We’re often told that money can’t buy us happiness — and yet the vast majority of people on this rocky planet continue to chase it. Today, I’m here to tell you that chasing too much money is not just a fruitless effort but actually a downright harmful pursuit.
Table of Contents
The Two Camps
When discussing the age-old question of whether happiness is something that can be purchased, most people fall into one of two camps:
- Money can buy happiness. The more of it you have, the happier you’ll be.
- Money can only buy happiness to a point before experiencing diminishing returns
Both camps are wrong.
Yes, the people who think that the relationship between money and fulfilment is not only linear but exponential are clearly more wrong than those who believe in its diminishing marginal utility but both camps ultimately fail to see the full picture.
In reality, the relationship between money and fulfilment is neither linear nor diminishing.
It’s a bell curve.
The first camp would have you believe that the correlation between money and fulfilment is so absolute that getting richer proportionally leads to being happier. The second camp argues that your fulfilment plateaus as you run out of basic needs or creature comforts to spend money on.
However, there exists an inversion point where the correlation between money and happiness actually flips. Continuing to chase more money beyond the peak of that bell curve will see your life satisfaction decrease as your net worth increases.
What Causes the Inversion
There are many reasons why, past a certain point, an increase in money results in a decrease in happiness:
- Lifestyle Inflation. Most people raise their standard of living as their income rises. This not only inflates their living costs but also accustoms them to a certain lifestyle. As such, the mere thought of returning to a simpler way of living would make them shudder.
- Workaholism. Unless you’re born into wealth, the only way to earn more money is to spend more time working a job or running your business. This worsens work-life balance as you spend increasingly large amounts of time chasing money you no longer need.
- Liabilities. Upgrading to a nicer car or bigger house often entails going into debt. The richer you get, the more debt you’ll accumulate in the form of car loans and mortgages. These liabilities create pressure to maintain or grow your income to pay them off.
In other words, the hedonic treadmill starts hurting your feet more the longer you run on it.
Avoiding Inversion
It may seem counterintuitive, but diminishing returns is actually what you want.
Once you get to a certain point of financial means, that’s your cue to stop chasing money and decide that enough is enough. Sufficiency isn’t something you reach; it’s a declaration you make.
To be clear, I’m not suggesting that you artificially limit your net worth by frantically spending on things you don’t need or giving a small fortune to charity (though the latter wouldn’t be the worst idea).
This is merely a reminder that if you continue chasing money past the apex of the bell curve, it won’t make you any happier and will actually do the exact opposite.
“The more we have, the more we want — and the less content we are” ~Vicki Robin
Don’t endlessly chase wealth under the misconception that more money always means greater fulfilment. Don’t go into debt just to give yourself an excuse to grow your income beyond any reasonable finish line.
Instead, figure out what enough means for you and stop there.
What’s Enough?
Everyone’s point of sufficiency is different but most people overestimate how much that actually entails. For me, enough means paying all my bills on time and having some money leftover to go to the movies while squirreling away a portion of each paycheck for retirement.
I’m not advocating for the adoption of minimalism but rather the rejection of excess.