Money Matters — When Is It Enough?

The feedback that I received for my previous article was that it was an open ended one. While I did propose a dilemma, I did not share a resolution. That was partly intentional and partly short sighted. With this article I would like to further delve into a concept that answers questions raised earlier.

One of the most important understandings when it comes to money, as far as I am concerned, is the comprehension of ENOUGH.

Let’s take a moment to first consider this question — CAN HAPPINIESS BE MONETISED? I have been meditating on this question all week and have not found a definitive answer to it. If buying something can make one happy, then isn’t money buying happiness? And if it is, then is it proportional to the money spent? How does one quantify happiness in the first place then? What is the measurement of unit of happiness?

I concluded that happiness is not to be measured but to be felt and if one is happy, well, he is happy, period. Can happiness be monetised then? Well, it cannot be monetised but money certainly is one of the ways to achieve it. One cannot deny that a certain threshold amount of money is required to stay happy and go on with life. For the purpose of this article, let us define this threshold as ENOUGH.

As I was looking for more specific definitions of ENOUGH, I chanced upon a research document from the Center for Health and Well-being, Princeton University, Princeton, NJ 08544 by Daniel Kahneman and Angus Deaton titled “High income improves evaluation of life but not emotional well-being”. I found this document particularly insightful and very profound. Not only does it introduce the concept of emotional well-being and evaluation of life, it clearly distinguishes between the two. What’s more, it actually quantifies ENOUGH!

The emotional well-being refers to the emotional quality of an individual’s everyday experience — the frequency and intensity of experiences of joy, stress, sadness, anger, and affection that make one’s life pleasant or unpleasant. Life evaluation on the other hand, refers to the thoughts that people have about their life when they think about it.

While the life evaluation of an individual rises with her income, emotional well-being also rises with log income, but there is no further progress beyond an annual income of ∼$75,000. This figure of course is more relevant to the residents of the United States of America but with close calculation we can find its equivalent for other countries as well. Please bear in mind that the figure of $75,000 is certainly not a scanty one. Nor is it an average annual income. It is way more than that.

The main takeaway from this research is that money is important for the happiness of an individual but only upto a certain point. Beyond that point, (roughly $75,000 in this case) the amount of money then starts becoming irrelevant to the emotional well-being. A good way to quantify ENOUGH, don’t you think?

We conclude that high income buys life satisfaction but not happiness, and that low income is associated both with low life evaluation and low emotional well-being.

Now for the practical ways of defining our ENOUGH in our lives.

One thing is for certain — having a sense of enough is extremely critical in our lives. Apart from chasing someone else’s dream, it also brings perspective into one’s own life in terms of personal hits and misses and makes us ponder over our actions.

GOAL SETTING

This single, one of the oldest management tools will go a long way in determining your enough. We after all live in a super dynamic world where everyone’s needs are different. Creating our own benchmarks based on what we need and prioritise will not only make our efforts relevant but also drill a sense of purpose and accomplishment in our lives. When our goals are clearly defined, so are the reasons for it. We cease to chase everything seemingly lucrative because we have figured out what adds value to our lives. The goals can be evaluated over a period of time and new milestones be added if need be, but they all happen in harmony with your own sense of enough.

STOP COMPARING YOUR JOURNEY WITH SOMEONE ELSE’S

The seat of emotional well-being is security and security comes from a sense of high self-esteem. Self-esteem in turn is higher in individuals who are clear about their goals and actions. No two people think alike nor are everyone’s circumstances the same. It is not a level playing field. What is the point of comparison then? More than half of consumer spending happens mindlessly because someone else is doing it! While temporary satisfaction may be achieved by acquiring something the feeling will not be a permanent one. Permanent happiness stems from something deeper within — when our actions are in line with our thoughts and our value system and not a mere statement.

BE MINDFUL ABOUT YOUR FINANCIAL DECISIONS

Like all other decisions, financial decisions also hinge on emotions. Worse they hang on to one’s ego. It is ironic I mention this, because I just bought myself my dream house. In fact I did make that extra stretch. But everytime I reconsider this decision, in my mind I know it was from a space for my own well being and not from a space of mindless show off! It was important for my sense of accomplishment and that is all that really matters then. Your heart always knows your truth. Don’t let the world decide it for you. Consult your heart before making any decision and be mindful about it.

KNOWING WHEN TO STOP

The last point that I’d like to make is that the concept of enough is not meant to make one complacent or take a casual approach towards life. That in fact, would be the opposite of an antidote to life. Life deserves to be fully explored and fully lived up to one’s potential. As a businessman, sometimes money is not the only driving force behind working. It is continuity of business and customer satisfaction more than the immediate gratification of money. But when does one stop then? For such cases, I have defined my sense of enough. It is when things begin to take a toll on my mental health and peace of mind that I know I need to stop and switch. No matter how important your reasons for doing whatever it is that you do are, nothing is half as good when it causes you more turmoil than peace.

THAT MY DEAR READER WOULD BE A FAIR WAY TO DETERMINE YOUR SENSE OF ENOUGH.