facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog search brokercheck brokercheck Play Pause

The interesting connection between High Salary & Happiness

WRITTEN BY: Gideon Drucker, CFP® AIF® ECA


On a recent vacation, I read Morgan Housel’s latest life-changing book “Same As Ever: A Guide to what Doesn’t Change.” (I’m also in the middle of a 4,000 page about Ze’ev Jabotinsky, World War 1, and the Middle East but that feels less relevant here 😊).

Morgan Housel is my single favorite thinker alive...the way that he writes about the intersection of money, emotion, personal behavior by weaving lessons from history is simply breathtaking. I recommended & have quoted extensively in these emails from his last book “The Psychology of Money" (which is the #1 book recommendation I make when someone asks me for a book on finance/money) and I want to do the same here with “Same As Ever: A Guide to what Doesn’t Change.” 

The premise of this book, before I get into my biggest takeaways, is that while people obsess over what changes over time, it’s actually far more fascinating (and important) to understand the things that NEVER change: the way humans strive to be happy, our penchant to be greedy or fearful, our overconfidence and shortsightedness, the way we think about risk and tribal affiliations etc.

Here is one of my three favorite passages & a few of my musings as to how it affects our planning. 

All emphasis/bolds are mine.

Expectations & Happiness

“Your happiness depends on your expectations more than anything else. So, in a world that tends to get better for most people most of the time, an important life skill is getting the goalposts to stop moving. It’s also one of the hardest.

There is no such thing as objective wealth—everything is relative, and mostly relative to those around you. It’s the path of least resistance to determining what life owes you and what you should expect. Everyone does it. Subconsciously or not, everyone looks around and says, “What do other people like me have? What do they do? Because that’s what I should have and do as well.

Money buys happiness in the same way drugs bring pleasure: incredible if done right, dangerous if used to mask a weakness, and disastrous when no amount is enough.

Wealth and happiness is a two-part equation: what you have and what you expect/need. When you realize that each part is equally important, you see that the overwhelming attention we pay to getting more and the negligible attention we put on managing expectations makes little sense, especially because the expectations side can be so much more in your control."

Gideon’s Note: 

This reminds me of an interesting study that Michael Kitces put out that showed that people at every income benchmark ($100k, $250k, $500, $750k etc.) all believed that happiness and “enough” would be had if they simply made a little bit more money. In people’s minds, they were so close to achieving financial happiness...they just needed slightly more income. What’s the problem with this? EVERYONE THOUGHT THIS. So having “enough” income was ALWAYS slightly out of reach because the person making $750k thought the same exact way as the person making $100k.

The amount of income was not the issue.

It’s instinctive to compare our finances to the people around us: the cars they have, the house they live in, the trips they take...and I would say that this impulse is especially loud for someone that doesn’t have any other way of assessing their finances. Part of the reason that we are so committed to analyzing your finances each year is because we are comparing them only to your only specific financial goals. If you know that you are saving enough, investing enough, have enough insurance, and funding the kids’ college enough to reach your desired financial outcome, you stop looking for external validation (as much) or comparing yourself, mindlessly, to the people around you....because you start to realize that the only “comparison” that matters is that between your current self and your future self.

And if wealth is all “relative” (which it is...in my experience, your net worth has very little to do with your perception of your financial situation) and if happiness is just as much about realistic expectations as objective measures, than having a plan that lets you know you will have “enough” is worth it’s weight in gold!! Having enough becomes not about a dollar amount (to which more can always be had) but rather about funding your goals and living the life that you want.

Put another way, sometimes new clients will ask “How am I doing relative to your other clients?” And I would answer, genuinely, with another question, “If it turns out that you are on track to funding your goals, can keep living your current lifestyle, and have no financial worries moving forward...do you really care?"

Financial independence is about doing what you want, when you want, with who you want, for as long as you want....if that is our north star in your planning, than it becomes a lot easier to have realistic expectations and to ultimately have “enough”, something that is impossible if it’s just about an income or a net worth figure.

As always, I invite you to Book a Right Fit call with me here!