Would you be happier if you had 100MM dollars? The answer is yes. How much happier would you be if you had 100MM dollars? The answer may surprise you - and that's what this blog is about.
I was reading a book by Daniel Gilbert called "Stumbling on Happiness", and one of the topics he addresses in this book is how money affects people's happiness. His studies showed that, if you could quantify happiness somehow, then the formula describing how happiness varies as the amount of money increases would be logarithmic. It means that: if you have vey little money, then getting a significant amount of money will significantly increase how happy you are. However, if you already have certain quantity of money, increasing it will have a negligible impact on how happy you are. And where should we draw the line? Here is how you draw the line: if you have concerns about whether you'll have enough money to eat tomorrow or next week, or whether you have enough money to go to a doctor tomorrow, or whether you'll have enough money to pay for your rent this month, then adding more money into your life will make a significant difference. That's because all these concerns about the basics of a day-to-day life are directly precluding you from focusing on other things that could give you satisfaction. However, suppose that you have some money, you have a job, you have some reserve, that you're middle class, let's say. In this case, more money would have very little to add into how happy you're are - even if we're talking about lots and lots of money. And why is that?
Think about this: if your family earns a total of 80K/year, you will be able to do almost everything that a millionaire can do, but of course, with some limitations. For instance, a millionaire can travel to the Caribbean, and so can you. Granted, you won't be traveling first class, you won't stay in a 5 star spa, and you won't get a helicopter tour. But, if you get organized, if you save some money, yes - you can visit the Caribbean. In the same fashion you can do many other things that they can. Therefore, it makes total sense that your level of comfort will definitely increase with more money, but very soon you'll be used to that level of comfort, and it will become routinely just like when you did not have that money.
When I talk to people about this subject, I get some responses that I want to demystify right here. Here are the common replies from folks seeking money desperately: "If I had 100MM dollars, then:"
1. "I could retire and spend my time with my kids"
[Marcelo] Wrong. Your kids will get fed up of you being around all the time - they wake up, you're there; they come back from school, you're there; they want to start dating, and you're there. I'm not saying you should not spend time with your kids - I'm saying that there is a healthy limit regarding how much time you should be spending with them. They need some space and time for themselves too.
2. "I could retire and spend more time with my friends"
[Marcelo] Wrong. Your friends are all working, don't forget that. Worse, they will see you as the lazy ass of the group.
3. "I could work on personal projects for a long time"
[Marcelo] Wrong again. You won't spend the rest of your life remodeling your house, or gardening. At some point, and sooner than you think, you'll feel a need to contribute to society again. This is an intrinsic necessity of our race (humans). Why do you think Oprah, Gates and Bin Laden are still actively working? Because they feel a need to contribute to society.
4. "I could work for myself, and I wouldn’t have a boss"
[Marcelo] So wrong. Work for yourself, and you'll probably open your own business/start-up. And who will be your boss? Bingo: you customers!! And believe me, they can be much worse than your current boss.
Lots of information on this blog, so I need to summarize it up:
a) If you are having concerns regarding whether you'll have money to survive tomorrow, your priority is to find a job and add some cash to your bank account. You will be much happier when you accomplish that.
b) If you're not in case (a), don't think a lot of money will make you much happier. If you're not happy and believe that the source of your problems is money, you're wrong my friend.
c) If you're not in case (b), meaning that you have some money and you're quite happy now, then you can definitely work towards getting more money - remember, it will bring more comfort, which is always good!!
d) Forget about retirement, and forget about all the erroneous believes about retirement. Studies show that folks that retire soon (around 45y old), either die sooner, or go back to work by their 50's.
Sticking with the tradition, a picture of me, skateboarding in Vancouver, CA!
