It’s more important to be happy than to be rich

happy girl and father

This article is the final installment of a 14-part series that explored the core tenets of Get Rich Slowly.

Here's the opening paragraph from my forthcoming book, Your Money: The Missing Manual. It's the sum of everything I've learned during my five-year journey to get rich slowly:

You don't want to be rich — you want to be happy. Many people mistakenly believe that the former leads to the latter. While it's certainly true that money can help you achieve your goals, provide for your future, and make life more enjoyable, merely having money doesn't guarantee happiness.

Many of us (including me) get wrapped up in the importance of money and the belief that having more money is the key to a better life. But it's not. The key to a better life is increased happiness. For some people, that does mean more money. But according to the research Tal Ben-Shahar shares in his book Happier, most of us would be better served by:

  • Creating rituals around the things we love to do.
  • Expressing gratitude for the good things in our lives.
  • Setting meaningful goals that reflect our values and interests.
  • Playing to our strengths instead of dwelling on weaknesses.
  • Simplifying our lives — not just the Stuff, but the time.

We're more likely to lead happy lives by putting these principles into practice than by getting another raise at work — especially if the increased income would only lead to increased spending. When we focus on monetary goals, we run the risk of becoming trapped on the “hedonic treadmill” (also known as lifestyle inflation), working harder and harder to make more and more money. This does not lead to happiness.

Related >> The Ongoing Battle With Lifestyle Inflation

Sometimes Money Can Buy Happiness

Wealth and happiness aren't mutually exclusive, of course. According to financial writer Jonathan Clements, financial stability improves well-being in three ways:

  • If you have money, you don't have to worry about it. By living below your means, you can obtain a degree of financial control even if you aren't rich. Avoiding debt gives you options.
  • Money can give you the freedom to pursue your passions. What is it you want out of life? What gives you a sense of purpose? These are the sorts of things you want to pursue in retirement. Better yet, try to structure your career around something you love to do.
  • Money can buy you time with friends and family. In fact, Clements says, true wealth comes from relationships, not from dollars and cents. Social capital is worth more than financial capital.

Related >> The Value of Social Capital

Money is a tool. As with any tool, a skilled craftsman can use it to build something amazing: a meaningful life filled with family and friends. But if you're not careful, if you don't have a plan, the life you construct with your money can be a tenuous thing — even dangerous.

Lessons Learned

Studies show that the pursuit of money is less likely to bring personal fulfillment than focusing on self-improvement and, especially, close relationships with others. Here are a handful of lessons I've learned during my research into the connection between money and wealth. I didn't come up with any of these ideas; they're products of actual research into what makes us happy:

  • People who are materialistic tend to be less happy than those who aren't. If your aim is to have more money and more Stuff, you'll be less content than others whose goals are built around relationships or mental/spiritual fulfillment. (Because I'm a perma-geek, I'm always reminded of what Princess Leia says to Han Solo in Star Wars: “If money is all that you love, then that's what you'll receive.”)
  • Oversaving does not lead to happiness. While it's important to save for the future (and to cope with current emergencies), research shows that oversaving can actually have a negative impact on your quality of life. If you're meeting your goals for saving, it's okay to spend some on the things that make you happy.
  • Experiences tend to make us happier than material things. We have different reactions to the money we spend on experiences and the money we spend on Stuff: When we spend on experiences, our perceptions are magnified (meaning we feel happier or sadder than when we spend on Stuff), and the feelings tend to linger longer. And since most of our experiences are positive, spending on activities instead of material goods generally makes us happier.
  • When we lower our expectations, our happiness increases. High expectations come when we compare ourselves to others or when we're bombarded by advertising. We come to accept the things we see on TV as “normal,” and because we don't have these things, we feel inadequate. Our expectations rise, and before long we're caught up in lifestyle inflation. But if we can consciously manage our expectations — both financial and otherwise — we can increase our sense of well-being.

Really, there's only one way to ever be satisfied with how much money you have: You must define how much is Enough. True happiness comes when you learn to be content with what you have. If you don't take the time to figure out what Enough means to you, you'll always be unhappy with your financial situation.

How Much is Enough?

Enough looks different to each of us. It's not just different amounts of money, but different types of wealth. For me, Enough is having my home paid off and cash set aside to let me buy books and go out to dinner with my wife once in a while. For you, Enough may mean living in a small apartment but owning a boat and having the freedom to sail for months at a time.

To find Enough, you have to set goals. You have to look inside to find your values. It can take months or years to get clear on what makes a meaningful life for you, but after you've done this, you can make choices that reflect your priorities.

After all, that's why you're doing this. You're not building wealth just so you can bathe in buckets of cash. You're building wealth so you don't have to worry about money, so you can pursue your passions, and so you can spend time with your family and friends.

Remember, my friends: True wealth isn't about money. True wealth is about relationships, about good health, and about continued self-improvement. True wealth is about happiness. Ultimately, it's more important to be happy than it is to be rich.

Here's a bit more on this subject:

This is the final installment of a 14-part series that explored my financial philosophy. These are the core tenets of Get Rich Slowly. Other parts include:

Thanks, everyone, for indulging me with this. It felt good to set down my philosophy into a semi-coherent series.

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Filip Rabuzin
Filip Rabuzin
10 years ago

This is wonderful. Very tight, coherent and easy to understand.

Chickybeth
Chickybeth
10 years ago

This series was really helpful to me and I looked forward to Mondays to see the next installment. Thanks!

Ken
Ken
10 years ago

How much is enough? That is a powerful question. My wife and I need to discuss this. That spill about relationships and happiness is so true. Great thoughts!

Mike Piper
Mike Piper
10 years ago

Have you read John Bogle’s recent Enough? If not, I highly recommend it. 🙂

Ben
Ben
10 years ago

I have heard that you are better to buy experiences than things, as far as happiness goes. Likewise, you are probably even better to buy things that create experiences such as board games.

Jackie
Jackie
10 years ago

For me I think “enough” is more of a feeling than an amount of stuff or reaching a goal like having our house paid off. Although I do want to get our house paid off quickly, it’s not as though I’ll feel discontented until that happens. Feelings can be pretty hard to define though, so I cam see the value in identifying specifics that might help me feel a certain way.

Sarah @ EkingOut
Sarah @ EkingOut
10 years ago

The point about over-saving is interesting. There’s definitely a fine line between satisfactory restraint and deprivation.

SMG
SMG
10 years ago

Out of context topic, but I just saw the page for your book on Amazon, There already is a foreward / note from Kevin Kelly without you even completing the book, sounds strange – isnt it? or maybe I am missing something here 🙂

Beth
Beth
10 years ago

JD, Just wanted to say thanks for sharing all of this. I can’t wait for the book!

Patrick
Patrick
10 years ago

I was watching something on “accidental fortunes” while I was wrapping Christmas presents, and the wife of a guy who found an original copy of the Declaration of Independence said, “Money doesn’t bring happiness, but it can bring peace.”

I think that’s a fair statement. A lot of the worries we have today revolve around money, and (for better or for worse) a lot of problems can be solved by throwing enough money at them. If money isn’t a problem, you have one less problem!

Suzanne
Suzanne
10 years ago

Great post and great topic! A good point that its important to view money as a means that allows one to focus on our priorities rather than as an end.

John Paul Aguiar
John Paul Aguiar
10 years ago

Great post.. I can add that it is better to be healthy then to be rich.

I had a kidney transplant 8 yrs ago and I have money. I can tell you the money didnt do shit for me when I was sick.

So happiness and health over money everyday.

Building Wealth
Building Wealth
10 years ago

It’s the WHY, stupid 🙂 What is going to make the difference is WHY you want money. Is it to buy more “stuff” and keep up with the Jones or is it to create more and better experiences…? Acquiring more money beyond your basic needs is done with a purpose that is meaningful to you. In any situation you have the power of choice. So what really matters is what you do with your money, how you put it to use in a way that it creates happiness. Anyway, what is happiness? I had to sit down and figure out… Read more »

Mrs. Money
Mrs. Money
10 years ago

It’s funny- over a year ago I had a scare where the doctors thought what I had was turning into cancer. At that point I freaked out and realized how much time I had spent worrying over money and how it didn’t seem relevant.

I think that money helps a ton with peace of mind but not necessarily with happiness!

Tyler
Tyler
10 years ago

Oversaving is a demon I’m currently confronting.

Many people outside my life are impressed by it, but those within it have struggled to cope from time to time.

Realizing that you can’t save enough to fix any problem that could ever come your way and letting go of control a little to enjoy your life is very worthwhile no matter how hard it may be.

RJ Weiss
RJ Weiss
10 years ago

Wow – one of the better posts on personal finance I have read in a while.

This series has been great. Thanks J.D.

Adam
Adam
10 years ago

“Simplifying our lives – not just the Stuff, but the time.”

This times 1000.

Lisa
Lisa
10 years ago

I’m totally happy. My husband & I both work from home, we get to spend all day sneaking work in between whatever our 6 kids have planned. Life is good and our happiness is from within. Now, I really do want to be rich. I don’t need to be rich to be happy, I’m happy already. But I’m not rich. And I’d like to be. So I will keep reading past the intro that doesn’t apply to me. I don’t expect wealth to bring me happiness, happiness comes in the back door. Wealth will just help me take my happiness… Read more »

mayct
mayct
10 years ago

This series was fantastic, it was well written with a ton of great info packed into it.
Thanks!

ami | 40daystochange
ami | 40daystochange
10 years ago

Love this post, I think it may be one of the most important lessons about managing money. In the end, we don’t scrimp and save just to get money. Money is a tool, a powerful tool indeed, but ultimately, just a means to an end.

Kim
Kim
10 years ago

“Thanks, everyone, for indulging me with this. It felt good to set down my philosophy into a semi-coherent series.” JD, I think it is very important to revisit such “core tenets” from time to time. Not only does it strengthen your philosophical foundation, but you can also make sure that these are still working for you. As a reader of your blog (and later come to it than many) some of it is new material. Always important. I am so glad about your book, JD. I think it is going to be well received, and, more importantly, that it will… Read more »

Mike Crosby
Mike Crosby
10 years ago

I thank you too for your writings.

Here’s something I don’t know if its ever been covered. I probably have enough to live comfortably the rest of my life. But who truly knows what the future will bring.

What has happened is that I have lost interest in growing my wealth. Does that make sense? It’s not that I’m trying to be some kind of money grubber, but now that I am financially secure, I’ve grown passive about investing.

KateMTP
KateMTP
10 years ago

I couldn’t agree more with you. I am not rich financially and I would love more stability, but I am very rich in the personal relationships I have with those around me.

What a great article to post during the holiday season!

Nicole
Nicole
10 years ago

@20 Mike
We’re not there yet in terms of having enough to live comfortably forever, but we are pretty financially secure… secure enough to take an early career sabbatical. I have definitely noticed that with security I am much less likely to want to chase the best interest rate or get the best deal on anything… our investing has gotten much more passive. Our time has gotten a lot more valuable.

Dustin | Engaged Marriage
Dustin | Engaged Marriage
10 years ago

I totally agree that “social capital” trumps money every time. It is also true, however, that having “enough” money can really help create an environment where our relationships can thrive.

I also really enjoyed the book “Enough” by John Bogle. It had more of a business focus, but the underlying theme is consistent with your own.

LeanLifeCoach
LeanLifeCoach
10 years ago

Money does not buy happiness, I see more people on the streets that are smiling than I see in suits smiling. But money is necessary and money does buy options. The option not to live on the streets, the option not to end up in a government subsidized retirement home. “Many of us (including me) get wrapped up in the belief that having more money is the key to a better life. But it’s not. The key to a better life is increased happiness.” With all due respect, I think you are, in part, wrong J.D. Money, as we agree,… Read more »

Dale Callahan
Dale Callahan
10 years ago

Amen. Great series on getting down to basics. So often I see people who are caught in indecision based on things being too complicated to follow.

In particular I love how you ended this – rich is not the key. In fact, rich is not even a goal – since we can always be richer.

But then again – is happy a goal? I think we have to be content where we are, and working to make it better – that makes us happy!

LatteLaura
LatteLaura
10 years ago

Great points in this article and a good reminder. Like your wife, I’m a fan of NPR. Yesterday I heard a program about happiness that you might be interested in. Perhaps you heard it?

It’s here: http://www.wpr.org/book/090412a.cfm

brooklyn money
brooklyn money
10 years ago

I was reminded of this when watching A Christmas Carol the other day on TV. Dickens had it right, as always.

Foxie || CarsxGirl
Foxie || CarsxGirl
10 years ago

“Money can give you the freedom to pursue your passions. What is it you want out of life? What gives you a sense of purpose? These are the sorts of things you want to pursue in retirement. Better yet, try to structure your career around something you love to do.” This is the absolute key for me, here. I can definitely live a life where I’m just “well-off,” pretty much financially independent but not exactly “wealthy,” yet maintain a tiny fleet of nice cars, including a Ferrari and probably a couple Porsches. To some, I may look rich, but the… Read more »

J Brown
J Brown
10 years ago

I know that money does help, but it is not everything. I am slowly realizing at 32 that time, health and money should be the priority. Enough is difficult to achieve, but not impossible. I know I have had Enough of buy/buy/buy now, debt, and stuff. My wife and I are working on what we need vs want, this is helping us.

The Broken Penny
The Broken Penny
10 years ago

Well written post. The more time I spend researching personal finance, the more obvious it becomes that money is as you say just a tool. Sometimes people chase money, rather than leveraging it to accomplish their goals. One of my favorite quotes is by Irish Novelist Jonathan Swift “A wise man should have money in his head, but not in his heart.” Learn to use money correctly and it can help gain happiness, use it incorrectly and it will only buy you frustration and loneliness.

Phil
Phil
10 years ago

Excellent job JD. You are an exceptional motivational writer and you have especially helped me over the past year since I discovered your blog. Please keep up the great work and I look forward to reading your book.

Cashing
Cashing
10 years ago

Last night I spoke with one of my friends about wealth. He told me that he wants to be rich so that he can serve others, but he doesn’t have to be rich to serve others. To serve and help others really comes with being a good steward of the things your blessed with, such as health, time, talents, or money. You don’t have to have money to serve others.

John DeFlumeri Jr
John DeFlumeri Jr
10 years ago

Everybody I ever talked to who needed money real bad, would rather be rich and buy False Happiness!

John DeFlumeri Jr

Tyler Karaszewski
Tyler Karaszewski
10 years ago

@Foxie: “I can definitely live a life where I’m just well-off … financially independent … maintain a tiny fleet of nice cars, including a Ferrari and probably a couple Porsches.” We all admire your sacrifice, really. Like everyone else has said, money is nice, it’s useful, but it’s not everything. I make more money than average, and that’s still not going to stop me from asking for raises and promotions periodically, I appreciate what I can do with the money as much as the next guy. But really, I’d forgo much of that to keep the other things in my… Read more »

Dirk B
Dirk B
10 years ago

I find happiness in moderate minimalism (guess I’m lucky in that way). Learned many years ago that the more stuff you own, the more that stuff owns you…

‘Experiences’ don’t take up much space!

Alas, others may be uncomfortable with my sparse collection of ‘things’. LOL

Brenda
Brenda
10 years ago

@ #26 LeanLifeCoach – Thank you for stating that. Money may not buy happiness for some people, but the lack of money sure buys a lot of misery for most.

Royce
Royce
10 years ago

This, like all your previous installments, was fantastic. You may have buried the lead, however – it seems to me that this is the most important and fundamental of your 14 core tenets. In fact, it is the basis around which a philosophy of saving and wealth should be built. Without an understanding of why we do all this, the entire purpose is probably lost, right?

Sam
Sam
10 years ago

Money is a just a tool, but it is an important tool for happiness. Money can provide security, health care, shelter, food, and when you have enough money, the extra can be used for fun, travel, vacations, really yummy food and wine, charitable giving to help others (which brings happiness), helping others in ones family/friends. Money can also buy things, gifts for others, gifts for oneself, things that one doesn’t need but one enjoys. And money in the bank provides an extra level of peace.

Golfing_Girl
Golfing_Girl
10 years ago

I would say that ignorance, is indeed, bliss. I just don’t follow high fashion, know who makes what purse, or what the “in” car is. And I’m happy I don’t. If I don’t know why it’s supposed to be so great, I certainly don’t need, want, or crave it.

My happiness has certainly increased over the past several years as we’ve eliminated debt and settled into a frugal and simple lifestyle–one that’s allowed me the decision to stay home after baby #2 arrives. To me, choices make happiness!

FinanceDad
FinanceDad
10 years ago

Money definitely doesn’t equate to happiness, but being financially free can certainly make easier to be happy.

Tanner @LifeDestiny.net
Tanner @LifeDestiny.net
10 years ago

Psychology Today just recently released a few articles on Happiness and Money…You can check them out here:
http://www.psychologytoday.com/blog/how-happiness/200807/happiness-breeds-success-and-money
http://www.psychologytoday.com/blog/the-good-life/200806/money-and-happiness

Cheers!

David/Yourfinances101
David/Yourfinances101
10 years ago

How true it is–plus, if you foucs more on being happy–you’re more likely to end up rich.

Great post

SMG
SMG
10 years ago

This post / tenet is in direct contrast with the name of this BLOG (despite saying that “It’s More Important to Be Happy Than to Be Rich”, you still are here to “Get Rich Slowly”)

🙂

Orontes
Orontes
10 years ago

I have really enjoyed the 14 part series. Can’t wait to be able to pre-order your book. You’ve been a real inspiration.

chacha1
chacha1
10 years ago

@Tyler K (#36), that is the best comment of yours I’ve ever read. (Aside from busting Foxie’s chops about her car lust!) Regarding the original post, J.D. has put it very nicely as usual. I would like to point out that the title is: “it’s more important to be happy than to be rich.” The title is not: “it’s not important to be rich” or even “it’s not important to be rich as long as you’re happy.” So for those readers who are seeing this as “you should concentrate on being happy, not on being rich,” maybe you could try… Read more »

Little House
Little House
10 years ago

What a great post. I think back to my days when I was worry free, just after college. I was poor, but able to pay all of my bills because I lived WAY below my means. The key for me was that I didn’t have any debt hounding me, so I could focus on more important things. I’m just now getting back to that feeling, having paid off most of my debt and now have a small savings account started. That feeling of freedom isn’t associated with money, to me it’s more associated with not owing any money!

Kent @ The Financial Philosopher
Kent @ The Financial Philosopher
10 years ago

J.D: You have evolved into a financial philosopher! Good for you!

“I do nothing but go about persuading you all, old and young alike, not to take thought for your persons or your properties, but and chiefly to care about the greatest improvement of the soul. I tell you that virtue is not given by money, but that from virtue comes money and every other good of man, public as well as private. This is my teaching, and if this is the doctrine which corrupts the youth, I am a mischievous person.” ~ Socrates

Sue
Sue
10 years ago

Love this article! Of the 5 things that Tal Ben-Shahar recommends, I do 3 of them already. So, I’m more than halfway there! I express gratitude, set meaningful goals, and have already simplified my life. I have a glass 3/5ths full!

I do have to say though that once having lowered your expectations and simplified your life, in order to enjoy social capital, you need to find like-minded friends. Because for those folks for whom appearances are of paramount importance, your modest home or lifestyle may not be de rigueur.

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