If you could wave a magic wand and change anything about your money situation, what would you change? Through all my research and experience, I’ve discovered three powerful reasons why your answer should never be “make more money.”
As a curious person, I love to ask friends, family, and clients this question. About 90% of the time, the answer is, “Make more money.” Mostly, this response is a joke or used to buy some time for a real answer. But there are times when it’s not a joke.
A Former Client
I had a client–let’s call her Andrea–who was a single mother, and she desperately wanted to manage her money better. Andrea wasn’t going hungry and the bills were getting paid, but there seemed to never to be anything leftover. The savings account wasn’t growing any larger, and she was at a loss of what to do about it.
In Andrea’s case, she already had her goals. She wanted to be out of debt and grow her savings. After working with me for a few weeks, Andrea realized there wasn’t any more room to scrimp and save without going completely insane. Her solution to make more money was only a part of the plans to reach her goals.
A Dangerous Path
Using your salary or a monthly income to compare yourself to others is a dangerous path to tread. Such comparisons steal your focus away from what is important and put too much emphasis on what is fleeting. I agree that making more money lifts you out of poverty and reduces a lot of stress, but there is a limit to what a higher income can do for your happiness and well-being.
Reason 1: Money Buys (Some) Happiness
In 2010, the Nobel laureate, Daniel Kahneman, and future Nobel laureate, Angus Deaton, published a paper studying the link between a household’s income and emotional well-being. The men were trying to help answer the age-old question, “Does money buy happiness?”
The answer turns out to be…kinda.
The researchers gathered data that suggest happiness does not increase substantially after a household makes beyond $75,000 per year. Below that threshold, more money is able to reduce a lot of stress and anxiety. More money buys a family food, shelter, safety, cars, insurance, and more. On average, a tremendous amount of stress and anxiety can be eliminated when a family makes $75,000 per year.
Above the $75,000 threshold, the question moves from, “Can we go on vacation?” to “Where do we want to go on vacation?” The stress and anxiety a family faces become more trivial as time becomes the scarce resource instead of money.
Reason 2: Achievement vs. Fulfillment
On a recent episode of The Tim Ferriss Show, Tony Robbins told a poignant story about what happens when you confuse achievement and fulfillment. As he has traveled the world hosting seminars, Robbins found that nearly everyone loves Robin Williams. His movies–whether dramatic or comedic–continue to delight a global audience.
Robin Williams had a hit television show and was a phenomenal stand-up comic. He won Emmy awards, Grammy awards, Oscars, and Golden Globes. He could make you laugh, cry, and believe in magic–all at the same time. Williams had millions of fans and millions of dollars.
Tony Robbins explained that there is a difference between achievement and fulfillment. Making more money is one way you can achieve more. It is a number that can be used to compare yourself to others. But fulfillment is about finding purpose and joy in the activities you do every day. Making more money never fills that void.
Reason 3: Money Doesn’t Solve Every Problem
Two of the richest people in the world are Bill Gates and Warren Buffett. As friends and occasional bridge partners, Gates and Buffett are worth a combined $136,000,000,000. With all that wealth, you would think all their problems would be solved. Not quite.
With the Bill and Melinda Gates Foundation, Gates and his wife are solving global problems. They are combating AIDS, malaria, and hunger. They are improving access to clean water, healthcare, and quality education. The foundation has achieved some success, but not all the world’s problems have been solved.
Warren Buffett has joined Bill and Melinda Gates on a mission to get wealthy families to donate to good causes. Known as The Giving Pledge, many wealthy individuals and couples have publicly promised to be philanthropic with their wealth. They are giving it away today and will continue to do so in the future.
The wealthy families who have signed The Giving Pledge will continue to grow their wealth, but their goals are above and beyond making more money. Their goal is to give away their excess wealth to help others.
Money can buy only so much happiness. A large bank account isn’t satisfying. And becoming the richest person in the world only solves your problems.
It is important to have goals and make plans. It’s okay to make more money but make sure it isn’t your ultimate goal.