For a long time, my life goal has been early retirement— to acquire enough income producing investments to live off of by the time I’m 35. This way, I’m earning my own money without actually having to “work” for it. I thought that if I achieved this throughout my 20s, I would have the financial freedom to do whatever I wanted (aka hang out and travel).
This may seem like a selfish life goal, but growing up — money was always tight. Even in our middle class neighbourhood, I felt like we were hiding that we couldn't keep up with the Joneses. So from a young age, I’ve always aspired to having more money. Maybe not Crazy Rich Asians money, but a few million would be nice. (According to some experts, you need a million just to retire!) In my mind, that was what was needed for a big house, a couple cars, annual vacations, and long walks on the beach. (I should note, no math was involved when coming up with this figure).
To me, a few million dollars = not working = happiness ... which actually doesn’t add up because I really like my job and boss, and get a lot of satisfaction from it. Looking back, nobody really told me that money can’t buy happiness. In fact, I was always encouraged to earn more by my parents, teachers, and the media.
Fast forward a couple decades, and life is pretty good. At 32, I have a steady job I love with a great paycheck, a loving family, supportive friends, and long, pretty hair that bounces in the wind (thanks to my T3 Curling Iron and Living Proof products). Every once in a while though, I get a nagging feeling from a lack of purpose, There’s gotta be more to it than this. I call this life-satisfaction FOMO: Every time I get what I want, whether it’s a promotion, a condo, a car, I’m content for a short while, but it’s not too long before I want more. Why am I not happy with what I have?
Turns out, I’m not alone. A couple months ago, I read an article in the New York Times about a popular Yale happiness class called “The Science of Well Being.” It’s taught by Laurie Santos, a professor of psychology and cognitive science, and offered free through Coursera. My interest was piqued and my life-satisfaction FOMO kicked into high gear. This wasn’t just a class where you learned facts and figures to get tested, this was a class where you put what you learned into life changing practice. To me, this class sounded like a self help book, and I love self help!
Looking back, nobody really told me that money can’t buy happiness.
I was particularly curious whether this class would impact my personal relationship with money, and how it factors into my happiness. I’m not alone in making this connection: According to the American Psychological Association (APA), 72% of Americans find money to be a stressor. (Canadian statistics follow a similar pattern, with money ranked as the top cause of stress in Canada, according to the Financial Planning Standards Council.) Not having money has been a top stressor every year since 2007 and is a leading cause of divorce. At the same time, researchers also speculate that becoming wealthier makes you more isolated, which can lead to unhappiness. It seems like you can’t win here: Being financially unstable or being rich, either one can lead to discontentment for different reasons.
The Yale class goes over the misconceptions of what we think will make us happy versus what actually will. One of the first misconceptions listed is the topic of money. All this time, I’ve been encouraged to work harder and earn more. To sacrifice a little to get the next promotion, which I didn’t mind doing. It made me rethink my past choices: Is this what I really want?
In my personal finance journey, I learned you need to spend money to make money — I need to invest smartly and put money towards retirement to obtain a comfortable future. I know it’s important to diversify, and since I don’t pay attention to the stock market, I use robo-advisors to tailor my investments toward my risk-comfort level and automatically reallocate funds when there is a change in the market. However, recently I went against my own advice and invested over $2,000 in an individual stock, specifically MoviePass. The stock was declining. When it plummeted to $0.40, I did some research that said to “hold” or “buy” and decided to listen and buy. It couldn’t get much lower than that, right? (So wrong.) I bought it at $0.40 and then shortly after it dropped 99% to below $0.01. That could have been my ticket to Prague plus an Apple Watch. It still feels like I got punched in the stomach.
I was thinking about my MoviePass stock during the happiness class. Did I buy the stock to pursue happiness? If not, why did I feel so unhappy when it plummeted? In the class, Professor Santos talks about a study done by Nickerson et Al. where they surveyed 12,000 freshmen on how materialistic they are (1976). Then, they followed up with those students 20 years later about life satisfaction. As you may have guessed, the more materialistic you were as a young freshman, the more likely it led to less life satisfaction. Not only were you less happy, but you were also more likely to have issues with mental health. I was a little surprised, given how unhappy I am thinking about the Apple Watch I won’t buy. But in the long run, a device that tells me the time, my heart rate, and text messages, isn’t going to make me happy; it’s just a shiny new toy that provides short-term satisfaction.
I was thinking about my MoviePass stock during the happiness class. Did I buy the stock to pursue happiness?
In the past century, the standard of living for most humans has improved a lot. Even in my short lifespan, I can remember how it used to be in the good old days of my childhood. Is it odd that I don’t know anybody’s phone numbers except for the parents of my elementary school friends? However, according to the class, even with so many life improvements and conveniences, we are slightly less happy today than 75 years ago. What does this tell us? The takeaway is that cars, cell phones, and computers (i.e. the stuff we want) do not make us happy.
Why is this? It’s because we get used to these things. You live with it every day. The newness fades away with the rest of your stuff. So rather than spending money on things that you get used to, spend it on things that feel out of the ordinary, like experiences. It doesn’t even have to be a bougie Parisian getaway if you can obtain joy from your basic summer beach trip.
But what about investing money in order to get more money? My investment portfolio is a little unusual when compared to my friends because I invest in real estate. Whenever I think of making a big ticket purchase — such as a car or Invisalign — I think of the potential property down payment I’d sacrifice (my bottom teeth are still crooked.)
This class made me seriously ask myself: Why do I want more money? And in my head, my silly answer was, to buy more houses... which will make more money.... to buy more houses. I’m going around in circles. Per the class, more money doesn’t lead to more happiness, so for the first time I looked at my properties in terms of happiness. This is what I came up with: The happy memories from my first condo were created because I lived there, but similar memories could have been created if I rented. Another condo that was purely for investment, and it doesn’t bring me any joy — just memories on annoying tenants. But the last place I purchased, I split the down payment 50/50 with my brother. He lives there now, and is a grateful homeowner. I helped him achieve something that was difficult to do on his own.
Until I took this class, I didn’t realize that last property meant more to me than the others. It was helping my brother that made me so happy, much more than the appreciation and rental income that I receive from the others. Professor Santos went over studies by Elizabeth Dunn that show spending money on others brings more joy than spending for yourself, regardless of amount. Dunn’s study was first done in British Columbia, and then again in Uganda where the U.S. dollar stretches further. In both scenarios, the positive impact was greater when you spent money on others versus yourself. I know that sounds crazy (because I love buying things for myself!), but apparently being a kind and generous person actually makes you happier. I have personally experienced this, it’s just not what I think about when I’m making impulse purchases. When I think about the purchases that have brought me joy, like the condo I bought with my brother or even the loan that I gave my parents, money spent on others beats out buying myself a car or a computer. However, like many other skills, you have to continually practice in order to maintain happiness, and I don’t have the funds to buy more homes. Luckily, Dunn’s research showed that even buying a donut for a friend or stranger does the trick.
But there is one arena in which money does seem to bring some happiness: When it comes to our paycheques. Our emotional well-being will increase as our salary increases but tapers off at around a $75,000 salary per year (Daniel Kahneman and Angus Deaton). When you are making less money, that money goes towards food, shelter, bills and necessities, which greatly impacts well being. However, as you earn more than enough to cover that, the impact decreases. This means it’s not much different if you make $75,000 vs. $200,000 vs. $10,000,000. So rather than spending our energy to earn more and more money, you will be happier if your prioritize relationships, time, and gratitude.
Isn’t that easier than working harder? Enjoying a nice meal with a friend or painting a picture of your dog. Calling your grandma, because I haven’t done that in a while, and then thanking her for your existence. For some, it may be. It feels odd contradicting what our capitalistic society values: to acquire more money and power. But as I’ve been making baby steps towards these non-monetary priorities over the last several weeks, my mind has been slowly changing. Maybe Professor Santos is on to something?
So did this class actually make me happier? Is my life better after I took it? Did it change my relationship with money? According to the surveys that I took before and after the class, my happiness improved by about 10%, but it could have just been the day. After starting this class, I noticed that the guys that I used to be attracted to on Hinge became bro-ier than I remembered. Guys who care too much about titles (Directors or VPs of Strategy) and competing against their friends (rude), or talk about Yacht Week for 30 minutes started to annoy me. I’m not saying that I don’t care at all anymore, because I too want to earn truckloads of money. But it became apparent that my dating goggles acquired a new filter; now I see just a little past their earning potential. I am just no longer going to cut a guy slack because they have an impressive resume; they better be funny and cute too. And kind. (I’m still single.)
I also learned a lot of techniques to improve my well-being, like gratitude, meditation, and sleeping more. But these only work if put into practice, which isn’t easy. Since I finished the class, I started meditating, and I strategize my daily goal while on the stationary bike in the morning. (My daily goal is to sleep earlier, i.e., close laptop by 9:45 p.m., wash up by 10:30 p.m., and be in bed by 11 p.m.) In addition to my daily sleep goal, I am actively working on long term ones that build stronger relationships with the people I love, goals that don’t involve a monetary gain. So rather than being so bummed that I lost over $2,000, I can focus more on gratitude; I still have my family, food on the table, and a job that will allow me to recover that loss.
As someone who used to feel the “happiest” buying property, I am rolling my eyes as I type this — but, I am working on it.
Amy Fujisaki is an analyst, a CPA, and a frugal investor. She likes to invest because, to her, it is easier than working. She runs a financial blog for millennials called Yupster Finance.