Weekly Nugget of Wisdom #15

Welcome to another Nugget of Wisdom! A weekly post I send out every Thursday. These are designed to be short and sweet, a quick read to (hopefully) impart some sort of wisdom, or at the very least to get you thinking about something interesting.

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Does money lead to happiness?

Much has been written and spoken about on this topic. There are a bunch of common sayings and thoughts that are thrown around on it, with the most prevailing in my experience being something along the lines of:

Having more money doesn’t really make a person happier for the most part. If someone is living in poverty and stressing out because of an inability to acquire food or a roof over their head, then yes, money does help. But beyond a certain point once the basics are taken care of — it has diminishing returns and plateaus.

There are all sorts of studies and graphs to show something like this too, they usually look something like this:

But then there are the opposite as well. Other studies and charts that tell a different story, like this:

Like most things in life, I find that reality is much more nuanced than any single quote or chart could possibly indicate, though if I had to pick one, I would say the second chart is more accurate.

This is a very individual and personal topic and I can’t speak to anyone elses situation, but what I can do is share my perspective, which I think is valuable because this is one of those topics that is tough to really have an informed opinion on unless you’ve experienced all sides of the coin:

1. Struggling financially and unhappy

2. Struggling financially and happy

3. Wealthy with no financial struggles and unhappy

4. Wealthy with no financial struggles and happy

I’ve been in all of these situations (and have also bounced back and forth between them a bunch of times). My view has also changed over time — a few years ago I really did think money didn’t lead to happiness. Anyway, here’s what I think now:

If you’re struggling financially and it’s causing stress, then of course more money is going to help, and, generally speaking, lead to more happiness. That’s obvious and I don’t think many people disagree with that. However..

If you’re genuinely (clinically) depressed, absolutely no amount of money is going to help. You’ll just be depressed in a penthouse or on a yacht or sitting in first class or driving a lambo or wearing a rolex or whatever. In some instances, it is just more fuel to fire your depression: god how awful of a person must I be to have all that I have and yet still not be happy.

This is true whether you start out depressed and then make a pile of money and then are still depressed, or it can just hit after you’re already well off — nobody is immune, and money does close to nothing to help. A fancy therapist or pscyhologist or hospital or rehab center or whatever sounds like it’s gonna just fix and cure things, but that isn’t really how it works in my experience. Too many people are depressed and think money will solve their problems, and I hate to say it, but for the most part, I really don’t think that’s true.

If on the other thand you’re not depressed or struggling financially and you’re a generally happy and content person… then more money is basically just going to keep making things better! You’ll get to experience more life. More freedom. Do more stuff with the people you want. You will be able to use money to remove stressors and discomforts from your life and inject more day-to-day joy.

One of my favourite quotes on this topic is by Morgan Housel:

The ability to do what you want, when you want, with who you want, for as long as you want, is priceless. It is the highest divident money pays

That’s what money ultimately buys you, and that really does, to me, lead to a happier, more joyful, fuller, and freer life.

The nice thing is that what that figure is, is different for everyone. It is a lot more in reach than most people believe — both by earning more, but also by wanting less.

Both are paths to freedom and happiness, but only one is 100% entirely in your control.

So does money lead to happiness? Yeah, I kinda think it does. It’s not an exact science, and there are massive exceptions, but, it’s hard to disagree with the overall premise.

Money is not the only path to happiness though and that’s where I feel too many people get held up. One of the happiest periods of my life was when I discovered Stoicism and really applied that philosophy and way of thinking to every area of my life. I was tremendously happy and content, my days were full of joy, and I had a fraction of the money I have today.

As a contrast, I started this year out by saying this:

I wasn’t feeling happy at the time. I was numb and depressed and had no real idea why — but clearly having money or making money wasn’t doing much to help me out at the time.

I’m glad to say that I have found my zen again this year, and I am probably the happiest I’ve ever been. It’s been a journey, and the journey is still going (as it is for all of us), and hopefully by sharing and talking through the above I have added something of value to your journey too.

It’s a great goal to make a bunch of money, to find financial freedom for yourself and your family, and to be able to experience more of life. Having lots of money is awesome — it really is.

But, it is probably not the answer to most of your problems.

Money fixes money problems, it does diddly squat for everything else.

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