Is Getting Rich Worth It?
scotthyoung.com
scotthyoung.com
And, as it works out, there's a recent study that backs this up.
"Beyond $75,000 in the contemporary United States,
however, higher income is neither the road to
experience happiness nor the road to relief of
unhappiness or stress, although higher income
continues to improve individuals' life evaluations."
My (totally wild-assed) guess is that an income of $75,000 is, on average, enough in the United States to always satisfy the first and second levels of Maslow's hierarchy of needs (http://en.wikipedia.org/wiki/Maslows_hierarchy_of_needs), at least as far as money can address the enumerated needs.
The article mentions that the $75,000 is per household, and "About one-third of U.S. households had incomes above $75,000, according to the U.S. Census Bureau's American Community Survey. The average household income was $71,500."
That number varies quite a bit based on location within the US, but it's good to be reminded that one person's "barely enough to make ends meet" salary is something that 2/3 of US households don't reach.
(I vaguely remember that after that article made the rounds originally, someone posted a link here to an article that adjusted the $75,000 based on cost of living in a long list of different cities to see what number would (theoretically) better apply to you)
For many years, the consensus was that wealthy people in a given society were happier than the poorer people in that society... but that wealthy societies weren't happier than less wealthy societies (as long as the mean income was over $5000/yr or so). This was called the Easterlin Paradox.
Then there was some research suggesting the wealthiest people in any given society were not happier than average for that society.
But the most recent research I've seen says that wealthy societies are happier... and relatively wealthy people in any given society are happier than average for that society.
In any case, it's a very tough question to answer... and it's been studied heavily enough that you can find research supporting almost any possible conclusion.
Paid off the house - So housing expense consists of property taxes, insurance, and utilities.
Saved enough for kids to attend college - So you know that if you die tomorrow your kids will at least have had the chance to get through school without crushing student loan debt. Note that this has shades from 'can go to some college', to 'can go to any college they get into'
Have enough such that spending 4% of it per year is enough to pay your basic bills (those property taxes, insurance, and utilities we mentioned earlier, and food to eat)
At each stage your tolerance for risk at what you are doing failing, goes up. So if you are at level 3 and the company your at explodes or your startup has to roll up. Its sad but its not like you're out hustling for the next job, you can reflect on what went right and what didn't and plan your next one with that in mind.
Of course there is completely different kind of 'Getting Rich' and it is most closely associated with people whose goal is "to be rich" rather than "to cure malaria" or "to feed the homeless" or "create the next parallel processing language at scale." I saw a number of those folks growing up in Las Vegas where you could go from having $1,000 in the bank to having a million dollars, in the clink of a slot machine's wheels. Lotto winners can be these people too.
Those people freak out. They try to "live like rich people" do, which is usually some weird mash-up of the Beverly Hillbillies, 90210, and Dallas. They buy a really fancy car, and a flashy house, they add huge on-going costs into their lives (pool maintenance, vehicle maintenance, catering services). They have no idea what managing a chunk of cash like that entails so they dump it all in their local bank's "wealth management" group. They insist on getting check writing (or worse debit card) access to it so they can pay for something whenever they need to, completely unaware of the tax consequences of having to sell securities to cover the cash demands. Surprisingly or not, they give a lot of gifts to people. Including people they probably shouldn't.
Those folks burn through the windfall faster than a fire at a month old Christmas tree lot. When they run out, they usually declare personal bankruptcy, try to get people sued for putting them into the poor house, often ask for gifts they gave to be given back, and sometimes never recover their balance. For them, "Getting Rich" was the worst thing that ever happened to them.
Then there is "rich" where you have 100MM+ in the bank to draw on. Note that 4% of 100M is 4M$/year or 300K/month. If you have that level of stability then you can actually sustain a lot of the stuff that the crazy people burn out on. You can own a jet with a pilot to fly you around, and the parties and gifts can go on for essentially forever. You also need to hire security to protect your family from being kidnapped, etc etc but that isn't a very common level of 'rich.'
Years ago I had a "side job" on weekends that paid roughly 2/3 of my "primary" job. Working on my weekend job felt stress free and enjoyable, as compared to the daily Monday thru Friday grind. I attributed a significant fraction of the enjoyment I felt in the weekend job to the fact that I didn't really _need_ the job. (Sure, it was _different_ work from the M-F grind, too, so that also factors in.)
My "getting rich" goal involves being more reliant on my investment income than my consulting income. My experience with that old weekend job makes me believe that, as my reliance on consulting income fades, my enjoyment level with the consulting work will grow. Having more freedom to be selective about work I take on, being able to do more charitable and volunteer work, and being able to work on fewer jobs simultaneously are all goals that I know will make me happier and decrease my stress level.
How would you answer the question 'does technology make people happier?'. Surely, having (say) a computer is not what life is about? When you stop to think about it though, having a computer is a gate to all kinds of things - communicating better with friends and family, a more flexible (and hence less stressful) work environment, and so forth. Does a computer necessarily lead to these things? Of course not. Is it a huge enabler for these things? Absolutely. Should you want a computer? In the vast majority of cases — yes. There's a qualifier though: the happiness you get out of a computer depends mostly on what you do with it, not you owning it.
Bringing the discussion back to money. Does it necessarily lead to happiness? No, but it sure opens a lot of opportunities. The same qualifier also applies: the happiness you get out of money depends mostly on what you do with it, not you owning it.
Should you go after money? That's a question that probably has no universal answer. My father likes to jokingly say: 'it's better to be rich and healthy than poor and sick', and he has a point. All things being equal, it's hard to see how money could be a bad thing. Problem is, all things are not equal. If what you want to do with your life leads away from money, then doing what you want to do surely matters more than being rich.
If you do choose a path which will not lead to money however, don't try to belittle money's benefits by saying things like 'money does not make people happy'. That really is not the point. Money is a wonderful enabler of opportunities, and we should recognise that so that we can make better decisions.
I thought about $100M in the bank and I realized that it would solve only one problem in my life: The problem of not driving a Ferrari. Now frankly, put it this way, it sounds like a pretty idiotic, petty "problem" to have. There are certainly many other challenges I face every day that are worse than "not driving a Ferrari", pretty much anything, relationship issues, balancing time with my kids, figuring out what I really want, etc - none of these other things would be any different with money. In fact money and more worldly possessions would be yet another time sink. It would have to be managed, things would have to be managed, managers for the yacht and the 5 houses would have to be hired and managed, and fired, and so on. Likelihood of having more time to do whatever: Low.
Maybe Id get a bigger house - but I am on the verge of building a new house anyway and its going to be big enough until the kids move out. Also "not having a bigger house" is not an issue I think about very often. Or ever. Same with not having a super yacht.
Do you want to change the world? You dont need money. If youre telling yourself that you are just making excuses. I guess maybe that is why we all strive for money - because we can very conveniently tell ourselves that we would be these super people if only we had a bit more money. Yeah right. Stop making excuses and start living your life.
Being rich means you have the freedom to do whatever you want.
Cognitive science suggests that the answer to this is also no.
I've known many people who were not rich who had a great deal of freedom to do what they wanted. Sure they couldn't buy a ferrari every week, but they were able to travel, explore, move around, do creative work and be pretty happy doing it even though they had almost no material wealth.
We make choices to take on responsibilities and to follow certain paths, but it's a double-edged-sword. There's something to that quote from 'Fight Club': "The things you own end up owning you".
If you do want to change the world, it means you have to comprehensively persuade perhaps ten or twenty fewer people of equivalent net worth than you would otherwise have to.
My impression is that next to nobody wants to change the world earnestly enough to make inroads in either persuasion or fundraising. The pity of it is that this is also true for the vast majority of people who have managed to become very wealthy by their own efforts - they have no idea what to do with all that money other than keep on trucking with the process that's making it. See the general flailing around for by-the-numbers Big Charity, for example, among those with enough wealth to be brand names.