How to be Happy with Little Money

Does money buy happiness? Can you be happy with little money? You don’t need a mansion or a Lamborghini to be happy. You don’t need a million dollars or to win the lottery to be happy. Read more on what truly creates happiness, and ways to be happy with little money.

Money Buys Happiness… But Only up to an Extent

According to a Princeton University study, the price of happiness is roughly $75,000 a year. People reported significant unhappiness leading up to $75,000, however, no matter how much more than $75,000 people made, they didn’t report any significantly greater degree of happiness.

Source: Time

As you can see from the chart, emotional gains taper off above $75,000.

Should you reject any salary over $75,000? Of course not. If you’re making $100k, $200k, or $300k, I’m sure your money can provide you some extra security, and maybe a nicer car and an extra bedroom or two. But will your life satisfaction be 2X, 3X, or 4X more than someone making $75k? Probably not.

Mo Money, Mo Problems

Unfortunately, this world has a lot of nefarious people. Identify thieves. Scammers. Con artists.

Guess who they target? Do you think they’d rather target someone with $5 to their name, or $5 million to their name? 

“Mo Money, Mo Problems” – Notorious B.I.G.

When you have a lot of money, and most importantly, people KNOW you have a lot of money, it makes logical sense that you will more likely be a target of scammers and con artists.

Who do you think is more likely to get audited by the IRS? People with money.

Americans who made between $1 million and $5 million in adjusted gross income had nearly a 1 in 20 chance of getting audited. Source: CNBC

Who gets called exploitative and predators of vulnerable people? People with money.

It’s not just wealthy people who get targeted. Corporations with deep pockets get targeted too.

When McDonald’s franchise employees claimed several violations of the California Labor Code’s wage-and-hour regulations, the plaintiffs tried to sue McDonald’s corporate (Big Cheese), rather than the individual franchises (Small Fries, pun intended). Source: Harvard Law Review

It’s easy to fantasize about having a lot of money. It certainly would be nice to not have to worry about rent, mortgage, or food.

But having ten times more money isn’t going to make you ten times happier. Having money certainly comes with its own unique set of challenges.

Happiness is (almost) Free

Think back to the last time you went camping. The Great Outdoors. You had to rough it out for a couple of days. You had to walk a hundred yards for access to water or a bathroom. There were no showers, unless you were smart enough to create a makeshift one. Night time brought a sense of calm and made the stars shine bright, but also made it huge hassle for you to grab chips and a drink without a flashlight.

Now think back to the minute you got back home after camping. 

A shower! Free

A toilet! Free

Running water! Free

Light at the flick of a switch! Free

All the things you took for granted suddenly gave you the same feeling of joy you had as a kid opening up presents on Christmas day.

Obviously, nothing is truly “free”. You still have to pay the utility bill and rent/mortgage. But these are still essentially free things that, in that moment of time, bring an immense amount of joy.

Unfortunately, that feeling wears off. After a few months, we use the same shower everyday. We brush our teeth in the same sink everyday. The feeling of joy we had when we got back from camping dissipates into oblivion.

However, I am frequently mindful of every time I turn on the faucet, brush my teeth, or microwave food… of how grateful I am to have these essentially free amenities in my life. 

It’s the small things in life that bring joy. 

Happiness is a Mindset

Don’t forget how fortunate you are!

If you’re reading this blog, you are fortunate! Over 40% of people on earth DO NOT have internet access.

Can you get access to clean, fresh water to drink through your tap? You are fortunate! Nearly a third of people on earth do not have access to safe drinking water. 

These are just basic necessities that are low cost, but can bring a tremendous amount of joy.

The key is to remember how fortunate you are compared to many in this world.

I’m not saying you shouldn’t strive for more. To get more out of your job, your relationships, your pursuits. 

I’m just saying that it’s good practice to be mindful every now and then when we cry about trivial things, like the lack of seasoning on your $12 avocado toast. #FirstWorldProblems

Lottery Winners Aren’t Happier? Depends on Who You Ask

You may have overheard in passing that lottery winners aren’t any happier. There may be some truth in that: A 1978 study concluded that lottery wins aren’t any happier. However, the sample size was prohibitively small, limited to 22 lottery winners.

However, a 2006 study concluded that lottery winners exhibit significantly better psychological health. 

It makes sense that money that can buy you the security of a place to live and food to eat can reduce your stress and increase psychological health. 

But keep in mind that money probably is not the main driver of happiness.

Maslow’s Hierarchy of Needs theory says that once your basic needs (food, housing) are met, you will seek out other things to make you happy. These things include psychological needs like love and self-esteem, and self-actualization, in other words, meeting one’s full potential.

Look Back to Childhood

I hope every reader here had a good childhood. 

I had a terrific childhood. 

I still remember playing baseball on Sunday afternoons with my friends. Arguing about which pitches were balls and which were strikes. Hitting home runs over the fence, and like Frogger, having to retrieve the balls in between moving cars on the street. 

Every now and then after game days we’d hit up the neighborhood grocery store to grab a soda, a home run pie, and some garlic bread. All for about $1.25.

It didn’t take a million dollars to be happy. Just a beautiful Sunday afternoon and just over a buck provided truckloads of joy.

As kids, we savored all of the little things… things that costed less than $20. A new baseball glove. A new tennis ball. A new baseball bat.

Nearly everybody is broke as a kid. Our only income came from the parent ATM machine. But think back at all the fun we had!

What Makes you Happy?

We all dream about that one big thing that we think will bring us happiness. That Louis Vuitton purse. Those Air Jordans.

For me, the dream is to own a Tesla. The lightning quick torque, not having to fill up with gas, and zero emissions is quite a fantasy of mine.

But how much does a Tesla cost? Close to $40,000 for the base model.

Is the amount of money really worth it? What can $40,000 really buy?

I was recently starving after work, and had a huge craving for a sandwich from my local deli. The $11 sandwich had it all: pastrami, onions, lettuce, tomatoes, secret sauce, all between two loaves of crispy bread. The amount of joy that sandwich brought me that day was astronomical. 

For $40,000, I could buy over 3600 sandwiches. That’s almost one sandwich a day for ten years! Or one sandwich a week for 70 years!

I know for a fact that I don’t NEED a Tesla to be happy. It would be nice, for sure. But I’m sure that moment of joy will wear off soon after purchasing it. The experience of driving it day in and day out will become mundane, much like brushing my teeth or taking a shower weeks after camping, no matter how much joy it initially brought.

Maybe you don’t like sandwiches. But I’m sure you can find something inexpensive that can bring you joy.

Putting it All Together – How to Be Happy with Little Money

Don’t get me wrong. I’m not going to stop my pursuit of building my wealth to become financially free, all because happiness comes in a $11 sandwich. 

I’m also not telling you sell all of your possessions and move to a Buddhist temple to become a monk.

These are far from the point. 

The point of this article is that you don’t NEED to be wealthy in order to be happy. 

Emotional gains tend to taper off above an income of $75,000. 

Living in poverty is undoubtedly difficult, but being rich isn’t always easy either, especially when you’re always under the constant threat of scammers and lawsuits. 

Be mindful and find joy in the little things, like electricity, internet, and clean water! 

We were all broke kids with no money. But remember how happy we were?

Find utility in cheap things that bring a lot of joy. Like a pastrami sandwich!

Let me know in the comments below!

Which inexpensive things bring you happiness?