Money Can’t Buy Happiness

This is a guest post by Robert, who lives in Calgary and works as a financial adviser. He is married, has three kids and plans to retire at age 35.  Robert and his wife then plan to return to school and become teachers, eventually living and working overseas.

Recently, I attended a screening of the film Race to Nowhere at the Calgary Public Library. This documentary puts forward many of the challenges faced by children in the pressure cookers that American schools have become. One of the major themes of the film is to question how we define success. Does it mean getting into the best colleges? Does it mean making bundles of money? In a competitive environment, not everyone can be first, or get accepted to their preferred school, or make the most money. But everyone wants to be successful.

People, who are consumers, tend to define their success by their patterns of consumption. Why should this be the case? I know instinctively that I am more than the clothes and jewelry I wear, the car I drive or the restaurants I eat in. But when I meet others, my first reaction is to try and form an opinion of them based on what is outwardly visible: their patterns of consumption. I think this mental habit is what causes us to try and define ourselves to others based on our consumption, and then we slip into deriving our own value from our patterns of consumption. Even people who don’t earn more can still spend more, thanks to easy credit.

Financial success is a narrow definition. It is handy, because it can be easily measured and compared. Happiness is impossible to measure, and it’s more difficult to create and sustain. Abraham Maslow suggested a hierarchy of needs that helps us think about what things we seek and how they contribute to our happiness. In the lower levels are physical needs, which allow our survival. This is where money and consumption typically fit. Above that come our social and emotional needs, which are more likely to contribute to our happiness. This explains why many people place so much value on their job, given that it provides income and also an opportunity to interact socially. Ideally, a job will also include meaningful work, actions that make a difference, which corresponds somewhat to Maslow’s highest need of self-actualization.

This suggests two conclusions to me. First, when someone feels they need money (which is just a tool) in order to be happy, there is a chance that they have in mind something else they really need. It may be more social interaction (eg. eating out) or more meaningful activities (eg. management position). It’s possible however to meet these needs without money. For the examples I gave, a person could have the same social interaction with friends over food by eating in; a person could also have a position of responsibility and influence through volunteering for leadership in their community. The second conclusion is that people must find a way to define their own success and happiness that is separate from their job and their ability to earn and spend money before they retire. Because retirement means removing oneself from the workforce and living on a fixed income, defining happiness based on work and income will no longer be possible.

One example of someone’s self-perception in financial independence follows: “But it is not like I don’t work. For income in addition to that from my annuity (that is double what I need to pay the bills) I own rental units and I write, publish, and market books. To stay engaged I do some money coaching (pro bono), always have a home renovation project going, and, being financially independent, I have the time to devote to being a husband and Dad to an 11yo. And therein lies the real payoff: When you achieve financial independence, your time and your life can more closely reflect your own vaules. The trick is to figure out those values and then build that life.” (comment by tmgbooks)

What constitutes success in your life? How do you derive meaning and happiness? Do you expect that to be the same in retirement?

5 thoughts on “Money Can’t Buy Happiness”

  1. Ultimately, success to me is when I reach self-actualization. Right now, successful means I stop letting fear and greed run my life completely.

    “Being happy doesn’t mean everything is perfect, it means that you’ve decided to look beyond the imperfections.”

  2. lovely, I like that quote. Fear and greed will always be with us, to some degree, since our emotions are part of what makes us human. I didn’t want to get into this in my post, but Maslow’s hierarchy of needs has been criticized by styling “self-actualization” as “ego-centric”. But I think that might be mainly the case in a society where people view themselves as consumers. Still, it makes me curious about others’ view of what would constitute “self-actualization” for them?

  3. I think self-actualization is reached through a process of mental and emotional development. For me it does not only include the desire for self-fulfilment but also self-realization, acceptance of nature, self and others. Look beyond life and death, and overcoming temptation and lust. Live a life as a student and a teacher. I do believe very few people can achieve this.
    Now I think about it again, I don’t want to be too hard on myself. I think my life is successful if I have little or no regrets. So far so good.

  4. I used money to buy my way out of miserable aspects of my life, and that made me happy. It “cost” me about 40% of my salary to switch from working full-time to part-time back in 2001. But in return I got my life back, being able to do more enjoyable things such as resurrecting some hobbies I had not been able to do. I also rid myself of certain negatives from my life such as the awful commute and the physical and mental toll it was taking on me.

    But eventually that degree of personal freedom was not enough, as even working part-time became lousy. So I was able to retire 2 years ago at age 45, forgoing the rest of my salary in return for being able to cash out my company stock holdings which were locked up and inaccessible. I have now totally rid myself of all the negatives associated with working as a result of giving up my (lowered) salary and have no regrets about it.

Comments are closed.