Wealth Creation and the Secret to Happiness

Posted on 17. Jan, 2012 by in Wealth Essentials

secret to happiness

Money can buy a lot of things, some say it can even buy happiness.  Despite the negativity that is generally associated with comments like this I tend to agree.  Money is a necessary part of life, it is how we trade services and resources in the world.  I’m not sure who said it, but a there is a saying that encompasses much of this thinking:

“Life is like a shit sandwich, the more bread you have, the less shit you have to eat”

Definitely a cynical view on life and probably not really a mantra to live by, but rather memorable all the same.  Everyone needs money in one form or another and having more can often buy power, but is power really happiness?

The happiness equation

I know that I said I agree that money buys happiness, but this is only true to a point.  My personal view is that sufficient money buys less hassles.  The happiness part is actually up to you, having fewer money hassles just helps reduce some of life’s stresses.

Let’s face it, money can cause tension.  If you don’t have enough money, you feel unhappy and restricted, it can cause relationship problems.  If you have too much money you can have similar feelings and problems, you start to worry about losing everything that you have gained and become enslaved in a similar way to having none at all.

OK, so I don’t personally suffer from having too much money, but comfortable was a state that my wife and I did achieve at one stage.  As we are about to go back to one income at home it is likely that comfortable is going to take a back seat for a while, but I’m working towards getting there without my wife and I needing to work full time in the future.

I’m not a math nerd, so I can’t present you with a complete equation here (feel free to help out though), but my theory about money can be summed up with a pretty simple bell curve.

Happiness curve

Different people have different needs, so the actual figures will vary accordingly.  Your job is to work out what you need to be comfortable and happy.

This is your goal amount weekly, monthly, yearly or as a grand total.  How you choose to reach this is also up to you, my personal plan is to find ways to do it that don’t involve working for someone else five days a week.  This should free up time for me to do what I want with my family.

If the idea appeals to you, you might like to subscibe to see how it goes, I promise to share what I learn along the way.

How much money do you need?

While there are certainly limits to the amount of money that one needs to survive and some make do with far less than others, everyone requires some money to live.  Past a certain point though you are just spending money on the things you want, which is fine as long as you know the difference.

Personally I’m pretty interested in the ‘wants’ as well as the needs.  I want to be able to dine out when I feel like it, go on holidays, buy things for my family and friends and generally feel like I’m not heavily restricted by my finances.  As a result, the amount I need in order to be happy may be higher than some people, but I’m guessing not as high as others.

I don’t have a magic number or mathematic formula, but knowing what you need is very simple to work out.  Your income just has to be more than your expenses (not the same, that will get you into trouble when surprises crop up), plus you have to factor in the cost of fun as well.

Happiness actually has nothing to do with money

To be honest with you I’m already very happy.  I have a beautiful wife and daughter, with another child on the way.  I have my own home, investments and zero consumer debt.  Things are looking pretty good.  I’m still a long way from being financially free, but I don’t really mind if it takes me a while because I already feel wealthy.

Yes, it would be nice to be less restricted by my finances and especially good to have the choice to work on the things I want to, rather than the things I have to, but I’m getting there.  To me wealth creation is so much more than just money which is why I think anyone, in any position can be wealthy if they chose to be.

What makes you happy and how big of a role does money really play?

Image by Bob.Fornal

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21 Responses to “Wealth Creation and the Secret to Happiness”

  1. Emily Hunter

    17. Jan, 2012

    It’s amazing how money affects every little bit of our lives, though. I think that you have the right attitude with seeking contentment with your cash, rather than pushing and stressing yourself out. Thank you for the post!

    • Money Cactus

      17. Jan, 2012

      Hey Emily,

      My pleasure, thanks for the comment.

  2. krantcents

    18. Jan, 2012

    I agree money has nothing to do with happiness. You need a minimum amount of money to survive, after that it really doesn’t change much.

    • Money Cactus

      18. Jan, 2012

      it is pretty simple isn’t it? More can be nice, but not if it detracts from what is actually important.

  3. Pam at MoneyTrail

    18. Jan, 2012

    “Sufficient moneys buys less hassles.” Couldn’t agree more. A certain amount of money can relieve stress and provide security but too much comes with it’s own set of problems. I have seen families become divided and fight over money.

    • Money Cactus

      18. Jan, 2012

      Yes, I have seen it happen too, which is why I really like the concept of overall wealth rather than just being rich. It is a lot more rewarding if you take a bigger picture approach.

  4. 101 Centavos

    18. Jan, 2012

    I don’t know that we really need a lot to get by in retirement. As long as basic needs are met, house paid off, and some spare cash for some trips…

    • Money Cactus

      18. Jan, 2012

      That is pretty much where I am heading. It all becomes a lot easier if you just keep it simple.

  5. Money provides opportunity but does not mean happiness. For me, if my basic needs are looked after and I can indulge in my passions (like traveling) then I am happy. I don’t need tons of stuff to have a smile on my face.

    • Money Cactus

      21. Jan, 2012

      I totally agree, passion is so important to your ultimate happiness.

  6. Juan

    20. Jan, 2012

    Having too much money really can be a pain. It is easy to think that life would be carefree with a couple hundred million in the bank but the reality is not as such. The truth is that when one has lots of money knowing who your true friends are can be really difficult. Also, with too much money one can easy fall into a cycle of fear and stress where the thought of losing everything become all consuming.

    • Money Cactus

      21. Jan, 2012

      I think you are bang on Juan. I don’t need to hassle of a lot of money, I just need enough to be able to do what I want!

  7. JP @ Novel Investor

    20. Jan, 2012

    Money is a just a tool that provides a means to stuff and experiences that bring short term enjoyment. It’s certainly not necessary for a happy life. There is also the more money, more problems equation.

  8. UltimateSmartMoney

    20. Jan, 2012

    I thought more money helped with happiness and it does. But the problem is that it is short lived. There is definitely other factors like health and relationship. For those who are married, having a healthy relationship with your spouse is key. As we raise our kids, I find it more difficult to maintain my strong relationship with my wife. I am trying to go out on more frequent dates without the kids. I heard it really helps…

  9. Barbara Friedberg

    22. Jan, 2012

    I really like these types of articles. Jean Chatzky did some research which suggests that after a threshold of $75,000/year is reached, there is not much of an increase in happiness! BTW, love the graph.

  10. youngandthrifty

    23. Jan, 2012

    I love that picture of the heart jam on the piece of bread. Did you take it?

    I also like your equation- so true… “Mo Money Mo problems”.

    I’d like to be in the middle, where I’m comfortable and don’t have to stress out and struggle.

    • Shaun

      23. Jan, 2012

      Unfortunately I didn’t (it came from Flickr), but I really liked it too. I think the middle would be a fantastic place to be, just have to keep heading in that direction!

  11. The Jenny Pincher

    24. Jan, 2012

    Love this “sufficient money buys less hassles” and totally agree! Money definitely does not buy happiness, happiness is a state of mind.

  12. Money can’t buy happiness but it sure can make things easier! Money allows you to have choices that you would otherwise not have.

  13. Lisa @ Cents To Save

    31. Jan, 2012

    Right now, “normal” would increase my happiness. But, each day is a gift and I am grateful for what I have. There is still work to be done on reducing debt, and getting back to normal… but we will get there.

  14. There was a survey published late last year that actually put the “cost” of happiness at about $75,000 – that was the amount of money economists and psychologists said you needed to make to feel happy and secure in your finances; any more than that was just superfluous.