward the things you ought to do while helping you avoid temptation and peril. Without a clear purpose, it's difficult to stay on course during the long march to financial freedom.
Purpose is also important after you've obtained the wealth you desire.
In his book You Can Retire Sooner Than You Think, financial planner Wes Moss shares five “secrets” of a happy retirement. After surveying 1350 retirees across 46 states, Moss found that the number-one predictor of contentment is a sense of purpose.
“[Happy retirees] have a well-defined understanding of their purpose in life,” he writes. According to his research, 91% of happy retirees are clear and comfortable with their sense of purpose. In contrast, 89% of unhappy retirees report that they're uncomfortable (or only “slightly” comfortable) with their sense of purpose.
The bottom line: “Happy retirees know what their retirement money is for.”
To that end, Moss encourages his clients (and readers) to foster a handful of “core pursuits” — activities that excite them and bring them joy. By developing these core pursuits before reaching retirement or Financial Independence, you're better prepared for what comes next.
Similarly, in Choose Your Retirement, Emily Guy Birken writes that “a retirement based on values will be a fulfilling and contented experience”. Birken dubs this a “values-driven retirement”.
A values-driven retirement sounds great. But how do you discover your values? How do you pick your core pursuits? How do you decide what you want out of life? How do you answer the question, “What next?” I believe the answer goes back to creating (an adhering to) a personal mission statement.
With a mission statement, you have a roadmap to meaning. Without one, run the risk of finding yourself lost in the woods where even your wealth won't help you find the way home.
Note: At the end of this article, I'll share a powerful exercise to help you discover purpose.
Money Without a Mission
A lot of people believe that if only they were wealthy, if only they had a million dollars, then all of their problems would be solved. Unfortunately, it doesn't work like that.
There's no doubt that money can buy food and clothes and shelter. Wealth grants access to better health care. It provides peace of mind so that you don't fall into a panic when the car breaks down. But money is only a tool. It's not a magic wand that will miraculously make you smart, fit, and kind. It's up to you put the tool to constructive use.
What happens if you achieve financial freedom without direction, if you don't use money to build a better life?
At best, you drift aimlessly from day to day, never quite sure what you ought to be doing next. Maybe you aren't destructive (to yourself or others), but you're certainly don't add anything of value to the world. I've met a couple of folks who, because they're financially secure, shut themselves away all day playing videogames. That's a shame. They have the freedom to do whatever they want…and they choose to do nothing.
At worst, reaching financial freedom without a plan plunges a person into decadence and despair. Think of all the horror stories you've heard about pro athletes, movie stars, and lottery winners who squander their riches on speed boats and strip clubs. (Here, for example, is the poignant tale of Jack Whittaker, a West Virginia man who won a $315 million Powerball jackpot in 2002. Without a plan, instant riches brought devastation rather than delight.)
Money can buy freedom, no question. But you have to seize the freedom or it all goes to naught. You may win a billion dollars in the lottery, but that won't make a difference to your health and wealth if you elect to survive on a diet of donuts and vodka while lounging watching Friends re-runs on Hulu.
“Money is important but it's far from most important,” says Jim Wang from Wallet Hacks. “This becomes clearer when you reach Financial Independence, when you no longer need to work as hard to sustain yourself. You risk losing your sense of purpose if it was deeply tied to working for an income. This is why many retirees have trouble in retirement!”
Money is important but a mission matters more.
Once you have plenty of money, it's your responsibility to make what you want out of life. (Truthfully, it always has been your responsibility.)
Fix Yourself First
For many people — including myself — I think the best answer to the question “what next?”, the best way to discover meaning and purpose, is to fix what's broken in your life. After you achieve Financial Independence, you no longer have excuses not to become the best version of yourself, whatever that means to you. As an example, here's my own story.
When I was younger, I was deep in debt. I was also fifty pounds overweight. I had time-management issues. My relationships were built on a false projection of myself. I used to think that if I could win the lottery or otherwise luck into a windfall, all my worries would go away. But when I eventually achieved complete Financial Independence, my problems didn't disappear. Quite the opposite.
It turned out that J.D. with money was the same as J.D. without money. He remained a fat, lazy procrastinator who was unhappy with his situation.
I had fixed my finances by becoming the CFO of my own life, by running my personal finances like a business. Slowly, it dawned on me. In order to fix everything else that was broken, I'd have to take responsibility for all of it.
- If I wanted to be fit instead of fat, I had to eat right and exercise.
- If I wanted to be comfortable meeting new people, I had to overcome my introversion.
- If I wanted to travel, learn Spanish, live in a walkable neighborhood, have healthy romantic relationships, write a book, become better at public speaking – if I wanted to be a better man, I had to do the work required to become a better man.
Money wouldn't magically make things better. Nobody else was going to do the work for me. If I wanted to repair what was broken, I had to do it myself. Furthermore, I realized that — like the hero of a fantasy or science-fiction novel — the power to fix my problems had always rested in my hands.
I began to make changes instead of excuses.
I lost weight, got fit, learned Spanish, traveled to Europe and Africa and South America, and began to build better relationships. I moved to a neighborhood where I could walk for 90% of my errands. I learned to ride a motorcycle and shoot a gun. I wrote a book (two, really) and became better at public speaking. I forced myself to set aside my introversion and relish the company of others, even strangers.
When I accepted responsibility for everything in my life, things got better. Lots better.
Note: My life isn't perfect, and I don't want to pretend that it is. Truthfully, I can sometimes go months forgetting that I must be my own hero. I grow complacent and slowly slide back into bad habits. I eat poorly. I play too many videogames. I drink too much wine. I don't spend enough energy maintaining friendships. Over the past year, for instance, I've packed on twenty pounds. But I know now how I ought to live — and when I live that way things are great!
Supplied with what seemed like limitless time and money, I realized that I was the only one who could fix the things that were wrong in my world. I realized that it had been up to me all along. It was a harsh epiphany.
My story isn't unique. Turns out it's rather commonplace.
For instance, Todd Tresidder (the Financial Mentor) says that after he achieved financial independence at age 35, he had a similar insight. He felt lost, directionless. It wasn't until he realized that only he could give himself direction that he found his way again.
This I believe: If you're not sure what your purpose is, fix yourself first — then move on to other goals.
Make the World a Better Place
After you've fixed yourself, you can turn your attention to making the world at large a better place. (Some folks might be tempted to focus on improving the world first. I think this is a huge mistake. You'll be much more effective if you take care of yourself first before moving on to help others.)
Here, for instance, is the story of Jason Brown, a former professional football player who gave up millions of dollars to do something more meaningful for himself…and the world. I love this story:
In 2009, after four years as a pro, Brown signed a five-year $37.5 million contract with the St. Louis Rams, which made him the highest-paid center in NFL history. He was financially independent. He could do anything he wanted, and he did not want to play football. Three years later (at age 29), Brown quit his career to become a farmer — even though he'd never farmed a single day in his life. (He learned how to grow crops from YouTube!)
But Brown isn't growing the food for himself. His First Fruits Farm raises sweet potatoes to donate to local food pantries. “When I think about a life of greatness, I think a life of service,” says Brown. He's found meaning through helping others.
Sidenote: In 2014, Brown delivered his own child after his wife went into labor on the farm and their midwife couldn't reach them in time!
Or there's Warrick Dunn, another former football player. During his first year in the NFL, when he was only 22 years old, he established Homes for the Holidays, a program to help struggling first-time homebuyers with the process.
Contrary to other reports around the web, Dunn's charity does not give homes to single mothers. Instead, in conjunction with Habitat for Humanity, Homes for the Holidays provides down-payment assistance and complete home furnishings to single-parent families that are purchasing their first home. (Not the same as giving away houses but still awesome!)
What's more — and I especially like this part of the program — Homes for the Holidays also provides financial literacy workshops.
You don't have to be a professional athlete to do good deeds once you've reached financial freedom.
After he became financially independent, Harlan founded The Plutus Foundation, a non-profit that aims to provide financial literacy and “improve financial empowerment”. And my friend Jen feels called to support Manos Unidas, a Peruvian school for disabled children.
Fixing yourself and improving the world are both excellent ways to find meaning and purpose once you've reached Financial Independence. But you know what? Another option, one that surprises many people, is continued work.
Work After Wealth
For many people who achieve Financial Independence, “what next?” is a new career. Or maybe even the same career.
After I sold Get Rich Slowly, for instance, and obtained financial freedom, I slowly reduced the amount of work I was doing until I was doing none at all. For a while, it was fun to have no commitments. I browsed the internet, read comic books, met friends for lunch. Kim I left for our grand roadtrip across the United States. But even before departing Portland last March, she and I had both begun to recognize that I lacked a sense of purpose. I was aimless and adrift.
“When we get home,” Kim said, “I think you should get a job, even if it's just a few hours a day at Starbucks.” I agreed that seemed like an excellent idea. Since then, obviously, I've started Money Boss. Now I have work and purpose again — the same work and purpose that gave my life meaning before.
Or there's Jacob from Early Retirement Extreme. After reaching Financial Independence at age 33, he spent four years pursuing hobbies like sailing, bicycle repair, and writing. Then, at age 37, Jacob un-retired for a few years.
“Financial independence allows you to do what you want whether that’s travel, raising children, saving the world, or playing golf. That’s what’s important,” Jacob writes. “What I like to do is solving impossible problems.” When he received a job offer that involved solving impossible problems, he took it. It gave him meaning and purpose. It was the right choice for Jacob and his circumstances.
Note: Some folks claim that if you're working you cannot possibly be retired. I think most of us recognize this as a bullshit semantic argument. (Mr. Money Mustache famously mocks what he calls the Internet Retirement Police.) To avoid debate, I prefer to talk about Financial Independence instead of retirement, but I believe they're essentially the same thing.
Finally, there's Jim from Wallet Hacks again. Jim is a serial entrepreneur. He's always starting businesses, even though he doesn't need the money. His work gives him meaning:
After I sold my last company, I felt a sense of emptiness when I woke up in the morning. I used to get up, excited to start the day because I had all these ideas in my head for what I wanted to try, projects I was working on, and people I needed to talk to. My sense of purpose, which was tied to my work, was taken away.
I started thinking about what I wanted to do next. I thought about what was important to me, what I really enjoyed about working outside of the paycheck, and realized that I work because I enjoy a feeling of accomplishment, I enjoy learning a new thing, and I enjoy overcoming challenges. So I set out to build a new work life for myself that touched on those…any income was an added bonus.
In his excellent book Work Less, Live More, author Bob Clyatt calls the lifestyle that Jacob and Jim and I have chosen “semi-retirement”. We're financially independent but opt to keep working. “Semi-retirees learn that a reasonable amount of work, even unpaid work, keeps them energized, contributing, and sharp,” writes Clyatt.
(Clyatt says that semi-retirement is also a great option for those who haven't yet achieved FI but are getting close. It's a way to scale back your career, to make a gradual transition from full-time employment to something more casual.)
“When you're Financially Independent, you should make decisions based purely on your personal values,” Mr. Money Mustache once told me. “You should make your decisions as if money didn't matter. You should ask yourself: If you could live anywhere, where would you live? You should choose to do work that you'd do even if you weren't getting paid. And you should make buying decisions as if everything were free.”
But how do know your personal values? Most people have a vague understanding of what's important to them, but lack clear goals and purpose. That's why I like the following exercise, which is designed to help you discover meaning in your life.
To complete this assignment — based on the work of Alan Lakein — you'll need about an hour of uninterrupted time. You'll also need a pen, some paper, and some sort of stopwatch. When you're ready, do the following:
- At the top of a blank page, write this question: What are my lifetime goals? For five minutes, list whatever comes to mind. Imagine you don't have to worry about money, now or in the future. What would you do with the rest of your life? Don't filter yourself. Fill the entire page, if you can. When you're finished, spend an additional five minutes reviewing these goals. Make any changes or additions you see fit. Before moving on, note the three goals that seem most important to you.
- On a new piece of paper, write: How would I like to spend the next five years? Spend five minutes answering this question. Be honest. Don't list what you will do or should do, but what you'd like to do. Suspend judgment. When your time is up, again spend five minutes reviewing and editing your answers. As before, highlight the three goals that most appeal to you.
- Start a page with the question: How would I live if I knew I'd be dead in six months? Imagine that your doctor says you've contracted a new disease that won't compromise your health now, but which will suddenly strike you dead in exactly six months. There is no cure. How would you spend the time you have left? What would you regret not having done? You know the drill: Take five minutes to brainstorm as many answers as possible, then five minutes to go back through and consider your responses. When you're ready, indicate the three things that matter most to you.
- At the top of a fourth piece of paper, write: My Most Important Goals. Below that, copy over the goals you marked as most important from answering each of the three questions. (If any answers are similar, combine them into one. For instance, if “write a novel” was one of your top answers to the first question and “writing fiction” was a top answer to the second, you'd merge these into a single goal.)
- The final step requires a bit of creativity. Label a fifth piece of paper My Mission. Look through your list of most important goals. Does one stand out from the others? Can you see a common thread that connects some (or all) of the goals? Using your list as a starting point, draft a Mission Statement. Your Mission Statement should be short — but not too short. It might be anywhere from a few words to a few sentences. Take as much time as you need to make this the best, most compelling paragraph you can write.
When you've finished, set aside your Mission Statement and walk away. Go about the rest of your life for a few days. Don't forget about your mission, but keep it in the back of your mind.
After you've had time to stew on things, sit down and review what you've written. How does your Mission Statement make you feel? Can you improve upon it? You want a vision to give you a sense of purpose that drives you day-in and day-out, through good times and bad.
Note: To make things easier, I've created a free PDF version of this project for you to download and print: Your Personal Mission Statement.
Earlier this week, I had a fun time co-hosting an upcoming episode of the Stacking Benjamins podcast. (I'll link to the episode here when it goes live.)
During our discussion, host Joe Saul-Sehy and I talked about people who reach their goals but then lose their way. There are a lot of people out there who dig out of debt only to fall back into the pit. Or there are folks like me who manage to lose fifty pounds but then gain it all back. (I've done that twice before.)
A big problem, Joe said, is that people forget to ask themselves, “What next?” They have a plan to get out of debt or to lose weight, but they don't have a plan for what follows. I think another issue is that people pick the wrong goals.
- Your aim shouldn't be to get out of debt. Your aim should be to boost your personal profit; debt reduction then becomes an inevitable side effect.
- Similarly, your target shouldn't be a specific weight. Your goals should be to eat right and to exercise thirty or sixty minutes each day. If you do this, fitness will follow.
Whether your digging out of debt, building your debt snowball, are wondering what to do now that you've achieved Financial Independence, or happiness and well-being can be improved by having a sense of purpose. What's yours?
Your Turn! Now I want to hear from you. Have you achieved Financial Independence? Are you already retired? If so, how do you find meaning and purpose? What keeps you motivated on a daily basis? When you first reach your goal, did you struggle to figure out what to do next? If you're not yet retired, do you have a plan for when you eventually are? How will you spend your money and time?
Author: J.D. Roth
In 2006, J.D. founded Get Rich Slowly to document his quest to get out of debt. Over time, he learned how to save and how to invest. Today, he's managed to reach early retirement! He wants to help you master your money — and your life. No scams. No gimmicks. Just smart money advice to help you reach your goals.