Strangely after Uni and backpacking my earning potential increased dramatically but my happiness definitely plateaued, so looking back I wouldn't tie happiness to money since I was happiest when getting by without much of it.
Now in my early 40s I rarely worry about money and my main sources of happiness is definitely my kids. I'm at a loss at what I could do to increase my happiness other than focusing on keeping a happy home and spending time watching my kids grow up.
One life observation I'd share was when I was young and earned little I used to think earning more would increase happiness and therefore couldn't wait to finish Uni and start working professionally, but money didn't end up being the main source of happiness, being young and being able to spend lots of time hanging out with friends was when I was happiest. So my advice to my young self would be: cherish your youth and focus on building and maintaining strong relationships.
I have plenty of money but what I do miss the most is hanging out with my friends all day like we did in our teens. Unfortunately that routine is almost impossible to recapture until we're... 70? If we're lucky not to have drifted apart by then.
Like the tide it's unsurprising but can still take you by surprise - your happiness is so tied to other people's choices. For instance, I don't know how old your children are but it's almost guaranteed that as they get older, they'll spend less and less time with you.
To me that suggests a playbook of sorts: Enjoy this present moment but invest a bit of your energy in preparing for the next phase. Cultivate a few relationships that are independent of your kids and your spouse. Make sure you can fill the voids as people fade out of your day to day.
Not really strange. Why would something like "earning potential" correlate possitively with happiness?
Especially if for it to increase you also needed to spent time doing stuff for other people, indoors, attend boring meetings, day-in, day-out, lose touch with friends, forego activities, and so on.
Earning only makes things better when lack of money was a real concern (e.g. if you didn't have shelter, food, etc). But I presume you those that during Uni/backpacking years.
Many people (esp. if you're on min wage) think accumulating wealth increases happiness as TFA suggests and as I did when I was younger. But as I pointed out with the benefit of hindsight to my younger self: money isn't the main source of happiness, prioritize enjoying your youth and friendships instead.
But
F** all that. Somehow we're obsessed with optimizing our lives with ever new ideas how we can have the best life, with the best health, the most money, most free time. We all work with computers and optimizing algorithms, or click-through-rates so we apply these techniques now to our lives and compare ourselves to others. Does someone online has better weights, should I still eat fruits or does this spike my insulin too much. Good god, just live your life without constantly checking on others, it's perfectly fine to live a basic life, it's perfectly fine to waste your time. Yes you don't have unlimited time, but you will be relieved and relaxed without having to self optimize. That doesn't mean you have to be unhealthy and miserable, if you want to change that it's fine, but do it on your terms (The author says, "just stop eating much", which is just arrogant, some things are hard to change and take years of willpower). Will you regret something at the end of your life? Maybe, but you lived your life on your terms and didn't ran from guru to guru. Kierkegaard said the following
``` Marry, and you will regret it; don’t marry, you will also regret it; marry or don’t marry, you will regret it either way. Laugh at the world’s foolishness, you will regret it; weep over it, you will regret that too; laugh at the world’s foolishness or weep over it, you will regret both.```
As a 30 yo person with health issues (nothing really bad, but not cool either), I totally acknowledge with the idea that staying healthy is the best gift you could do to your kids and I’ll work hard to give that to my son.
As on money, I have the feeling that the thing you must solve is finding not only your house, but the house you’ll love, so you can invest all of your « useless » extra money in it (extending it, renovating it, decorating it…)… It’ll only increase your house value while making you happier.
This is very misleading. Yes, if you spend $1 renovating your house, perhaps your house value has increased by $0.50, but you've also lost $1, so financially speaking, you've made a loss. So in the context of investing, it's misleading to state that renovations increase your house value.
It may be theoretically possible to make a profit with renovations, in some very specific conditions and with extraordinary skill, but the vast majority of renovations are not profitable.
I'm just saying investing in your house does make your house value increase, not that it's financially interesting. And in an ideal situation, I would anyway never sell this "house I love".
The point i'm trying to make is : if you put your extra money on your house, it's never going to be a total loss and if you do it well it can increase your happiness by a lot. It's a personal thing but I think that feeling well at home (not only materially, but that's another point) is the foundation of stable happiness.
Don't delay.
Oh no! The tragedy of not spending everything you own!
Sarcasm aside though, almost everyone will mispredict how much they are likely to earn in their lifetime and the opinion of your friend falters a bit in the presence of significant randomness. Estimating your future earnings too low is not really a problem, estimating too high can lead to serious problems when faced with unexpected expenses. Since there is only limited downside to being conservative with debt and serious downsides to being too extravagant, I don't think that potential high-earners are being all that irrational by avoiding debt.
Of course, if you are psychologically a "maximizer" then you might want to skate closer to that edge and risk falling off in exchange for potentially squeezing every last dollar out of your life. If your psychological profile is closer to being a "satisficer" then avoiding risk to maintain your current lifestyle is probably better for you. In personal finance, no solution is correct for everyone.
Well, the trafic part is the spending your precious time accumulating money you haven't spent - which turns into totally useless when dead.
I really don't think this contributes at all to the conversation. We're not talking about going out and blowing your paycheck. If your total lifetime earning over 40 years of working is $1.2M, and you only spend $1M over your entire lifetime, you could have just worked for 16% less time and enjoyed the time. Otherwise what was the point, just trying to maximise the number??
Another big factor in this is Change jobs often is not a workable strategy here. Anybody with regular focus on their health and investments will tell you. You just can't raise money for making big investments(like above) when you don't have a stable job. Same happens with health too. Unfortunately most people often equate rapid changes to a process with progress. Whereas big progress is often a result of consistent improvement to a single process over long periods of time.
In an economic system with Inflation, increasing responsibilities and biology making aging and being healthy hard. Hoping to save up to buy some thing later is strategy that just doesn't work.
Simple reasoning tells us you need to go into debt a lot, early and often.
For example, you can temporarily "retire" for a few years and do what you want without pressure. Either directly or indirectly, I think having debt limits you to the path & earnings you've "forecasted" - the opposite of freedom.
At least that's the case for me.
Not everyone strives to min max their time to the extent that they _can't_ be working while doing what they want. Assuming you're a white collar worker in tech, there are plenty of opportunities for you to make oodles of money, while having a balance between a job and life. Given the choice between being mortgage free in my 30s with an apartment in a cheaper part of town, and being able to quit work to travel/work on my carpentry for 3-5 years, or having a balanced life over the next decade, spending time and having experiences with family & friends, I'll pick the balanced lifestyle every single time.
Future generations may not be offered a choice in this. After all, why should student debt start at age 18 and not age 5? Ouch.
I found it very difficult when you try to factor in compensation growth and the time value of money.
If I choose to save more money now, that benefits me more in the future because it has more time to grow. On the flip side, saving more money now means less money to spend on enjoying myself and I can't get my youth back.
For compensation growth, if I knew that my compensation would grow by x times in say, 10 years then I could plan accordingly and save less money now because I know that I will be making a lot more money in the future. However, I can't know that so how do I take this into account?
The result of this was me coming up with a very boring answer: save 30-40% of my net income (Equity comp makes this more like 50-60%) and make no assumptions about compensation growth. I'm naturally quite frugal so this isn't difficult, though I think that this is probably overkill and I should loosen up my spending a bit.
I've considered this before, but it feels very unnatural to bet on my compensation increasing drastically even though I can see that it's very possible if not likely.
> Make that extra money work for you. Invest into diversified index funds so you can use the power of compound interest, and use that “free money” in the later stage of your life. The earlier you invest, the better it is.
It surprised me because what prompted me to think about the other points the article makes was realization that compound interest is a lie.
I've written about it previously here[0][1]. It's not that the math of compounding is wrong - it's that, in terms of saving money in our economy, a typical person is unlikely to gain any meaningful amount of money through compounding. The rates are too low. If you're lucky enough to front-load your savings early then maybe you'll get something useful out of them... around retirement age. Which is, like the article points out, not exactly the best time to enjoy your wealth.
This isn't to say you shouldn't save or invest your money - just that you shouldn't rely on interest rates to do anything for you. There are opportunities to multiply your wealth faster - if you're willing to shoulder the high risk of losing it. But low-risk options available are so bad that mentioning compound interest is just... noise. Distraction.
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At the same time, there is no need to spend money in a stupid way right now. Defaulting to a frugal mindset in most domains will buy more free time later.
Simple way to understand this is, 50s is your retirement decade. Therefore:
1. When you are 40, your resume has just 10 years worth value.
2. When you are 30, your resume has just 20 years worth value.
..
Sometime back, a manager advised me the surest way to get promoted is do the job of the level your are aiming for. Same applies to retirement as well. You can't retire unless you are already retired in some way. Else you will just continue far into your 50s without retiring. Then you will be forced to.
Given all this FIRE is definitely a great strategy. The other point on health is very good advice as well. In fact every hour post age 35 spent on things on Leetcode instead of swinging a Kettlebell in many way is wasted time. More importantly in many cases might even give negative returns(Obesity, Diabetes etc).
None of this applies to the outliers of human race of course. But for most folks out there with ordinary lives. Retirement planning and health care should be the single biggest priority of your life through your 20s and 30s.
Wish somebody had told me this before I came into work this morning. I didn't realise I was already retired.
Whether you like it or not. You can't stop age, you can't stop biology.
You are stagnating in your job, when you should have retired.
But the underlying assumption that having more experiences (outside of work) leads to more happiness I believe to be somewhat false. It of course depends on the person, type of experience and definition of hapiness.
I have this feeling too.
Or, should I say, maybe the concept is right in theory - the brain is better at remembering novelty, and events associated with strong emotions. But "buy experiences, not things" is something that has a meme status today, and I cynically suspect it's not accidental - that there is an ulterior motive to it.
"Buying things" is predominantly realized through buying products. "Buying experiences" is predominantly realized through buying services. You can derive value from a product you own indefinitely (at some point it'll wear down). But a service is a one-time deal, you have to spend again to get more. The mindset of "buying experiences" thus encourages a service economy and creates a recurring revenue stream for service providers.
Now I tried it and don't see the reason to. I mean there is no rush. Regular house/flat will give you 80% of value of multimillion dollar mansion will give. Cars are all +- the same given that you can drive only so fast. Travel when you need to work is too hectic but if you are retired it can be very inexpensive. In order to push past this middle level it is not clear what to do i.e. difference between 1M and 10M is not that big in terms of your lifestyle but ability to accumulate so much is completely different beast.
The true happiness comes from other things: friends, family, free time, the business you love, curiosity etc.
UPD: This is all of course if you were able to get into good career/small business path. If you are stuck with some low-pay job you still have some work to do to jump to another industry.
I can see why one has the urge to downvote this though. It has to do with “ruining the positive atmosphere”. Instead of offering alternative view, heck, even just a simple encouragement, some people just default to knee jerk reaction of disapproval.
-- John Lennon
