An important question: How much money is “enough”?
An important question: How much money is “enough”?
My lovely girlfriend and I just got back from a week-long train vacation that took us to one of my favorite cities, Seattle. It made me want to discuss something that’s been on my mind. Soon, I’ll try to write about how we were able to afford this trip to provide some tips.
While working on fixing or improving your finances, one of the main questions you should be asking yourself is, “How much money is enough?”.
This question is an important one, and it’s one that I learned to start asking ages ago. Humans evolved to strive and want more, which is a great quality, but it can also keep us miserable. Never being satisfied isn’t necessarily a bad trait. It can make us push to better ourselves and improve our situation. But when we’re never satisfied or never think we have “enough”, it can lead to a lack of gratitude and misery.
This question is also somewhat of a moral and philosophical one for some of us. It may not be one for you, but I’ll explain what I mean shortly.
The status game of excess
One the things my girlfriend and I love doing is looking at houses. Not only do we like looking at houses, but we also have fun guessing how much they’re worth. Something I love about my girlfriend is the fact that on our trip, we could just take our rental car and spend hours driving around Seattle checking out different neighborhoods like a couple of creepers while guessing the cost of some amazing houses.
Although many of the houses were incredible, I also kept asking, “How much of a house do people actually need?”
Like most millennials, we may never be able to afford a house. Things may eventually shift in the housing market back to making houses a reasonable price again, but our hopes aren’t super high unless we both start making a lot more money. But if we do get a house or end up renting one, we’ve had a lot of discussions about how much house we want and actually need.
In Seattle as well as here in Las Vegas and just about every other major city, you’ll find these massive houses. They’re millions of dollars, and some of them have more bedrooms and bathrooms than any person or family would ever need. We see these types of homes all the time when we watch our trashy real estate reality shows like Selling Sunset or Selling Beverly Hills on Netflix as well.
Basically, they’re houses that even the Brady Bunch would be like, “That’s a little much.”
Personally, there are a million reasons I don’t want a gigantic home. First off, I scare easily, and huge homes where most of it is empty is pretty terrifying to me. Second, we have cats, and sometimes I freak out when I can’t find them in our 1,000+ square-foot condo. Third, it’s just not necessary for me or just about anyone else.
Capitalism has primed us for excess and always wanting more. Something you’ll hear me reference all the time was this amazing “aha” moment I had while reading a book, and it mentioned this while discussing how marketing is meant to make us feel inadequate.
The author said something along the lines of, “The worst marketing campaign ever would say,’ You’re fine with what you have right now. You’re perfect the way you are and don’t need more.’”
Humans are wired to play status games. We’re always trying to outdo each other whether we realize it or not. Oftentimes, we’re spending our money just so we can impress others. Once you realize that and how silly it is, I promise you that you’ll start saving a lot of money.
By simply asking yourself, “Am I buying this to bring myself joy or to impress other people?,” you’ll change your financial life for the better.
Many of the millionaires you see aren’t satisfied, but not in a good way. They’re not satisfied because they’re constantly comparing themselves to other millionaires. Or worse, they’re comparing themselves to billionaires. Realizing this should help you understand that you need to know what your “enough” is.
There are a ton of psychological studies to back this up as well. We’re constantly comparing ourselves to others rather than just finding what brings us joy.
In one study, they asked people how much money they’d rather make while knowing what colleagues made:
A: Your current yearly income is $50,000; others earn $25,000.
B: Your current yearly income is $100,000; others earn $200,000.
This seems like a no-brainer, right? Option B, of course. Make twice as much as option A and who cares how much others make…right?
Wrong. About 50% of people chose option A, which is insanely irrational. An extra $50,000 a year is over $4,100 per month before taxes. Nearly half of people said they’d basically pay $50,000 just so they made more than others.
Another interesting psychological factoid is about Ivy League college students and how depressed they are. You’d think kids going to the top schools for the smartest people would be awesome, but it’s not. And it’s all due to social comparison.
Psychologists have a theory that many kids go from being the best to not being the best anymore, or worse, they’re now at the bottom. Think about a kid who is a straight-A student they’re whole life. They kill it in elementary school, middle school, and high school. They’re at the top of their class, they got an awesome SAT score, and they’re known as the “smartest kid in school” for all of these years.
Now, imagine multiplying that kid by the thousands and putting them all in the same school. That’s what many Ivy Leagues are like. There’s only one 1st-place position, so they can’t all have it. Kids who went from being at the top will inevitably be 2nd, 3rd, 50th, or 100th place.
Social comparison can be a real pain, but once you recognize it, it’s much easier to manage and to manage your money as well. Although I learned about all of this years ago, I still catch myself doing it because we’re wired for it.
I’ll see friends who own houses or make more money at their jobs and beat myself up. Then, I have to pause and ask myself, “Why do I want these things? Is it just so I can keep up with them, or is it for my own joy?”
The ethics of excess
Here’s where I may lose some of you. Sorry, but also, not sorry. The philosopher Peter Singer ruined my brain, and the ethics of excess are just something I have to think about all of the time now.
Peter Singer is a famous philosopher who started the “effective altruism” movement. One of his most popular thought experiments goes as follows:
You’re walking along on your way to work and see a child drowning in a shallow pond. You can safely rescue the child, but you need to jump in now. The only problem is that you just bought an expensive pair of shoes that will get ruined. You’ll also ruin your clothes and will be late for work.
Do you save the child?
If you’re a non-psychopath, you probably said, “Of course I’d save the damned child! Are you nuts?!”. Well, Peter Singer argues that we’re all aware of suffering around the world, and many children are dying due to a lack of funds in the area. By not donating to good causes, we’re basically not saving the drowning child.
You can read the full thought experiment here. And if this has inspired you to donate, I highly recommend GiveWell.org, which is an effective altruism-style donation where they maximize the benefits of donating.
Now, I will say that I have an extremely nuanced view on effective altruism. There are people who take this to the extreme and barely live off of anything and donate a large portion of their money. That’s not how I roll, and sometime, I’ll write more in-depth on how I spend my money to bring myself joy while also helping where I can.
In short, my mental health is extremely important to me. I don’t spend money like a lunatic, but I do have hobbies that are there to give me a break from work and the stresses of life. If I didn’t treat myself with my hobbies or things like this recent vacation, I’d be miserable, and a terrible person to be around for my son, girlfriend, and anyone else who knows me.
When I can, I donate to GiveWell or local organizations I believe in.
Why am I talking about this? Well, because of Peter Singer, I just can’t understand how people can have so much wealth and not use it to help others. I don’t understand how millionaires and billionaires can have multiple multi-million dollar houses with more rooms than they could ever use while so many people are suffering. I don’t get how they can spend thousands or millions of dollars on things like meals, the best forms of travel, and ridiculous artwork while we have a homelessness crisis.
And listen, I know it’s “easy for me to say” because I’m not a millionaire, but I’d like to think I’d do better. I think about the question of “how much is enough?” regularly, and even at my modest income, it affects how I spend and where I put my money.
Again, you may completely disagree with everything I’ve written in this section, and that’s fine. The reality is that if you’re reading this, there’s a pretty good chance you’re not one of the millionaires. Most of the people reading this are trying to get their money right, but I do believe these are things we should think of so that when our money gets right, we do right with it.
Plus, it’s a motivator. Like you, I’m trying to make more money and save more, and when I’m in that mindset, it helps to think of what I’ll do with it.
Find contentment and gratitude
At the core of it all, when we’re trying to fix our money or make more money, it’s all about happiness. We’ll never be happy if we’re never content, and that’s where gratitude comes in.
I’m not exaggerating when I discuss how bad I had it financially for most of my life, and it wasn’t until recent years when I started getting my money right.
In 2013, I was a year sober and moved back to Las Vegas. I moved into an apartment in a bad part of town. I barely made any money, and I had no car. Fortunately, there was a 99 cent store within walking distance, and that’s where I got my groceries.
I had nothing in the living room. My bedroom had a mattress and fold-out card table with a laptop on it. When my son would come over on the weekends, I was so broke that all we did was watch cartoons on that laptop all day long, and we’d eat ramen and TV dinners.
Even though I didn’t have much, I practiced gratitude every day for what I did have. I remember someone saying, “I don’t have much, but I’m grateful for what I do have,” and I knew I wanted to live that way.
I don’t think I would have made it through those years and got to where I am today if I wasn’t grateful for every little thing while also working hard to improve my life and make a better life for my son.
Today, it’s the exact opposite. I have a job paying me over double what I was making back then. I have a new car that I can afford to make payments on. I have three bedrooms, and each one is fully furnished, and so is my living room. My son has everything he needs and stuff that he most likely doesn’t need.
My girlfriend is a social worker who works with the homeless and works her ass off. My job isn’t nearly as tough, but I work pretty hard as well. Due to fixing my finances and being able to save because I’m not spending excessively, we were able to take a week-long vacation that was well deserved. The trip cost thousands of dollars, and that’s not something I ever thought we’d be able to do.
It all starts with knowing how much is “enough” and finding a good balance between contentment while also working for more. You can do it too.
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