Rethinking Wealth & Happiness

Reply Thu 16 Aug, 2018 11:51 am
I've been thinking lately about what it means to be in the various income classes and wondering what makes some people living in poverty able to be completely happy and content and some people who are wealthy miserable.

I had a discussion with my future father in law about my background growing in a poverty and my life now firmly in the middle class and how attitude on things have or have not changed over the last 20 years, and I came up with what I think I'd have thought would have made me happy when I was 18 versus what would make me happy now at 38.

18 years old - what financially would make me happy
1) a stable home and not having to move frequently (ex. 3BR, a/c)
2) a reliable car, nothing fancy but not going to break down often (ex. Honda Civic)
3) not living paycheck to paycheck; maybe $2-3k in an emergency fund
4) health/dental insurance
5) ability to save some money for retirement (say $100/mo)

Having these 5 things would have been more than my family had my entire life and I thought they would have been more than enough to make me happy.

20 years later, now that I have those things (and more) my financial-ish goals that I think will make me happy are:
1) a larger home in Chicago near Lake Michigan (3-4BR, 2Bath, 3 car garage)
2) buy a 2nd car (Jeep Wrangler) that I can drive during the summer; maybe a 2 seater convertable
3) buy my 3rd investment rental property (followed by a 4th, 5th, etc)
4) max out 401k
5) go on 2-3 week long vacations each year (1-2 internationally)

I often wonder why, now that I have the things that I know would have made me completely happy when I was 18, now are not enough to satisfy me.

I think my 18 year old goals could be achieved on roughly $35k/yr (which equals about $910 every two weeks) depending on where you live in the country. I would NOT be happy if my pay dropped to that level (even though 20 years ago I would have been).

I make over 3x that much now, and I wouldn't say my financial happiness is much greater. The marginal utility/happiness of getting a 2nd vehicle is tiny compared to going from 0 cars to 1 car.

I don't think making $150/yr would make me happier than what I make now. In fact I think my income would probably have to go up to over $300k/yr before I think my happiness would change much...and even then I'm not sure.

This gets me thinking about what the goals of our government should be regarding poverty. Should the government focus just on income or should they focus on outcomes. Meaning should the goal be to get every family at a set dollar amount or should the goal just be to get them to a basic level and anything beyond that wouldn't be a goal of the government (I know some people think the government shouldn't have anything do with fixing poverty or helping people; you guys can move on, this isn't the discussion I'm looking to have).

I know I've been rambling; just putting some thoughts down.

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Reply Sat 18 Aug, 2018 09:26 am
Quote maporsche:
I make over 3x that much now, and I wouldn't say my financial happiness is much greater. The marginal utility/happiness of getting a 2nd vehicle is tiny compared to going from 0 cars to 1 car.

I've been thinking the same thing for years. I said to a friend once that the more you make, the less happiness payoff you get.

The guy living on the street who gets a job which can pay for a furnished room has just increased his happiness tremendously, because now he doesn't have to get wet when it rains, he doesn't freeze when it gets cold, and he doesn't have to go find a place to go to the bathroom. That's a huge difference.

When he gets a slightly better job and can afford a used car, his happiness increases quite a bit, but not as much. Being able to get around to places without having to walk there is wonderful, but not quite as wonderful as getting off the street and getting warm.

When he gets his own apartment and doesn't have to share kitchen and bathroom facilities with other tenants, that's also a big step up, but again not as much. And so on for getting your own house, getting a second vacation home, etc.

By the time it gets to where you own your own house and a summer house, plus investment to keep it all going, you approach zero increase in happiness when you can afford to buy more houses. Although I don't think you ever hit negative territory.

I tried explaining this to a friend once and he looked at me like he's waiting for the Nice Men In The White Coats to pick me up any moment. So you might run into the same reaction here.
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