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How do you find happiness with money?

Written by William Cowie - 6 Comments

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An acquaintance of ours returned from a missionary trip to Tanzania recently. As these cross-cultural encounters go, each side had plenty to share with the other about their lives. Toward the end the trip, she asked one of the locals what stood out from everything the Americans related. It was that there are people on this earth who actually spend money to walk. (He was referring to Americans either buying treadmills or paying gym memberships to walk on them.) They (everyday folk in Tanzania) have no choice but to walk miles every day, and they simply have a hard time imagining walking as a luxury for which one would pay serious money.

That story illustrates, for me at least, that almost everyone living in America is among the top 1 percent of the world’s wealthy. This topic of the 1 percent drew a lot of headlines and attention earlier this year, highlighted by the publication of Thomas Piketty’s book, “Capital in the Twenty-First Century.” (Even before the book’s publication, I even had this to say about the topic.)

The outcome of the recent mid-term elections has been dissected and analyzed by hundreds, all striving to put a fresh spin on the events. Not surprisingly, one of the streams of comment has focused on the campaign contributions of the super-rich, questioning whether inequality is allowing a handful of people to dictate your life and mine by buying legislation, if not just buying the legislators themselves. One of the more interesting books on that subject was published a few weeks before the elections: “Billionaires, Reflections on the Upper Crust,” by Darrell West, a big shot at the Brookings Institution, who took a look at the lives and politics of the richest thousand or so Americans.

I haven’t read the book yet, but I saw an extract which lists the richest Americans and what they are doing to influence politics. I also came across two well-written reviews. One, by one of the most popular business authors of our time, Michael Lewis, was on the “Billionaire” book, and the other one was by one of the “extreme inequals,” Bill Gates, of the Piketty book.

Mr. Gates posted a long article on his personal blog, in which he reviewed “Capital in the Twenty-First Century.” In it, he agrees with a few of Mr. Piketty’s general points:

  • “High levels of inequality are a problem — messing up economic incentives, tilting democracies in favor of powerful interests, and undercutting the ideal that all people are created equal.
  • “Capitalism does not self-correct toward greater equality — that is, excess wealth concentration can have a snowball effect if left unchecked.
  • “Governments can play a constructive role in offsetting the snowballing tendencies if and when they choose to do so.”

He also agrees with the fundamental point that taxation of labor is disproportionately high, compared to tax on capital. Not only is income by wage earners (ordinary people from the 99 percent) taxed more highly than income from capital, corporations paying out those wages are taxed on those wage expenses as well, while they pay no taxes on interest or dividend payments. He then goes on to propose a system of taxes not on wealth (as Mr. Piketty advocates) but on expenses. In his defense for the tax structure he proposes, Mr. Gates touches on three things people can do with their wealth:

  • Invest it into their businesses to grow
  • Give it away through philanthropy
  • Spend it

That brings us to the Michael Lewis review of “Billionaires.” In it, he tells the story of a tennis coach who held a tennis camp in New Hampshire for Eastern kids of wealth. Every morning, there would be one box of cereal for every kid, some nice and some boring. The kids would rush and jostle to get the good stuff, and the losers were left with the stuff nobody wanted. By the third morning, the coach held a meeting and told the kids, “When I’m in the big city, I never understand the faces of the people, especially the people who want to be successful. They look so worried! So unsatisfied!” Here his eyes closed shut and his hands became lobster claws, pinching and grasping the air in front of him. “In the city you see people grasping, grasping, grasping. Taking, taking, taking. And it must be so hard! To be always grasping-grasping, and taking-taking. But no matter how much they have, they never have enough. They’re still worried. About what they don’t have. They’re always empty.”

Mr. Lewis then lists numerous studies which all show the same thing: People with way more money than they need are perpetually unhappy. But, worse, not realizing that having so much more than others leaves them unfulfilled and unhappy, they keep looking to more money as the answer to that emptiness. It’s like someone adrift at sea, drinking sea water when they’re thirsty, only to discover that it leaves them even thirstier. After that, they keep thinking if they only drink even more sea water their thirst will go away.

The truth, as Michael Lewis pointed out, as corroborated by numerous studies, is that the money given away brings more happiness than the money strived for. “A … study, by a coalition of nonprofits called the Independent Sector, revealed that people with incomes below twenty-five grand give away, on average, 4.2 percent of their income, while those earning more than 150 grand a year give away only 2.7 percent.”

How about you? Money-wise, what brings you the most happiness?

Published on November 26th, 2014 - 6 Comments
Filed under: Self Employment

About the author: is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!

Comments (scroll down to add your own):

  1. Wow! Nickel, that’s one of the best articles I’ve read in a very long time, and you’re absolutely spot on about the “more money doesn’t mean more happiness.”

    I’ve always decided that if I ever win the lotto (which I never play – go figure)getting millions as the prize, I would become a philanthropist. I’ve never strayed from that thought.

    I truly believe that doing something positive, such as helping others – be it animals, environment and people – would make me far happier than buying a huge yacht, joining a country club of the elite and buying a manse on hundreds of acres. Setting up a foundation and divesting that money for those reputable charities would be my dream come true.

    Now, all I need is to go play the numbers. LOL

    Comment by Anonymous — Nov 26th 2014 @ 11:30 am
  2. Fantastic and thought provoking article. Yes, even the poorest in the US are among the wealthiest in the world.

    I think the temptation is to believe money equates to happiness, when it doesn’t. You either learn to rule it, or it rules you. The goal should be to do well to do good, and do better (each year) to do more (each year).

    Comment by Anonymous — Nov 28th 2014 @ 10:35 am
  3. Great article and, just as Thad said, thought provoking. In my case what makes me ‘happy’ about money is being able to put a roof above our heads and providing for our daughter. If we can give her what she’ll need, we’re OK.

    Comment by Anonymous — Dec 7th 2014 @ 5:36 pm
  4. Money is not permanent it makes you unhappy sometimes.

    Comment by Anonymous — Dec 22nd 2014 @ 12:34 am
  5. Money cannot buy happiness but it can buy you a lot of other things. I believe that after a certain amount of income you make, your happiness in relation with money sort of remains stale. Meaning anymore money you make won’t necessarily make you more happier.

    Comment by Anonymous — Jan 18th 2015 @ 1:42 pm
  6. Money is just a tool for me and it must be used to make life easier and help others. If its used for anything else then you lose the real value of money.

    Comment by Anonymous — Mar 25th 2015 @ 7:40 am

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