There’s a happiness conundrum that needs solving. Despite living in a rich country with income levels that put us in the top 1% in the world, there are still many unhappy people.
This post explores why we are not happier and what we can do to elevate our happiness. At the end of the day, money is a means to a better life.
The Man Who Continues To Be Unhappy
After a tense 14-12 softball victory, five of my teammates and I 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. He was told he couldn’t lose and that real estate was the surefire way to riches.
But, the house he had bought when he was 27 years old ended up losing half its value. 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.
He was in a full on happiness conundrum and was miserable. 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.
Solving The Happiness Conundrum
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. His happiness conundrum was slowly getting solved.
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.
Understanding The Happiness Conundrum
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 2020 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. The United States consistently ranks outside the top 15 happiest countries in the world since the rankings began.
Reasons For The Happiness Conundrum
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 latest World Happiness Report. The reason is probably because its too damn humid in Singapore!
Money And Happiness Are Loosely Correlated
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.
Related: Why The Smartest Countries Aren’t The Happiest
Things To Help Solve The Happiness Conundrum
Out of all the things that can help solve the happiness conundrum, here are my top five.
1) Having 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 about happiness and independence:
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) Having supportive parents and relatives
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 about happiness and family:
When I got in deep trouble in high school, they didn’t further chastise me. Instead, they 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. During the year leading up to leaving my job, my parents didn’t say I was crazy. They were supportive and helped me think things through.
Finally, when it came time to settle down, my parents 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.
Unfortunately, my parents live almost six hours away by airplane. Not living closer to my parents is one of my biggest disappoints. It made us all feel more lonely. COVID prevented us from seeing each other for over 18 months. At least we have video technology.
3) Having 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 about happiness and family:
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.
Oh, I must now mention our daughter, who arrived six months after I wrote this post. She is an incredible blessing and I feel so thankful to have her. Her warmth and personality are wonderful.
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. I saw this a lot as a minority growing up in Virginia.
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 about happiness and doing what’s right:
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 situation
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 of racism and hate.
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 about happiness and doing meaningful work:
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. I was in a happiness conundrum myself. So, I started Financial Samurai to help figure things out. Happiness level: 5.5/10.
Solving The Happiness Conundrum With Financial Samurai
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
Hopefully this post has helped you solve your happiness conundrum. It certainly has made me think about what’s most important in life.
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. Do you believe there is a happiness conundrum? 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?
Update On Feeling More Happy In 2023
Having money is nice, but having good friends and a loving family is so much better. The global pandemic really pointed out the importance of good relationships as the loneliness epidemic grew.
Unfortunately, I caught up with Biff at batting practice and he had gained back a lot of weight. He said he broke up with his girlfriend, but didn’t explain why. He was just happy to be out of the house and bashing balls again. But he also went through a mid-life crisis and quit his job. His happiness conundrum continues.
If you want to feel more happy, find your ikigai, or “reason for being.” One of the main reasons why I’ve kept Financial Samurai running since 2009 is because it is my ikigai. I love to help people gain more financial courage so they can live a better life with no regrets.
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Thanks for such an interesting article and sharing your insights into what is truly important. It took a little longer for me to figure it out, but that’s OK too.
Parents in foreign service? My best friend was John (Jack) Grover, diplomatic courier, who seemed to know everyone and whom everyone liked tremendously. From 1979-1981 I flew around the world on a PanAm standby series of tickets. Jack knew someone in every stop and everyone welcomed me like a long-lost relative with money ( “Hi, come date by daughter!”)..not to that extent, but it’s possible your folks knew Jack also. I follow your blog and say “thanks”.
Sam, are you taking updates in January 2022?
I have a couple of thoughts.
Typically, I don’t respond to blogs, but you have been forthright about appreciating
responses, and as a regular reader, who not only appreciates your thoughts, but appreciates your candor, I certainly ‘owe’you’ in kind.
As a psychologist, who uses my background to consider how the out social psychology in our culture, affects us, I typically agree with your thoughts about ‘happiness.’ Certainly we live in a ‘rich culture’ where financial comparisons are more power posturing than relevant to core happiness and health. Now in my 70s, a self-made, small-time, serial entrepreneur [my last paycheck was in 1975], with enough contributions and achievements to be proud of my professional trajectory. I ‘made’ my retirement figure, with ongoing income via rents, so that I’m focusing on trying to regain my sense of ‘fun, fulfilment, life meaning’ etc while enjoying control of my time, which to me enables increased time to appreciate and consider my life.
While I agree with the focus on non-financial issues of quality of life, via relationships, children, giving back…. I haven’t found that direct ‘pursuit of happiness’ is the most useful. Although I consider the US etc extremely strong [only for certain persons, unfortunately] as measured in GNP and individual freedoms, I consider the US relatively poor in feeling part of a larger whole, through which to find personal meaning. Homo sapiens/ we are meaning-seeking animals. Typically, a stronger sense of well-being/ happiness comes not only from ‘giving back’ through family & work [as you do via your blog], but being part of a meaningful whole, whose lens focuses approaches through which to achieve this goal. This larger approach evens out the typically ups and downs of ‘happiness & sadness.’ Anyway, that’s my take. And I appreciate your blog – one of the few I follow, since I limit my intake of media [‘you are what you eat/ what you follow’/ and how frequently you plug into media’]. You have repeatedly considered retiring from Financial Samurai [as noted in your blogs]. I hope you find it worthwhile to continue to’lean in.’ Your take is important in my world; I have passed your blog onto my adult children, who are facing your challenges, delayed about a decade.
The photo of the Thank You note is magical, thank you for sharing. Kevin Brennan, SF
I came to this column because it was reference in today’s (11/28/21) column about the New Ideal Income for maximizing happiness.
On a technical matter: Here is a more up to date table on countries’ PPP per capita: https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD?most_recent_value_desc=true
The US ranks 11th, using 2019 data.
In terms of finding happiness, I would like to add that I’m writing these thoughts just as the Thanksgiving weekend is drawing to a close. During the past couple of days, I was reminded that, per psychology research (can’t give you a reference though), that a person’s happiness increases when he or she expresses gratitude. It involves recognizing that there are times, as you have stated elsewhere, when we feel or have been ‘lucky’, OR, helped by someone. So, emotional well-being – and thus, happiness – improves simply by expressing gratitude to someone, as you, FS, did towards your parents.
Likewise, people of faith are encouraged to give thanks to God, with promises of spiritual blessings from Him for expressing that. For example, here is a list of verses from the Bible about thanksgiving: https://www.worldvisionadvocacy.org/2019/11/14/20-bible-verses-about-thankfulness-to-god/ . Megachurch Pastor Rick Warren presented an entire sermon about this, too. “How God blesses grateful hearts” https://www.youtube.com/watch?v=gFejU9_FvXs
Great post Sam. With a logical layout of data to relate or should I say unrelate happiness and money.
A bit of humility goes a long way toward feeling satisfied with one’s life. You don’t have to look very far to see others struggling with debt, health, or family problems to appreciate how blessed you are. Happiness comes not from having more than everyone else, but rather from enjoying what you have.
Hi Sam + readers, your blog and comments just go on getting better and better, so thanks to all from perfidious Albion.
It can be quite hard for us over here to relate to what seem like huge salaries (not to mention ‘compensation’, a hilarious term to me personally) over there, compared to what’s available to us. However, there have also been envious comments about our low income tax regime compared to yours, but the relatively modest advantage we have there is hugely overshadowed later on by essentially lifelong free healthcare; overall you probably can access more money in retirement owing to the MUCH lower rates of tax on inherited income/deferred salary pensions, so for the majority it’s probably a wash.
This is likely true of other aspects of life, like the weather as referred to in the comments section, which probably looms larger in our lives than yours – I’d never go to live in Canada or any of the Nordic countries, which are not only cold but dark for much of the year. Equally, I have lived in the tropics, but wouldn’t go back there in retirement. Places change, but have to admit that I did like Hawaii.
I’m currently retired for the third time, and think I’ve done enough to stay that way; no kids, sadly gone-before SO, so as for so many family and friends are now more important than anything else, along with the health to enjoy their company.
Clearly keeping active and alert into old age should probably be the primary goal now, and learning something every day is therefore important, and being grateful for what I have/achieved too. I love your definition of Nirvana, and the expression ‘happy as a clam’ to me quantifies that (if Nirvana can be quantified at all). This is b/c happiness and contentment are very different things; happiness is fleeting, that timeless moment of joy, whereas contentment is having enough of whatever you need and the knowledge that you have it, to me.
My guess would be that the differing percentages per country shown for the various aspects you have considered are largely down to local conditions, just as you’d expect, so a fascinating insight. Thanks again to all.
I think you are spot on that money is not a majority component of happiness. I noted that you had accomplishments on your list but it got short shrift in the article. I have always been a goal oriented person and achieving things is when my happiness quotient gets a lift, not buying or owning THINGS. How long do you feel better about the world after having accomplished an important goal versus having bought a new car?
Nice post Sam,
Money is so easy to focus on because of the quantifiable numbers but its only a little piece of a complicated happiness pie.
I do think happiness is somewhat baked into the FIRE movement though since some of it is about not focusing on external happiness motivators like fancy cars, and instead generating time to chase whatever does make you happy, like family time.
So maybe FIRE gets to be 50% not 40%. Still a long way to go to 100% though.
Raised by older parents who lived through the first depression, I was programmed with the mind set that money is the primary protection towards ones well-being and all that “that” implies.
I hate to admit it but my needle towards money being the primary happiness lever was at minimum 80% or more. Fortunately as humans we grow in wisdom on all levels and what I discovered at the age of 50 when I reached my financial independence was that in order for me to have a successful retirement; I had to take into account the holistic well-being of my family members not just their financial needs. This was especially true of my wife.
I also knew enough to work this process through as a case study and in order to have a successful completion, I had to figure out ways to test this reality. In my case it took another four years to work this project to fruition. It required me to work with my kids to assure each made it through their undergraduate studies and at least have a life goal. It also required me to work with each one of my family members individually to make sure they were capable of using their abilities to adapt, interpret, and learn how to take care of their own well-being.
Once I witnessed firsthand that they were well on their way i.e. graduated and employed, I knew it was time for Dad to be retired and I pulled the trigger at age 54. I can honestly say that had I not taken this path, I would still have been at a 80/20. Today my wife and I are are well positioned at a 60/40 allocation towards happiness.
This is a great article with great charts. I notice one of your charts on happiness is furnished by Charles Schwabb so I suspect it has some bias toward things money buys.
I have worked with clients with their money for over 20 years and I would modify those for an individual to use by personal preference so they can customize the usefulness, since people are so different! For example, a nature person who is happily single , and an introvert, may not family family at all. Independence could be achieved for not that much money if you are extremely frugal, smart, and disciplined…. so the amount of money needed has huge variations in definition.
Your blog is a great help for people to critically think about all these things. As a financial advisor, my most important training was in my philosophy courses in school, which is where I learned to know myself and be happy (Stoicism in particular).
Thanks. Bloomberg chart was a poll conducted nun Charles schwab with folks telling them what made them happy.
He is happiest be he king or peasant who finds peace at home!
I don’t think there is anything wrong with a personal finance blog spending the bulk of its posts talking about finance related matters. But I can see that haven’t been at it for a decade, it might be refreshing, exciting and a bit challenging to expand into other aspects of life.
Money plays a large part in my happiness. But it’s an interesting question to see how much. I would say personal health and health of close family and friends are by far the #1 part of being happy. Personal growth might be second, professional growth might be third. After that, money is probably next.