After a tense 14-12 softball victory, the six of us went to a nearby brewery for some beers and burgers. I ended up sitting next to our centerfielder who told me he used to hate his life. Let’s call him Biff.
In high school, Biff was a popular guy. At 6′ 5″ tall, he played varsity baseball and varsity basketball. But he admitted he was sometimes cruel to the smaller kids and exchange students. He wasn’t proud of his actions and wished he could apologize to them today.
After the financial crisis hit in 2008, Biff fell into a deep depression. The house he had bought when he was 27 years old ended up losing half its value. He was told he couldn’t lose and that real estate was the surefire way to riches. Not only had he lost all his equity, but he also owed more than the house was worth.
He was so deep under water, all he wanted to do was turn in his keys and walk away as so many Americans did. There was just one problem. Florida was not a non-recourse state. As such, the lender could easily obtain a deficiency judgment and garish his future wages and non-exempt assets.
Biff proceeded to gain over 100 pounds as he literally locked himself within his rapidly depreciating prison. At 30, he was morbidly obese, broke, and girlfriend-less. Life had no more meaning to him.
Then one day out of the blue, the state of Florida threw him a lifeline by offering him a free $75,000 to pay off some of his mortgage if he promised to keep up with regular payments. He took advantage of this tax payer’s money and fulfilled his side of the deal.
Despite feeling a little guilty for getting a bailout, Biff started gaining positive momentum in his life again. Over the ensuing two years, he lost 70 pounds, got a promotion, and finally at 32 found a girlfriend. He also stopped hating on anybody who seemed to be doing better than him because he was finally in a better place.
The first step to him feeling happy was to make sure his finances were no longer going in reverse. Once his finances had stabilized, Biff’s happiness grew because he found someone who loved him despite all his flaws. Today they are married and have a daughter.
Being rich didn’t matter anymore to Biff. Making progress did. Oh, and being able to crush a softball 350 feet as our cleanup hitter makes Biff and the rest of the team ecstatic.
Money And Happiness Are Loosely Correlated
People say money doesn’t buy happiness because it’s true. After you make enough to comfortably survive, whether it’s $75,000 in Kansas City or $250,000 in San Francisco, having more money seldom significantly moves the happiness needle.
The World Happiness Report 2018 ranked Finland as the happiest country in the world. The report highlighted six significant factors which contribute to happiness: GDP per capita, social support, life expectancy, freedom to make life choices, generosity and corruption levels.
Despite the United States having by far the highest GDP in the world, the United States ranked only 18th in the survey. What a conundrum to be so rich, yet so thoroughly average in the happiness ranking.
Some of the reasons attributed to why Americans were not happier included: wealth inequality, obesity, substance abuse, and depression.
On a GDP per capita basis, the United States ranks about 19, which is in line with its happiness ranking. However, GDP per capita alone doesn’t neatly explain why more of the wealthiest countries aren’t in the top 10.
For example, Singapore has a per capita GDP of $93,900, yet ranks 34th in the World Happiness Report 2018. The reason is probably because its too damn humid in Singapore!
Happiness is subjective and extremely difficult to quantify. But based on the data, it’s clear that money is only one part of the happiness equation.
In my opinion, money takes up at most 40% of determining your level of happiness. Once you get to the level where you have enough money to do what you want, your 40% is maxed out.
The remaining 60% that determines your happiness has to do with family, friends, and accomplishments. If money was a predominant happiness indicator, billionaires would never cry, never suffer, and definitely never get divorced.
What I realize today is that I’ve spent too much time trying to help readers and myself optimize the 40%, and not enough time trying to optimize the other 60%. One of Financial Samurai’s main goals, after all, is to help readers lead happier lives.
So, for the remainder of this post, let’s talk about the other 60%. As I get older, I expect the types of posts I write will correlate more closely to the percentages I believe make up our happiness levels.
Things That Should Raise Your Happiness
1) Independence. Independence grows over time. The first taste of independence usually comes when you’re able to live on your own without parental assistance. Perhaps it’s going away to school or landing your first job.
Independence continues to grow once you start gaining respect and mastery at your job. The better you are at your job, generally the more leeway you’re given to do what you want. You might eventually get promoted to run a team or a department, giving you even more independence.
You finally gain maximum independence when you no longer have to report to anybody. Most think retirement is the ultimate goal. But based on my experience, retirement isn’t a cure-all for happiness.
Some people believe that entrepreneurship leads to maximum independence. Instead, entrepreneurship can lead to tremendous dependence if you hire workers and take in investors. What people really want is a profitable, bootstrapped solo-business or the financial independence to do whatever without caring about money.
My situation: Although I was basically a grunt at my first job in NYC and had zero independence, I was grateful to just have a job. After about six months of appreciating employment, my happiness took a dive due to the 12-14 hour days. Happiness level: 6/10.
When I switched jobs and moved to San Francisco, my happiness took a tick higher because I was in a satellite office that offered more independence. My boss and I were a unit that covered west coast clients so there was much more independence compared to being at the NYC headquarters. Happiness level: 7.5/10.
Once my boss left to become a client, I gained even more independence. But I also felt a lot more pressure to maintain the business and eventually grow it. Therefore, my happiness remained steady or might have even taken a tick down, despite higher pay and title. Happiness level: 7/10.
It was only after I negotiated a severance in 2012 did my happiness level creep up to an 8/10 and has remained at roughly this level with temporary spikes to 10. I knew what I wanted to do post work and pursued it with abandon.
2) Family. No matter how much of a knucklehead you are, most family members will provide unconditional love and forgiveness. They will support you no matter what.
It is estimated that the average friendship lasts only seven years because life gets in the way. While friends come and go, family members last for much longer. We must make an effort to regularly keep in touch with our parents and siblings.
My situation: When I got in deep trouble in high school, they didn’t further chastise me, but provided comfort during a time of great distress. When it was time to find a job, I remember my dad doing his best to introduce me to many of his acquaintances he got to know while working in Asia.
When I wanted to leave for a new job for more money in NYC after 10 years with my existing firm, my mom counseled me not to join because she knew the misery wouldn’t be worth it. When I decided to leave work altogether at age 34, they didn’t say I was crazy.
When it came time to settle down, they welcomed my wife with open arms. I always wondered whether they’d try to push me towards a certain type of person like some parents do, but they did not.
I am so appreciative that my parents always provided counsel and never put up roadblocks whenever I made a decision. Having them in my adult life for so long has been a blessing. Losing them will be incredibly difficult.
3) Your own family. If you are lucky to find a life partner, there is nobody you will love more in this world. If you want and have children, the amount of joy you will experience is beyond anything you can imagine.
I understand that not everybody wants children. In fact, 10% of you in my survey said you did not. That’s absolutely fine. Having a family made up of just you and your soulmate is incredibly powerful. Make it your mission to find someone who loves you as much as you love them.
My situation: I lucked out and met my wife when I was a senior in college. Because I met my wife so early, I’ve always had this minimum elevated level of contentment. I knew that worst case, if I could only make minimum wage working at McDonald’s, at least I’d have her in my life and we’d make things work.
When we finally had our boy in 2017, my happiness temporarily rocketed to a 10+. It was as if I had unlocked a new feeling that remained hidden for decades.
But as many first-time stay at home parents know, taking care of a little one is very difficult for the first several years. Therefore, my happiness has faded back down to about an 8 on average and sometimes down to a 7 when my boy’s temper tantrums are out of control. Even so, I’d never give him up for the world.
Be forewarned. If your relationship is rocky before kids, having a kid will likely expedite an impending breakup.
4) The ability to stand up for yourself. One of the worst feelings is getting bullied and not being able to do anything about it.
In school, you might get picked on by a bigger kid. You want to fight back, but you’re afraid of getting seriously injured. You rationalize that it’s better to give him your lunch money and starve than face his wrath.
At work, you might get tormented by a senior colleague. You want to tell her to stop, but you’re afraid of getting a bad review. You need the money because you just bought a home.
Online, you’re afraid to say what you truly think out of fear of getting ridiculed. As a result, you keep quiet and join a mob that bullies others for thinking differently. The fear of standing up for yourself and others is one of the reasons why bad things stay bad for a very long time.
My situation: Ever since I was in elementary school, I had the courage to fight back against bullies. I got in plenty of fist fights because I didn’t allow anybody to push me around or call me names. I learned as a kid that once you stand up for yourself, even if you take a few blows, the bullies eventually stop. Some may even apologize. The repercussions were a couple suspensions, multiple trips to the principal’s office, and a few bruises. But it always felt great to defend my honor.
I’ve carried this attitude of standing up for myself throughout my entire adult life. When there was BS happening at work, I spoke up, often to my own detriment. I didn’t appreciate nepotism and often challenged senior employees whom I did not respect. This was not a good career strategy. When the big bosses in my corner were eventually pushed out, I was left with fewer backers.
Online, this site has grown large enough to attract unfortunately some hateful comments every week from people like the old Biff. Even if only 0.1% of the people hate your guts, however, that’s 1,000 people a month if you receive 1 million visitors a month. I generally just delete 99% of the bad comments. But if there’s a particular commenter who keeps badgering me then I may take a stand because I’m thinking about the world my son will face growing up. As a parent, I see it as my duty to break the cycle.
One of the best benefits of being unemployed is that you can never get fired. So many people end up ruining their careers based on what they say and do online. Being able to stand up for yourself is definitely one of the biggest benefits of financial independence.
Standing up for yourself can initially feel scary. But the more you practice, the easier it will get.
5) Doing work that is helpful to others. One of the reasons why ~70% of people are disengaged at work is because they know what they do is probably not very helpful to society.
Imagine working at PepsiCo, whose entire goal is to sell sugary drinks and processed foods to get Americans addicted and sick. That can’t feel good given our obesity epidemic. Imagine working at Juul, whose main goal is to get adults and teenagers hooked on vaporized nicotine.
On the other hand, if you create or do something that’s helpful to others, you will feel extremely wealthy. Talk to veteran nurses, teachers, firefighters, and social workers. Many will glow about their rewarding careers.
My situation: Before 9/11 happened, it felt great working in finance in NYC. After 9/11, I felt a tremendous amount of sadness. Suddenly, nothing I did at work mattered anymore compared to what the brave first responders did to try and rescue the people trapped in the World Trade Centers. I wanted to join the U.S. Foreign Service like my parents and serve my country. But I did not because I was not smart enough or motivated enough to pass the Foreign Service entrance exam.
It took at least three years to get over my disillusionment of working in finance. During this time, I went to business school part-time, partly to see if I could gain some knowledge to do something else.
But part of the deal for having my tuition paid for was to continue working at my firm for at least two years after graduation. During this time, the financial crisis had hit in 2008 and there was nowhere I could go. The best I could do was hold on tight for my employment life as I had taken out a $1.1 million mortgage in 2006.
The 2008-2009 financial crisis forced me to once again re-assess what I wanted to do with my life. I wanted out but didn’t know what to do, so I started Financial Samurai to help figure it out. Happiness level: 5.5/10.
It was not until 2011 that I decided that my biggest joy was writing and helping people get their finances straight. By then, Financial Samurai was constantly on my mind even while I was at work. So in 2012 I finally said goodbye to my employer.
The thing that has helped keep me going for so long has been the consistently positive feedback I get from readers that outnumber the negative feedback 200 to 1. Over the past 10 years I’ve witnessed readers eradicate their debt, fix their spending habits, buy their first homes, leave toxic work environments, create thriving side hustles, build substantial retirement portfolios, start families and so much more. It’s been a wonderful journey and a treat to hear from each one of you.
Happiness level: 8/10.
Feeling Happy Is Worth The Effort
Before you reach financial independence you might get tricked into believing that money is the main reason why people are happy. It’s easy to lose sight of all the other things on your quest for greater wealth.
However, you can be the richest person in the world, but if you have nobody to share your fortune with, I doubt you’ll be happier than someone making $40,000 a year in a job in which he or she loves and who has a loving partner and supportive friends in real life.
For the sake of happiness, it’s worth staying fit, finding people in real life who love us as much as we love them, and doing something that’s helpful to others. Who knows. You might even reach a point where you’re so happy that money starts pouring in as a byproduct!
I’d love to hear your thoughts on how much money plays a role in your overall happiness. What are some other important things that make you incredibly happy? What are some things you notice happy people do that unhappy people don’t do?